Evmos, Swing, Tashi, Wormhole team up to solve Cosmos liquidity problems

September 20, 2023 Coin Telegraph

Tashi and Swing will integrate Wormhole bridged tokens for USDC, USDT, wETH, and others, potentially making Cosmos DeFi easier to use.

A group of decentralized finance (DeFi) protocols have teamed up to solve liquidity problems in the Cosmos ecosystem. The teams involved include cross-chain bridging protocol Wormhole, liquidity aggregator Swing, lending protocol Tashi, and Cosmos network Evmos.

According to statements from two of the teams involved, Wormhole will register five new bridged tokens for use on Evmos: Tether (USDT), USD Coin (USDC), wrapped Ether (wETH), wrapped Bitcoin (wBTC) and Solana (SOL). A Wormhole governance vote on this part of the proposal began on September 19 and currently has near unanimous support.

Once the tokens are launched on Evmos, they will be implemented into Swing protocol, which will allow users to send them to Evmos from any network that Swing supports, including BNB Chain, Polygon, Fantom, and others.

Tashi will also implement Swing into its user interface, allowing users to bridge the coins and deposit them as collateral with a minimum of button clicks. Users will then be able to take out loans of either Cosmos-based or Ethereum-based coins using this collateral, swap the loaned coins for others, deposit them into liquidity pools, or perform other common DeFi actions.

*Caption: Tashi user interface. Source: Tashi.*

According to representatives from both Swing and Tashi, the integrations are ready to go live and are simply waiting for the Wormhole proposal to pass and be implemented. The proposal’s vote will come to an end on September 24, which implies that the new liquidity system should go live soon afterwards.

In a conversation with Cointelegraph, Tashi co-founders Lindsay Ironside and Kristine Boulton claimed that the new system is needed to fix a “crisis” in liquidity within the Cosmos ecosystem. “We’ve got this chain that continues to deliver these amazing opportunities, but nobody’s using it because they can’t get liquidity there,” Boulton stated. But “[Wormhole], they’re on, I think it’s 29 different chains right now [...] so it is an opportunity to fix that crisis.”

Ironside stated that she felt a new system was needed after she first began using the Cosmos ecosystem. She had a bad user experience the first time she attempted to swap USDC for Cosmos (ATOM) and send it to Evmos. In order to obtain the ATOM, she needed to first bridge her USDC to Cosmos Hub. But once the USDC was on the network, she didn’t have the ATOM to pay the gas fee to make the swap.

According to Ironside, this experience caused her to realize that the team needed to focus on this problem. “Coming in as new users [...] and trying to figure out where the solutions to these problems were, [that] was a big deal,” she remarked.

In a separate conversation, Swing CEO Viveik Vivekananthan agreed that the new system will potentially fix these problems. If a user wants to swap USDC for a different coin on Evmos, Swing will convert a small portion of the coins sent into the Evmos native coin, which will then be spent on gas to make the swap. This will allow users to onboard into Evmos using any supported coin, Vivekananthan explained.

In the beginning, Swing will only be able to bridge tokens from mostly non-Cosmos networks into Evmos, he stated, but the team plans to expand its compatibility to allow bridges between different Cosmos networks in the future.

The Cosmos community has been making a concerted effort to attract users with new features in 2023. Cosmos-based chain Noble launched a native version of the USDC stablecoin on March 28, and Cosmos Hub implemented liquid staking on September 13. However, the ecosystem also faces a competitor in the form of the Optimism Superchain, which is attempting to build an interconnected web of blockchains with similar features to Cosmos.

Cosmos Hub upgrades to offer liquid staking

September 13, 2023 Coin Telegraph

Coin Telegraph

The upgrade introduces a liquid staking module, eliminating a 21-day locking period applied for unstaked ATOM tokens.

Cosmos Hub, a blockchain part of the Cosmos Network, has been upgraded to launch a liquid staking module, enabling users to bypass the previous 21-day unbonding period by unstaking ATOM (ATOM) funds.

ATOM is the native token of the Cosmos network. Before the upgrade, ATOM holders had a locking period of 21 days to move their funds after unstaking the token. With the new module, staked ATOM can be used in the Cosmos decentralized finance (DeFi) ecosystem without compromising yields from staking.

The staking process involves users holding their tokens to validate transactions and secure a blockchain network. Participants receive rewards for their contribution, similar to earning interest on a savings account.

The v12 upgrade is successfully completed ⚛️

The Liquid Staking Module is live on the Cosmos Hub!

With LSM the Hub unlocks new dynamics within the ATOM Economic Zone.

