Lava Protocol – Decentralized and Interconnecting Liquidity Protocol

Project Reviews / 03.12.2020

The onset of LAVA Protocol

Molten Finance emerged into the DeFi space with strong features backed by a deflationary token supply and a constant liquidity mechanism to sustain its protocol. These features drew huge interest from crypto investors, making its trading volume reach about $500 000 within a day. In addition to this, 1% of the transaction also gets burnt, further reducing the supply of the circulatory number of tokens.

The Liquidity pool provided by most initiatives of DeFi gets dried up easily, which further causes a steep drop in the value of the token. To curb this, developers thought it wise to allocate 5% of every transaction into the smart contract, commonly known as the “Volcano.” However, as the community grew, and the number of transactions was rising. The accrued fees from the locked liquidity in the Volcano were lying idle. Therefore, it was prudent to devise a way of rewarding holders and liquidity providers of MOL.

This gave birth to LAVA, the Decentralized Liquidity Distribution Protocol established within the Molten Ecosystem to reward stakers.

The Concept behind LAVA Protocol

The LAVA protocol was developed to address the shortfall of both Molten Finance and Liquidity Protocol. Half of the rewards from the basic ETH liquidity provided were stuck in the main contract. Though these contracts are decentralized, it still raises red flags about a possible situation whereby developers may have secret access to future funds. To calm these tempers of fear, the new LAVA protocol, which has been launched recently, has an inbuilt automatic feature that sends 50% of transactions to LAVA/ETH Liquidity Providers (LPs) and the remaining to the Ethereum burn address.

How to earn LAVA Tokens

This is a low capped supply token that is also deflationary in supply, making it very scarce within the ecosystem. First, users can purchase LAVA from Uniswap or, better still, stake $MOLTEN to earn LAVA as a reward.

LAVA was introduced into the ecosystem to support staking MOL tokens and also LPs that were not enjoying any portion of the accrued fees that were being made by the volcano. Because of this, many LAVA tokens will be rewarded as a bonus to $MOL Stakers for the first 7days to increase their annual per yield on the protocol.

Through a Decentralized Autonomous Organization, the community may decide to change the rate of tax transactions across the protocol in the future.

Putting your ETH/LAVA Liquidity Pool to work

There are two options available to earn rewards from the liquidity provided by traders and also token holders. One can stake his $LAVA on the staking app and earn rewards from the pool. On the other hand, you can also decide to hold onto your ETH/LAVA liquidity tokens and earn from the overall Uniswap trading fees. Another unique thing about this is that LP tokens that are not staked on Uniswap will directly receive ETH and LAVA. Earned rewards are sent to the associated wallets of users.

The longevity of LAVA is assured

One of the crypto space’s common sayings is “Not your keys, Not your Crypto.” In that case, you can’t assure the full safety of any crypto that you are not in control of. This should also not let users utilize the concept of Decentralized Finance. The LAVA Smart Contract has been audited by Swipe to ensure that security is uptight to prevent any loss of funds in the future.

Furthermore, the team has locked in the initial liquidity it provided for over 1 year to ensure the project’s sustainable growth. A cap of 125 $LAVA was placed before its listing to ensure a fairer distribution of LAVA Tokens to the community.

Lava Protocol – Decentralized and Interconnecting Liquidity Protocol

The LAVA Protocol will serve as a strong bridge interconnecting all the tokens fluidly developed into Molten Finance Ecosystem while rewarding its traders and stakers in almost a dual manner. The deflationary nature and its burn mechanism make it one of the tokens worth vied for in the ecosystem. Liquidity Providers are at liberty to earn from several avenues on the platform. Users who want to avoid any form of impermanent loss can also hold their Uniswap LP Tokens and still earn both LAVA and ETH even though the smart contract has been audited by a reputable firm in the crypto industry.

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Holds a degree in BSc. Nursing from the University of Cape Coast, Ghana yet an addict to the blockchain technology and the cryptosphere. He combines the promotion of crypto projects and also the making of professional contents all to get innovative projects to the real world. He is a passionate Community manager and a Marketing Advisor for blockchain startups.