San Francisco, California, April 8, 2021 (GLOBAL) – Bitcoin and other funds have allowed users to control funds, eliminating the need for banks and intermediaries. Users can now store their digital assets, store value, and make payments without commissions and regulators that censor financial freedom.
However, with great power comes great responsibility. The old centralized way of being the recipient – you get your checking and savings accounts and you can’t keep your assets. The new way is that you have complete control and power, but with that, Kava had no involvement. The community must have a responsibility to show up and vote.
In recent months, institutional investors have been focusing more and more on Bitcoin. The growing number of publicly traded companies with bitcoin treasuries is just one such indicator. A recent update to the Kava protocol allows these companies to take out loans on their assets.
Institutional investors flock to bitcoin
The past twelve months have been intriguing for Bitcoin. Aside from the price hype, the big news is that more institutional investors are looking to gain access to the world’s leading cryptocurrency. Instead of spending money on futures contracts, these companies buy bitcoin as part of their treasury. Several companies have openly announced these purchases, including MicroStrategy, Tesla and Meitu.
To some, this approach may seem risky. Bitcoin remains an unstable asset that can be subject to sharp price fluctuations. However, every company that has created a bitcoin treasury in the past few months is currently making a profit. Acquiring Bitcoin and capitalizing on its growth seems to be going well, although momentum could change in the blink of an eye.
Now that these institutional players are investing in Bitcoin, one has to wonder what comes next. Will they sell when the price is at a certain level, or will they keep adding BTC to their coffers? Figuring out this “hold” angle will prove necessary if this industry continues to grow globally.
It took years to get the attention of these companies, but there are several reasons other than the speculative asset for them to hold onto their BTC portfolio for a while. Finding new use cases for these companies’ bitcoin holdings may be the missing piece of the puzzle.
One option that some institutional players might like is using their current bitcoins as collateral for loans. As part of the recent Kava V5 update, the HARD protocol received an update to version 2. This update enables variable interest rate borrowing and distribution of HARD tokens to both suppliers and borrowers.
Assuming companies like Tesla want to make their BTC work, they can do it through Kava and the HARD Protocol. Any financial institution can earn 45% on their current BTC assets without counterparty risk. Since Tesla owns $ 1.5 billion worth of bitcoins, or roughly 48,000 BTC, they can earn up to 21,600 BTC with a 12-month lockout period. Kava provides a significant stream of passive income that institutions can explore by converting their bitcoins into a cash flow asset.
Lending and borrowing is an increasingly popular aspect of decentralized finance. As of today, Bitcoin’s role in DeFi remains minimal, with few protocols supporting the world’s leading currency in its native form. Most often, users need to convert their assets to a tokenized or packaged version and spend money on it. The protocols that natively support Bitcoin can benefit from the growing interest of institutional investors in cryptocurrencies.
Convincing institutions that own bitcoin to explore DeFi options will be a daunting task. While 45% return without counterparty risk is attractive, it remains unclear how many companies prefer this option because the risk with DeFi is that there is no counterparty to sue when things go wrong.
As more Bitcoin-centric DeFi solutions enter the market, the environment will become more competitive and attractive. Serving institutional level players is the next type of business as a lot of money has been pouring into Bitcoin lately.
Maintaining this momentum will require compelling options, be it decentralized finance or otherwise. The coming months could prove crucial in this regard, as these institutional players may not sit idly by for too long.
“As more businesses and financial institutions accept bitcoin and cryptocurrencies, the Kava DeFi platform is becoming more valuable as it gives this new wave of financially-minded users the opportunity to finally tap their assets and turn Bitcoin and other cryptocurrencies into a cash flow asset. their balances ”. – Brian Kerr, CEO of Kava Labs
Kava is a multi-asset DeFi platform that offers stablecoins, loans and other financial services to users of major cryptocurrency assets, including BTC, XRP, BNB and ATOM, just to name a few. The Kava platform has three types of tokens: the KAVA token, the HARD token and the USDX stablecoin, where the KAVA token is the native token of the Kava blockchain, which is integral to the security, governance and mechanical functions of the platform. Users can secure their crypto assets in exchange for the Kava stablecoin, USDX. Stablecoin Kava provides a high interest income earning users more than using a traditional cash or savings account with a bank, but unlike traditional savings accounts.
To find out more, visit Kava.io.
Name: Sara Austin
Company: [email protected]
Email: Kava Labs