Users can now directly liquid-stake their already staked #ATOM without waiting for the unbonding period. pic.twitter.com/IdIyr8nsdL
— Cosmos Hub ⚛️ (@cosmoshub) September 13, 2023

According to pseudonymous Cosmos validator Cryptocitos, the new module will unlock over $400 million worth of ATOM, likely accelerating the staked ATOM presence in protocols running on Cosmos. “The implementation of the liquid staking module means no more need to wait 21 days to unbond and no more choosing between Staking or DeFi,” Cryptocitos wrote on X (formerly Twitter).

The new version also allows holders to cancel unbondings already in place, allowing ATOM to return to regular staking and be used in the liquidity staking module. The upgrade went live at 1:00 pm UTC on Sept. 12 at block height 16985500 under the name Gaia 12.

Another expected impact will be seen in ATOM’s inflation rate, Cryptocitos explained. “Right now, the bonded ratio for ATOM is 67.8%. As long as it’s above 66.67%, the inflation rate is slowly going down to a floor of 7% - currently it’s at 14.26%. The higher the bonded ratio goes, the faster the inflation rate goes down.”

Additionally, ATOM holders will be subject to a 25% cap on the total amount of ATOM they can liquid-stake. Furthermore, Cosmos Hub disclosed steps taken to mitigate liquid staking risks:

“LSM introduces governance-controlled parameters, and as an additional security feature, validators who want to receive delegations from liquid staking providers would be required to self-bond a certain amount of ATOM.”

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Seda co-founders discuss intersection of oracles and multichain

July 28, 2023 Coin Telegraph

Coin Telegraph

Oracles enable value, but they are also susceptible to value manipulation; co-founders of Cosmos-based Seda discuss their benefits and how to prevent pitfalls.

The year 2022 was not a very good year for Cosmos and its vision of inter-blockchain communications (IBC). The collapse of the Terra Luna ecosystem (the biggest protocol on Cosmos at the time), tension between co-founders and a fall in the token’s price all cast a shadow on its future prospects. That said, projects such as dYdX and cross-chain oracle protocol Seda continue to call the network home and are adamant about its IBC vision.

Currently, Seda says it enables over 12 million data feeds across 24 networks. In an interview with Cointelegraph at EthCC Paris, Jasper de Gooijer and Peter Mitchell, co-founders of the Seda protocol (formerly known as Flux), discussed the importance of oracles in cross-chain bridges and how they protect the value they enable.

Cointelegraph: How do oracles add value to IBC?

Jasper de Gooijer: The current problem is that smart contracts can only query data outside of blockchains themselves, right? That greatly limits the amount of use cases that smart contracts have, such as in lending markets. So in those markets, if you want knowledge on price on, say, six chains at once, you need six oracle providers, and that's when you need multichain oracles.

CT: What is the biggest accomplishment or technological breakthrough thus far in the Seda ecosystem?

Peter Mitchell: We launched Seda about a year ago. And within eight weeks, we became the second-largest oracle, securing over $2.7 billion in total value locked. And then we realized that we couldn’t monitor and scale this into something like 200 chains, right? It would be impossible to have robust monitoring of price feeds.

So the innovation we’ve built on Seda is that the main chain aggregates the data and then pushes the smart contracts to the subchain. And so, rather than deploying the oracle contract on every new chain, we just deploy this single smart contract.

CT: In light of recent high-profile oracle exploits, what are some ways of keeping the technology secure?

JG: The main point is really just education. People should know that they should not build a bridge with hundreds of millions of total value locked if the [underlying] token only has like $10 million of liquidity on decentralized exchanges. The second thing is building smart price data modules, so you can swap tokens for something like time-weighted average price, which makes it less likely to slip in volatile environments.

PM: Like Jasper was saying, if you have a token that's being borrowed against $100 million, and you only have, let’s say, $10 million in liquidity on-chain, then you can’t really liquidate $100 million or $50 million positions against that kind of liquidity. So setting up metrics like liquidation thresholds and collateralization ratios beforehand can really set up the protocol for success.

BIG REVEAL

1/ We are thrilled to announce that we have rebranded from Flux Protocol to @sedaprotocol, a new standard for data transmission across web3!

Say goodbye to centralized control over data & hello to a future where data flows freely pic.twitter.com/GYttNGuwuJ
— SEDA (@sedaprotocol) January 16, 2023

This interview has been edited from its original format for clarity.

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Cosmos-based Osmosis launches concentrated liquidity, lets LPs choose price

July 12, 2023 Coin Telegraph

Coin Telegraph

The new feature offers higher fees to LPs who provide liquidity within tighter price ranges but also causes them to not earn fees if the price goes outside of the range.

The Cosmos-based decentralized exchange Osmosis (OSMO) has launched a new “concentrated liquidity” feature, according to a July 12 announcement from the app’s developer, Osmosis Labs. The new feature allows liquidity providers (LPs) to choose a minimum and maximum price to offer to buy or sell crypto.

