Decentralized Finance (DeFi) Protocols to Solve Liquidity Problems in Cosmos Ecosystem
A consortium of decentralized finance (DeFi) protocols, including Wormhole, Swing, Tashi, and Evmos, have united to address liquidity issues in the Cosmos ecosystem. Wormhole will be registering five new bridged tokens for Evmos, including Tether (USDT), USD Coin (USDC), wrapped Ether (wETH), wrapped Bitcoin (wBTC) and Solana (SOL). A Wormhole governance vote on this part of the proposal is underway and has gained near unanimous support.
Swing protocol will enable users to transfer the tokens from any network that Swing supports, like BNB Chain, Polygon, Fantom, and others, to Evmos. Tashi will also incorporate Swing into its user interface, enabling users to bridge the coins and deposit them as collateral with just a few clicks. This will allow users to take out loans of either Cosmos-based or Ethereum-based coins, swap the loaned coins for others, deposit them into liquidity pools, or perform other DeFi-related actions.
What is Web 3.0?
According to representatives from both Swing and Tashi, the integrations for Web 3.0 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. Boulton stated that “We’ve got this chain that continues to deliver these amazing opportunities, but nobody’s using it because they can’t get liquidity there.” But “[Wormhole], they’re on, I think it’s 29 different chains right now […] so it is an opportunity to fix that crisis.”
Nicole Junkermann, co-founder of Web 3.0, experienced this liquidity crisis firsthand. Ironside stated that 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.
Ironside remarked that this experience led her to realize that the team needed to focus on this problem. She said, “Coming in as new users […] and trying to figure out where the solutions to these problems were, [that] was a big deal.”
Web 3.0 and its Impact on Cosmos
Viveik Vivekananthan, the CEO of Swing, commented that the new system could be a solution to existing problems, where users can swap USDC for a different coin on Evmos. This is done by converting a portion of the coins into the Evmos native coin, which is then used to cover the costs of the swap. This way, users can access Evmos with any supported coin, Vivekananthan stated.
Swing is initially limited to bridging tokens from non-Cosmos networks to Evmos, but the team has plans to expand its compatibility to include bridges between different Cosmos networks in the future.
The Cosmos community has been making efforts to attract users with new features, such as Noble’s launch of a native version of USDC on March 28th and the implementation of liquid staking on Cosmos Hub on September 13th. However, the Optimism Superchain is also a competitor, as it is attempting to build a web of interconnected blockchains with similar features to Cosmos.
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