Kava token becomes disinflationary like Ethereum after the latest upgrade

Key Takeaways:

  • Kava Labs launched its KAVA 12 upgrade on Feb 15.
  • The update aims to improve staking and make the token deflationary, among other upgrades.
Kava announced the launch of Kava 12, which aims to make its KAVA token deflationary.
Kava announced the launch of Kava 12, which aims to make its KAVA token deflationary.

NEW DELHI (CoinChapter.com) — DeFi lending platform Kava underwent its 12th major upgrade on Feb 15, which it deemed as a “game changer for the Cosmos Ecosystem,” bringing the “developer power of Ethereum” to its blockchain network.

The much-awaited upgrade went live after being delayed multiple times in January this year. In its announcement, Kava Labs claimed that the upgrade would help DAOs on “any Cosmos chain” exert better control over their expenses.

Kava token claims the latest upgrade would be a game changer.
Kava claimed the latest upgrade would be a game-changer.

Moreover, the upgrade would help track Cosmos chain emissions flow. Kava’s announcement shared that the new DAO structure would help channel the emissions into initiatives.

Highlights Of The Kava 12 Upgrade

With the new upgrade, Kava would introduce a mechanism to hold Cosmos emissions in community pools. Moreover, the Kava DAO community pool would include a portfolio of assets instead of only the native KAVA tokens.

A community pool backed by a portfolio of assets would likely help Kava DAO withstand changing market direction. The reliance on only one or a few particular assets led to the downfall of several crypto firms in 2022, and it seems Kava developers were taking notes.

Additionally, the crypto market’s downturn in 2022 highlighted the impact of the lack of transparency in the sector. Likely inspired by the FTX collapse and its impact, Kava Labs announced that the new upgrade would increase the transparency of the network. 

With Kava 12, users would have permanent access to a snapshot of the community pool portfolio’s value.

Kava outlined changes in its community pool inflation and staking rewards in the latest upgrade.
Kava outlined changes in its community pool inflation and staking rewards in the latest upgrade.

Meanwhile, Kava 12 will mint tokens for staking rewards and the community pool. In the previous version, the community pool depended on an abstract tax on the staking rewards and fee pool through the Authorization module.

However, the latest upgrade would mean the new module would feed the community pool. As a result, the community pool would become a function of inflation and the total token supply. The authorization module would directly send rewards to validators.

Is KAVA Becoming Deflationary?

One aspect of the latest upgrade that traders are talking about is the Kava developers’ claim of making the KAVA token deflationary.

The Kava 12 upgrade would cap the total supply per the DAO’s guidelines. Furthermore, the developers claimed that KAVA would become “ultimately deflationary.”

It is very important for a top crypto ecosystem to be deflationary against the revenues it generates from demand of the products built on it. […] Kava DAO’s new architecture is a big step in the direction of providing tools for all cosmos projects to achieve these goals

Scott Stuart, Founder Kava Labs, said

The upgrade announcement highlighted that the DeFi lending platform could cap the maximum supply of KAVA tokens. This is because deflationary tokens have a limited supply, which means their price increases with demand.

Additionally, the upgrade would help KAVA staking become independent of token supply. Finally, kava developers claim that improved staking APY would make rewards “more predictable for the community.

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