*Osmosis user interface. Source: Osmosis*

The Cosmos ecosystem is a web of blockchain networks that use the Cosmos software development kit and are connected through the Inter-Blockchain Communication (IBC) protocol. Osmosis is one of the largest decentralized exchanges (DEXs) in the ecosystem, doing approximately $120 million in volume each day, according to data from DefiLlama.

The new feature allows Osmosis LPs to provide liquidity at a minimum and maximum price. If the price falls below their minimum or above their maximum, they will no longer receive fees. On the other hand, they will receive higher fees when the price is within range than they would if they had chosen not to state a maximum or minimum.

According to the announcement, concentrated liquidity will provide a 100x to 300x increase in capital efficiency, meaning that a pool can have significantly less liquidity for the same amount of volume and yet still not cause slippage for traders.

The feature was first introduced to DEXs in Uniswap v3 and has become common throughout the Web3 world. However, the Osmosis team told Cointelegraph that it has been relatively rare in the Cosmos ecosystem before now.

In a conversation with Cointelegraph, Osmosis Labs protocol engineer Alpin Yukseloglu stated that the exchange’s new feature goes further than Uniswap’s original version. The original version of concentrated liquidity only allowed LPs to set minimums and maximums at particular price intervals, called “ticks.” This improved scalability but also created user experience issues when users couldn’t place price points exactly where they wanted them to be.

The version used by Osmosis adds more ticks within each price range, allowing for the setting of more finely tuned minimums and maximums and potentially reducing user frustration, as Yukseloglu explained:

“We’re keeping that scaling, but we’re adding more ticks into each bucket to make it so that you can have those more granularly placed preferences.”

Yukseloglu said Osmosis plans to implement a full-fledged on-chain order book at some point in the future. The feature is “essentially at implementation-level spec right now,” but the team is not yet ready to announce a timeline for its completion. The Osmosis Labs engineer claimed that both concentrated liquidity and the order book are part of a broader Osmosis goal of giving liquidity providers more options.

Crypto futures exchange dYdX is also developing an on-chain order book as part of its move to the Cosmos ecosystem.

In August, Osmosis co-founder Sunny Aggarwal expressed his view that Cosmos IBC is a superior means of securing cross-chain bridges when compared to other options, calling it “the safest bridging protocol in existence.” A critical vulnerability was found in IBC in October, which was patched the following day.

dYdX exchange launches testnet for ‘fully decentralized’ version 4

July 5, 2023 Coin Telegraph

Coin Telegraph

The crypto exchange launched a testnet featuring an on-chain order book and matching engine, doing away with the centralized components found on the mainnet version.

Crypto exchange dYdX has launched a public testnet of its V4 iteration, according to a July 5 announcement from the exchange’s development team. This marks the completion of “milestone 4” out of five, paving the way for a future V4 mainnet launch.

Once implemented on mainnet, V4 is expected to allow for “full decentralization” of the exchange.

v4 Testnet is officially live https://t.co/TD5caN6VSQ

Here are all the links you may need for easy access!

Public Testnet: https://t.co/BZ57SvuXNv
Testnet Status Page: https://t.co/7vkrGZs9fx
v4 Documentation: https://t.co/tKTUWacKld

Feedback and Block Explorer links
— dYdX (@dYdX) July 5, 2023

dYdX is a crypto exchange built on Ethereum and StarkEx networks. Because it does not take custody of users’ funds, it is generally considered to be a decentralized exchange (DEX). However, it does feature a centralized order book and matching engine that allows market makers to place limit orders. This contrasts with automated market-maker DEXs like Uniswap that employ on-chain pricing algorithms to match buyers and sellers.

Version 4 of dYdX will eliminate this centralized order book and matching engine, making the exchange fully decentralized, but without relying on an automated market-maker. According to the protocol’s documentation, it will do this by running parts of the app on a separate dYdX network with its own validators, allowing the order book to be stored on-chain.

According to the announcement, users can request testnet funds to try out the app as of 17:00 UTC on July 5, allowing them to place virtual trades, view profit and loss, and perform other basic functions of the exchange. The ability to test bridging from one network to another has not yet been implemented, but will come “over the course of the public testnet.”

Once the testnet phase is completed, the protocol’s team plans to implement the fifth milestone of the roadmap, which will integrate stablecoins into dYdX and will add support for Cosmos Inter-Blockchain Communication (IBC) so that Cosmos users will have access to the app. V4 is expected to launch after this final milestone is completed.

dYdX announced in April that it would wind down its services in Canada due to regulatory issues. In September 2022, it offered a $25 bonus to new users if they proved they weren’t bots, causing some pushback from privacy advocates. The promotion was later abandoned.