The world of finance is undergoing a profound transformation, with decentralized finance (DeFi) at the forefront of this evolution. Among the trailblazers in this space, Hover has emerged as a non-custodial liquidity market that is reshaping the lending landscape within DeFi. This comprehensive Hover review explores the basics of Hover, providing insights into its innovative features, tokenomics, governance, partnerships, and its potential to revolutionize the world of on-chain finance.
Introduction to Hover
Hover is a cutting-edge institutional-grade lending protocol deployed on the Kava EVM. Its mission is to become the central hub for immediate and capital-efficient liquidity access within the DeFi ecosystem. Hover distinguishes itself through a combination of integrated tokenomics, continuous risk monitoring solutions, and a dedicated public team, setting new standards for DeFi development.
At its core, Hover enables users to earn yields by lending their assets. Moreover, users can collateralize these assets to borrow other assets, with the borrowing limits determined algorithmically. In the event of non-repayment or collateral value exceeding the loan amount, a portion of the collateral is liquidated to cover the outstanding loan.
How Hover Works
Hover operates by pooling deposited assets and lending them to borrowers within the ecosystem. Borrowing limits are determined by the collateral factor (CF), which considers factors such as quantity, dollar value, and volatility of the provided collateral. This ensures responsible borrowing by overcollateralizing loans, preventing users from borrowing more than they deposit.
The health factor is a crucial metric used by Hover to notify depositors of their overcollateralized positions. When the health factor approaches 1, it signals a potential liquidation risk. If it falls below 1, liquidation becomes imminent. Borrowers can either deposit more collateral or repay a portion of their loan to maintain a safe ratio.
Hover’s depositors earn variable interest on their deposits, sourced from the interest paid by borrowers. The interest rate follows the Jump Rate Model, with rates increasing significantly when the utilization ratio exceeds 80%.
Hover Tokenomics
Hover’s token ecosystem comprises HOV, esHOV, and xHOV tokens, each serving distinct functions. HOV tokens can be acquired through the Hover token sale or exchanges post-token generation event. Staking HOV converts it into esHOV, unlocking various features through the Hover Staking Program. Users can then undergo a KYC process to convert esHOV into xHOV, granting access to the Hover Rewards Program.
The Hover Staking Program (HSP) includes features like Borrowing Rebates, Liquidation Rebates, Governance participation, and Hover Rewards Program earnings. Users can also join HOV VIP Tiers by staking tokens, offering exclusive benefits and rebates.
In addition, Hover’s token allocation is divided into various categories, including Liquidity Incentives, Core Contributors, Public Sale, Protocol Owned Liquidity, CEX Liquidity, Reserves, Partnerships, Ecosystem, Kava Foundation, Development Fund, Genesis Pools, Advisors, and Bug Bounty.
Governance and Rewards Program
Governance involves token holders coming together to vote on proposals aimed at enhancing platform operations. These proposals encompass various actions like introducing new tokens to Hover markets, adjusting market parameters such as CF or RF, or fostering innovation through research grants. As the project matures, Hover will gradually expand the scope of governance within its framework.
Meanwhile, the Hover Rewards Program is an opt-in fee distribution system, allocating 33% of the protocol’s revenue to stakers who convert esHOV to xHOV through a KYC check. This program ensures steady rewards for participants while maintaining compliance with digital identity regulations.
Hover and the Kava Network
Hover has strategically partnered with key entities to enhance its offerings. Kava, a secure and scalable Layer-1 blockchain, provides the foundation for Hover’s operations. Rome Blockchain Labs, Ledger Works, WatchPug, and Pyth contribute expertise in blockchain development, risk management, smart contract auditing, and financial market data oracles.
The Kava network, upon which Hover is built, has achieved impressive milestones. Its co-chain architecture, blazing-fast block times, and Kava Rise TVL-based rewards program have attracted a multitude of protocols to the Kava platform, contributing to significant Total Value Locked (TVL) growth. The KAVA token plays a pivotal role in securing the network and driving expansion.
Hover’s vision extends beyond lending and borrowing to becoming the primary liquidity partner for various Kava DeFi primitives, including options, futures, and derivatives platforms. By providing stable liquidity markets, Hover aims to enhance the efficiency of Cosmos’ DeFi ecosystem.
Final Thoughts
Hover’s innovative approach to DeFi lending, its robust tokenomics, and its strategic partnerships within the Kava ecosystem position it as a trailblazer in the DeFi space. With a commitment to long-term value creation and meaningful utility for token holders, Hover has the potential to revolutionize on-chain finance.
As it launches later this year, Hover’s pioneering non-custodial liquidity market holds promise for both retail and institutional users seeking seamless interoperability, advanced tokenomics, and robust financial services in the rapidly evolving world of decentralized finance.
