Launching a DeFi Lending Market on Kava — Interview with Hover Core Contributor Vincent Wu

We had the opportunity to speak with Vincent Wu, a core contributor at DeFi project Hover, which is building a lending market on the Kava blockchain platform. Vincent Wu has extensive experience in the cryptocurrency and trading industry, and is now looking to take his knowledge to the realm of decentralized finance.

Interview with Hover core contributor Vincent Wu

Ahead of the launch of Hover’s Genesis Pool, we asked Wu about his thoughts on the current state of the DeFi market, Kava, and how Hover is looking to become a major player in the ecosystem.

1. Can you tell us a bit about your personal journey in the crypto field and how you became involved in the development of Hover?

Of course! I’ve been in crypto since 2016, prior that in sell-side investment banking. I had growing interest in it ever since projects did ICOs to raise money for their protocol – crowdsourced funding pseudo-anonymously was completely new to me at the time. During that time, I quit my job and went all in on crypto, by building out an ICO due diligence platform from what I’ve learned. 

With the first crypto winter over us, I eventually moved to working with institutions at firms like Aquanow, VirgoCX, and Crypto.com where I sourced and provided liquidity to prop desks, hedge funds, and larger trading firms. 

For Hover, I saw an opportunity to build on a budding ecosystem, to work on a different side of the industry. Lending protocols have always been my interest as I’ve used them to explain how smart contracts work to people from traditional finance. 

I met the team and let them know what I wanted to do – we eventually connected and here I am today. 

2. How do you perceive the current state of the DeFi market, and what trends do you see emerging in the near future?

We can break down the DeFi markets in multiple segments similar to how you divide the tech sector into Fintech, Medtech, etc. 

For example, there is a clear growth in the Gamefi ecosystem, from a prior model of user retention with farming and grinding to earn tokens to something a bit more multi-faceted. We’re seeing exceptional studios working on games that retain users just by being a great game to play overall. 

In the financial ecosystem we’re seeing a lot of battle tested protocols being replicated on different L1’s and L2’s. DEXs are growing to be more efficient, a lot of builders on higher TPS protocols are implementing on-chain perpetual swaps and a variety of interesting developments. For the lending markets specifically, we’re seeing uses of soulbound tokens or frictionless KYC systems to allow undercollateralized lending. 

To add, we’re also seeing the growth of traditional lending strategies such as fixed rate lending that are being derived from leveraged yield strategies that can reduce the risk for borrowers to cater to a broader spectrum of investors. These are definitely objectives that we have on Hover’s vision. 

In the future, I do see more regulatory changes to the ecosystem. More specifically that CEXs have a bigger role to play in terms of onboarding new users onto DeFi. With the KYC/AML compliance and travel rule implementations inspired from traditional finance, we will see a lot that the onramps to DeFi will be heavily dependent on users that will be brought on from these fiat onramps. 

3. Could you provide an overview of Hover and explain how it differentiates itself from other non-custodial liquidity market protocols?

Hover is a lending protocol that will be launched on the KAVA network with cross-chain support to cater to the entirety of the Cosmos Ecosystem and more. We’re working with and in close communications with the KAVA foundation and Rome Blockchain Labs (RBL) – the company behind the launch of other successful lending protocols like BENQI and Moonwell. We’ve taken everything we’ve learnt to improve our protocol overall.

We differentiate ourselves on a protocol level by integrating a unique tokenomic structure to incentivize long term growth. A lot of the lending markets in existing markets overlook this concept and only focus on governance or emissions. We’ve considered these but also implemented reward programs to further incentivize growth and rewarding those that stake with rebates and discounts on their daily operations. In addition we’re also exploring the bleeding edge of what lending protocols can do, not limited to the unique KYC’ed undercollateralized lending and fixed rate borrowing mentioned prior. 

4. What were the reasons that led you to choose Kava as the platform for building Hover?

We saw an opportunity with Kava in many ways. There is a high TVL already  which will allow us to build and optimize the existing assets on their protocol. In addition to this they are constantly updating with their most recent update allowing the Cosmos SDK side of their chain to seamlessly bridge onto the EVM side.

With no prominent lending protocol on the KAVA EVM Co-chain, we saw a great opportunity to capture the market there. Kava is currently a growing ecosystem that also listens to the community which are traits that we valued when deciding on a platform to build on. 

5. In non-custodial protocols like Hover, liquidity plays a crucial role. Can you elaborate on the importance of liquidity and how Hover addresses this aspect?

Good question. Liquidity is crucial for Hover as it is for most lending protocols but it’s definitely a bit of juggling to get things right. We are working with different protocols to establish a stable borrow flow, supplying them with low rates on borrowing with our rewards program and ample supply. In turn, we are tapping into different areas to provide a diversified supply of assets to our markets.

We understand that having one large source of supply is inherently risky for lending protocols so we are putting efforts to diversify and find stable sources of supply. We are incentivizing early adopters to supply liquidity with our Genesis pools as well happening in upcoming months.

6. We would love to hear more about the upcoming launch of Hover. What can users and the crypto community expect from it?

Of course! We will have many opportunities for our early adopters to partake in our launch. We will have Genesis Pools (GPs) soon. Genesis pools allow you to supply your assets early to earn our protocol tokens over up to 90 days. We will open our pools for deposits for about two weeks then will be withdraw-only afterwards. In addition to this, we will also have a public sale hosted by our external parties in upcoming months. For more information, feel free to join our Telegram and Twitter.

7. Security is always a concern in the crypto space. What measures has Hover taken to ensure the security and safety of user assets?

Security is a high priority for Hover, so we’ve gone above and beyond to manage technical, operational, and financial risks. We have our smart contracts audited by Watchpug as well as internally reviewed by Rome Blockchain Labs. This is in addition to our bug bounty program. For our market operations, we’re working closely with Ledger Works as our external risk partner.

They work with our internal risk lead to monitor Hover’s market health and stability. This is done to ensure smooth and secure operations no matter how large the protocol grows. All of this is done on top of standard security features like using multi-signature and hardware wallets. As you can see, security and risk are something we take very seriously at Hover. 

8. With the rise of meme coins and their popularity, what are your thoughts on their impact on the crypto industry? Does Hover have any plans related to memecoins or similar trends?

Call it an unpopular opinion, but I think memecoins bring in a disproportionate amount of retail interest. The obvious negative impact is that meme coins – without much support from the developer team and with no plans or roadmap will become a fad. This can lead to a lot of losses for anyone that invests more than they should on these assets and might potentially discourage retail or bring unwanted attention to the ecosystem if these memes coins get abandoned. A famous time when this happened was with Doge when Elon Musk went on SNL.

To look at things in a more positive light, I’ve never seen a bigger catalyst for retail users to participate in Web3 albeit their rationale is more profit driven than anything else. Most of these meme tokens reside on DEXS or Swap protocols in its infancy before getting listed on CEXs if they get big enough.

This means that the typical retail user will get exposure to buying their first digital assets on CEXs, learn how to withdraw this onto their own self custodial wallet, how to interact with Uniswap or Equilibre, and hopefully basic private key security to actually buy their first meme coin. 

9. Finally, on a lighter note, if you were to create a memecoin, what would its unique features or characteristics be?

Haha! I mean, with the rise of liquid staking tokens, it would be interesting to see if you can create some sort of launchpad that revolves around funding projects from the yields distributed by staked tokens. Projects get their funding (eventually) and stakers will get some project tokens. Call it pepepad, dogepad, stakepad, or something trendy like that. You would need a lot of memes to make it sustainable of course!

We’d like to thank Vincent Wu for taking the time to answer our questions thoroughly and wish the best of luck to Hover!