After Luna, stablecoins are in full bloom. Is Cosmos going to become a new DeFi garden?

Zhuorui Fu

2022-09-28 17:58

Read this article in 25 Minutes

AI summary

View the summary

Written by: Fu Zhuorui

Cosmos cross-chain ecosystem is now The Polkadot system can be described as the twin peaks of cross-chain, especially in the past 1-2 years, it has developed rapidly. As of October 2021, the Asian Development Bank will distribute management ledger information through Cosmos technology. As of press time, Cosmos has a market capitalization of $4 billion on Coinmarketcap. The recent Cosmos Conference has upgraded Cosmos 2.0, increasing the use of its system currency ATOM in the entire ecosystem. There are many distinctive projects in the Cosmos system, such as Certik, Kava, Osmosis, OKB, etc. Terra in the former Cosmos system once brought it infinite scenery, which can be said to have improved the status of the entire Cosmos in one fell swoop. With Terra crumbling, Cosmos is also trying to find the next star stablecoin project.

Cosmos is open to new members, as long as it conforms to its Tendermint consensus protocol and Cosmos SDK framework projects can be accommodated Enter the Cosmos system, and Cosmos will hand over the user's gas fee to the independent program itself. Cosmos and Polkadot are two cross-chain mountains, and Cosmos has a lower entry threshold than Polkadot. Adding Polkadot, new protocols need to go through parallel chains or threads, but Cosmos does not. Polkadot makes the cross-chain deeper (and more secure), while Cosmos is slightly shallower but more open, but the difference in user experience between the two is not very big.

"Polkadot Ecological Research Institute" believes that the "explosion" of Cosmos in recent years is not because of its high value capture ability, but because Some star projects, such as the knock-on effect brought by the previous Terra. Operations that can be done on Cosmos can also be done on Polkadot, so Cosmos does not have a unique value position.

Although there are many criticisms, Cosmos still has many bright spots, and its inclusiveness has also attracted many remarkable agreements and interesting Potential protocol stable currency.

After Terra, Umee, another stablecoin DAI team, announced in June that it will replace MakerDAO's DAI into the Cosmos ecosystem , although users actually need to use Gravity Bridge, a tool that connects Cosmos and EVM compatible blockchain projects. DAI is a cryptocurrency-backed cryptocurrency stablecoin pegged 1:1 to the U.S. dollar, consisting of USDC, Ethereum, USDP, Wrapped Bitcoin, and a few other cryptocurrencies. The composition of DAI can be seen in real time on the Daistats website. As of press time, DAI is roughly 126% overcollateralized. Regarding DAI to the Cosmos ecosystem, Umee CEO Brent Xu said, "Looking forward, Umee's broader mission includes creating cross-chain stablecoins and adding Cosmos assets to MakerDAO."

Canto: Yield Farming Protocol of Cosmos

In addition to DAI, Canto based on Cosmos SDK is also popular recently , which is also an EVM-compatible L1 public chain. The purpose of Canto is to truly realize the ideal of DeFi, so it is free and aims to support Free Public Infrastructure. The core has three functions: a zero-fee decentralized exchange Canto DEX, a Compound V2 forked lending system Canto Lending Market (CLM), and a "stable currency" that can only be traded with USDC/USDT through a soft peg to the US dollar $NOTE. Since $NOTE has the risk of unanchoring and its price has not been stable since its launch, it is not necessarily a traditional stable currency, but a system currency serving Canto.

Canto does not plan to issue governance tokens. Currently, users who mine Canto can participate in voting for protocol operations. The latest approved The document is the September 19 poll on inflation data. Canto DEX also does not plan to have its own transaction page, all transactions need to go through a third-party aggregator. For liquidity providers, Canto is free. At present, Canto has no investors, funds, etc. to support it. There are active users on Twitter and Discord, but there is no centralized governance.

