Kava Labs: Centralizing Financial Services for a Defi Future
Richard Galvin, CEO of Digital Asset Capital Management, returns to Real Vision to welcome Brian Kerr, CEO & co-founder of Kava Labs. Galvin and Kerr discuss the purpose and evolution of Kava Labs as well as Kerr’s thoughts on the crypto ecosystem, applications, and where the space is heading for users in the future. He explains that when Kava originally started, the team was focused on crypto payments, swapping between different assets including BTC, ETH, and DAI and using a non-custodial law that linked together Lightning with payment channels to allow for swaps globally. Through this, Kerr and his team realized that crypto payments were not scaling the way they anticipated, and it would be years before the markets would be ready for that type of product. Seeing the success of Maker-Dao to give ETH speculators a way to gain margin, the team worked with Ripple to replicate that system, using XRP as collateral. Kerr’s team effectively created a side chain that would be able to move assets on XRP to the sidechain and use those coins as collateral to issue stablecoins. In doing so, Kerr saw an opportunity—this process could be done for all assets, and as such, Kava fully pivoted into the generalized lending platform it is today. Filmed May 4th, 2021. Key Learnings: When focusing on layer 1 development, it was clear to Kerr that there were trade-offs between high throughput, decentralization, and scale. With that, the sacrifices to make layer 2 solutions work were not efficient. Kerr states that if everything is going to be interoperable in the future, one can have different layers 1s specializing in one subject matter to then be combined by developers to make future applications. Kerr believes that the industry is headed towards exchanges lowering the barrier to entry for users, vetting applications, and offering services directly to traders. As users want to utilize a process where everything is accessible without the need to move assets off platform, Kava aims to provide those services.