Kava BUSD Reward Reduction

Prop #30 to reduce BUSD rewards.

The USDX digital assets trading in a stable range around 1 USD is a key result towards the growth and usage of the Kava lending platform.

USDX trading range and price on public markets has been in a steady decline recently. A likely hypothesis to describe USDX trading below $1.00 is the sale flow afforded by the KAVA rewards presented to assets supplied in Kava, namely BUSD as its lower risk profile lends it to more leveraging (shorting USDX) with less risk.

An implication of the reduction in rewards for BUSD suppliers to Kava is not that BUSD users are somehow less deserving of earnings, rather that the stability of USDX around 1 USD is seen as having greater priority by the Kava community than the benefit of users of a particular asset type in Kava.

It’s highly likely that if Prop #30 passes, BUSD rewards are reduced, and USDX trading range in markets does not meaningful recover towards 1 USD that further proposals to reduce BUSD rewards, increase BUSD Borrow APY, or some combination thereof for other supplied assets in Kava will be proposed in the future.

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Disclaimer: This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making investment decisions.

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