In September 2022, user "The Farmers Club" published an article about how to use Canto for liquid leverage mining So as to obtain extremely high APR. The specific operation of this user is also similar to the basic Yield Farming operation. First, register Canto, convert Canto native assets into EVM-compatible Canto assets, and become Canto’s liquidity provider (Liquidity Provider, LP). After becoming an LP and starting mining, you will get Canto rewards, and then you can lend these LP Token earnings on the platform with one click, thus starting Yield Farming. The user who posted the article chose farm NOTE/USDT, which according to the article can achieve 600% APR.

About Canto’s liquidity income, the above has been translated by Rhythm: New public chain Canto ecology: high annualized liquidity mining with stable coins

Berachain: A new story of the three-coin structure

In addition, the EVM-compatible L1 protocol Berachain is also a PoL protocol based on the Cosmos SDK. Berachain has an endogenous stablecoin system, but the stablecoin is not a stablecoin or a dual-coin system like Terra, but a three-coin system, including BERA, BGT, and HONEY. BERA is the gas currency of the protocol, BGT is the governance token, and HONEY is the original protocol-mortgage stable currency. After verification, the verifier gets BERA, pledges BERA to get BGT, and the income of BGT is settled in HONEY.

At present, Berachain is highly valued by users. There are many language sub-channels on Discord, and there are many kinds of discussions in it, but the technical discussions are biased few. Some users believe that Berachain will have the potential to become a new star project on the Cosmos chain. Since Berachain has not been officially released, no users have yet used Berachain for Yield Farming. However, from the perspective of the protocol framework, it is quite possible that users can carry out liquid leverage mining through the protocol.

About Berachain, Rhythm also has a detailed analysis: New public chain Berachain: DeFi native L1 with liquidity proof

Agoric: Javascript-based legacy protocol

Agoric is also based on the Cosmos SDK. This proof-of-stake protocol is written in Javascript smart contracts. Since the protocol can be written in Javascript, which is the most widely used in the world, the protocol has attracted many high-quality coders to join, and the protocol aims to become a Cosmos marketplace. According to a tweet from Agoric at press time, the protocol has now served 17 million developers. The CEO of Agoric is Dean Tribble, the chief scientist is Mark S.Miler, and the senior executives have many years of technical background. Its chief operating officer is Michael Jablon, who has many years of experience in strategic development.

The stable currency of the protocol is RUN, which is pegged to the US dollar to support the smart contract on Agoric pay. BLD is the pledge token of the contract and the token of protocol governance. BLD holders can vote for BLD and RUN decisions. BLD holders can lock the pledged BLD and then mint RUN. In order to attract Ethereum developers, Agoric will also actively participate in the construction around Gravity Bridge.

In November 2021, Agoric raised $32 million in a private Token sale to develop its own AMM and stablecoin . On January 21, 2022, Agoric sold over $50 million in BLD through the CoinList platform.

Membrane Finance: Leverage, Leverage, More Leverage

Membrane Finance is a Cosmos-based lending and derivatives platform, and its expertise is to improve the composability of the encryption market and the compatibility between protocols. Membrane Finance also relies on Collateralized Debt Position (CDP), so users can deposit collateral on Membrane Finance through CDP, and mint a platform-generated stable currency Collateral Tokens ($CDT), $CDT It can also be redeposited in exchange for the original collateral. By staking, users can obtain a "line of credit".

Membrane Finance published its first Medium article on June 15th of this year introducing the platform. There are currently two articles on its Medium, one is an introduction, and the other is an in-depth explanation of $CDT published on September 13. Membrane Finance also posted its first Twitter post on June 15th, saying that it is expected to officially open in September this year.

Membrane's mechanism consists of 4 steps: deposit, coinage, repayment, and liquidation. In the deposit step, the user deposits his/her collateral, and can choose to deposit a single asset or a combination of mortgages. In the minting phase, the user can mint the maximum value allowed by his/her collateral, but the more coins the user mints, the greater the risk of liquidation because the value of the treasury loan is higher. When repaying, users deposit $CDT to reduce liquidation risk. If the value of the coin minted by the user exceeds the allowable price of the collateral, the collateral will be liquidated.

