What Is Kowala?
The cryptographic asset class is a highly volatile class where you can either make lots of money in a single day or end up losing everything. Some of the volatility solutions in the market include automatic value-pegging solutions like BitUSD and NuBits, have encountered multiple failures because of malfunctions and minimal adoption. Similarly, Tether has also proven to be susceptible to the ever-changing whims of governments and banks. In addressing these problems, Kowala proposes a new breed of stable cryptocurrencies that still retain all the key features of decentralization, quick transfer, privacy, low transaction expenses and security.
Kowala Autonomous kUSD Stablecoin Cryptocurrency Protocol
It is clear that everyone from consumers and miners to investors and traders would stand to benefit from a crypto with a stable value and also whose operation is not dependent on other third parties like banks. The Kowala Protocal intends to offer true stability with its range of asset-tracking, self-regulating, distributed cryptocurrencies referred to as kCoins. All kCoins will have a 1:1 value that is relative to all widely traded assets, including kUSD and kEUR among others.
The kCoins will be self-regulated using various mechanisms, including constantly gathering trading market information, variable fees and variable block rewards. Over time, these mechanisms are designed to ensure that every kCoin is restored to parity or balance with its tracked asset. The fact that each kCoin will eventually achieve parity with the underlying currency creates new arbitrage opportunities to traders looking to earn profits from slight market fluctuations surrounding the peg.
Kowala Core Regulating Mechanisms
There are three unique mechanisms that Kowala will use to help maintain the kUSD market price at $1 or very near to 1:1 ratio. The first one is the block rewards algorithm where block rewards are used to control the market prices by pushing towards the $1 target when necessary. The second mechanism is a special stability fee that will be applied to all subsequent transactions to bring up the kUSD price to $1. Finally, the last mechanism, trading activity, refers to how traders who are motivated to gain profits engage in their normal trading activities in a way that quickens the return to parity.
Kowala Reducing Mining Costs
Cryptocurrency mining has proven to be quite costly, especially regarding power consumption and hardware costs. Furthermore, conventional crypto mining pits the miners against one another in an often fierce, costly, but wasteful competition. Kowala plans on rectifying this anomaly by creating a healthy environment where kUSD miners are actually cooperating so as to push the blockchain forwards.
The other notable point regarding kUSD mining is that users who do not want to buy their own crypto mining equipment will be given the option to lease the mining rights. The leasing will allow owners of kUSD to hire mining operators, who then earn fees for the mining, whereas the main mining rewards will be given to the owner’s wallet.
Over time, as cryptocurrency finally gets regulated and there is a much more matured outlook in the cryptography market, then the issue of volatility may hopefully subside. However, as for now, solutions like the Kowala Protocol are simply immeasurable in terms of minimizing volatility. With more merchants looking for ways accepting cryptocurrencies, it is worth having a stable kCoin that you can transact with.