As a lending platform, Membrane also supports leveraged yield farming (Leveraged Yield Farming), margin trading, generalized hedging, lending $CDT etc.

Although Membrane wants to achieve decentralization as much as possible, some decisions in the community still need to be voted on, so the protocol also released a governance model Token MBRN. It is estimated that 100 million MBRN will be generated, 70% will be in the ecosystem, and 30% will be given to the Builders Allocation. Initially, the interest rate generated in the DAO will be allocated to a Safety Fund in case of cash shortage. After that, 100% of the interest rate will be distributed by MBRN miners.

$CDT is a USD stablecoin with a floating anchor rate and can be traded on Cosmos’ decentralized exchange Osmosis. Stablecoins follow a float mechanism created by Reflexer Labs called a reflex index. Its core point of view is similar to other (algorithmic) stablecoin logics, that is, when the market price of $CDT is greater than the actual repurchase price, the repurchase rate will decrease to encourage mining, increase the supply of $CDT, and reduce the price of $CDT, and vice versa.

The core highlight of the Membrane protocol is that multiple assets can be pledged into one asset (Asset Bundling), that is, users can pledge different assets , which will be regarded as an asset in Membrane, so the mortgage value will be greater.

Because of the merging of mortgage assets, the total amount of mortgage becomes larger as shown on the right. Image source Membrane Finance

Building a new public chain is risky and requires market testing. At present, Membrane Finance has not yet been officially released. It also recruits talents from readers and users on Medium and Twitter, and encourages everyone to participate in building a community.

Kujira: Multi-chain Whale Universe

Inspired by MakerDAO's DAI and Cosmos' new public chain Kujira also launched the system's stable currency $USK in August this year. Similar to other stablecoins, $USK is also soft-pegged to the U.S. dollar, and its backing currency is Cosmos’ $ATOM. But Kujira said that it will be supported by Kujira's native currency $KUJI in the future. The stablecoin is supported in the Rust language.

Previously, Kujira has released a cross-chain dApp in the ecosystem called Blue, and the page is very clean and concise. Open the efficient Blue URL, users can clearly see an IBC/Bridge in the main menu, and then easily import local IBC assets from other chains, while connecting to the Keplr wallet.

After that, Kujira also launched FIN, a decentralized order book trading platform. Later, ORCA, a liquid mortgage platform, was launched, through which users can obtain mortgaged assets at a discounted price.

Kujira positions itself as a multi-chain decentralized trading platform for the Cosmos ecosystem. Investor "Opa" said that Kujira's potential has just begun, wait and see. The original text of "Opa" is also published in Rhythm: Cosmos Ecological New Public Chain Kujira: Redefine Multi-chain Decentralized Trading Platform

eEUR by e-Money: The Euro Stablecoin

In the traditional financial market, about 45% of global trade is traded in US dollars, but the euro is closely behind, accounting for about 14%, and is the second largest currency. The vast majority of stablecoins in the market are anchored in US dollars, so the stablecoins of the euro have taken a different approach.

As early as 2021, the Danish blockchain payment company e-Money launched on Cosmos’ decentralized exchange Osmosis Euro stablecoin eEUR. The stable currency has passed the European Union's compliance approval, supporting the audit firm Ernst & Young's euro audit to prove its book reserves, and can pay interest at the same time.

In July this year, eMoney announced a partnership with transaction payment company Simplex, so Simplex customers can use credit and debit cards to purchase directly eEUR.

eMoney works closely with Cosmos. On September 23 this year, e-Money CTO Henrik Aasted joined Cosmos' Spotify podcast The Cosmos Club to chat about his views on the development of stablecoins in the Cosmos ecosystem and plans for eEUR. It is worth mentioning that Kujira also participated in the podcast on September 27. It can be seen that Cosmos is actively escorting the stablecoins in the ecosystem and promoting the next star project.