How Milkomeda C1 is Strengthening the Cardano Ecosystem
For those unfamiliar, Milkomeda C1 is a protocol that brings EVM capabilities to Cardano. In the last few weeks since launch, Milkomeda has already brought on a lot of excitement with numerous dApps released, tens of thousands of wallets created, an accelerator program launched, and more exciting things to come! Learn more about all of this in our previous article about the Milkomeda Launch.
In this post, we will take a look at how Milkomeda C1 is strengthening Cardano thanks to all of the new capabilities the ecosystem now includes.
Benefits the Cardano Ecosystem has Today
Though users may have experienced various parts of the Milkomeda ecosystem themselves, chances are, with so much going on, you are likely to have missed at least a couple of use cases Milkomeda has enabled:
- Milkomeda C1 enables USDC/USDT/WBTC/WETH and other high-value assets to be bridged over from Ethereum to Cardano. This allow users to seamlessly convert funds by the use of stable coins in a low-cost environment.
- Users from other crypto ecosystems can finally move onto Cardano without going through centralized exchanges thanks to bridges connected to Milkomeda C1, thereby improving decentralization and increasing adoption. By eliminating the dependency on centralized exchanges, users now have access to multiple Cardano DEXs, including OccamX, Blueshift, MilkySwap, and MuesliSwap.
- dApp development teams from other ecosystems can take advantage of Milkomeda C1 to launch in Cardano without having to rewrite any of their code. Essentially, any dApp written in Solidity can run in Cardano, via Milkomeda, with ease–a win-win for both developers and users.
- dApp developers can take advantage of mature tooling that allows them to deploy their dApps faster.
- The pool of EVM developers is significantly larger, thereby allowing Cardano-first companies to have a much easier time finding talent who will build the use cases we are all eagerly anticipating. With the addition of Solidity, developers are now able to join the ecosystem, making potential projects much closer to being realized.
- The best security-audited and formally verified smart contracts in the crypto space are all currently EVM and can be brought over and deployed on C1, providing users with greater security guarantees.
- Milkomeda C1 allows users to use their hardware wallets with smart contracts/dApps, thereby improving the security of their personal keys/funds. This merging of smart wallet functionality with hardware wallet security sets a new standard for confidence and compatibility in the crypto world.
- Allows Cardano Native Tokens and dApps to gain access to new liquidity markets. This creates more possibilities for both investors and Cardano dApps.
- Oracles can ship in the Cardano ecosystem without having to wait for upcoming hard-forks to address existing Plutus design limitations. By bringing the power of API3’s dAPIs to Cardano, on-chain environments can now utilize real-world data.
- Users can now make use of DeFi dApps which allow them to go long/short any assets bridged over from the Ethereum ecosystem without centralized exchanges. By utilizing the bridges (Nomad, Celer, Connext, Multichain) working with Milkomeda, users can take advantage of their assets, formally outside Cardano, without risking privacy or incurring the inflated cost associated with migrating funds.
Long-Term Potential
Not only is Milkomeda C1 making a large impact on Cardano right now, but in fact, the doors have been opened wide for many novel use cases to take advantage of over the long term. Below, we will go over just a few of the potential ideas which can be built by leveraging all of the benefits of both Cardano and Milkomeda C1 together.
Bringing Zero-Knowledge Protocols to Cardano for Free
Once Cardano implements many of the upcoming scaling features, Milkomeda C1 will begin transitioning to a rollup. This will unify the security assumptions of Milkomeda C1 itself with the Cardano chain and bring a lot of new potential as well.
Chiefly, Cardano will instantly have access to the latest and best Zero Knowledge technology (which is predominantly built for the EVM) natively within the Milkomeda C1 rollup. This means that rather than starting from scratch and implementing a lot of very complex math and challenging tooling, users will be able to benefit from the privacy, scaling, and cost benefits that ZK tech is already starting to provide in other ecosystems. In fact, we have a Catalyst proposal for exactly this that you can find here.
Hydra Quick Transfers
Once Hydra has a robust implementation live on Cardano, it will be possible to integrate it with Milkomeda C1 for quick transfers. Users would be able to find a liquidity provider who is offering to perform quick transfers for a native asset that the user owns, and within mere seconds of sending the assets over the Hydra channel, the user can find themselves with their native asset or ADA on Milkomeda C1 (or vice versa).
Staked ADA DeFi
In the future, users will be able to use Milkomeda C1 while having their ADA automatically staked for them. The rewards will be accrued and available for the user to realize upon withdrawal. This will allow users to take full advantage of all of the latest and greatest DeFi on Milkomeda C1, potentially multiplying their APY potential by leveraging both native Cardano staking rewards and Milkomeda C1’s growing set of dApps.
In other words, users get all the benefits of their ADA, helping secure the Cardano chain yet with the opportunity to leverage Milkomeda C1, thereby drastically improving the Cardano DeFi experience and offering a truly competitive landscape.
C1 Lego DeFi
With Staked ADA DeFi, this will also open the door for “Lego DeFi” to be available in the ecosystem. In other words, users will be able to stack the dApps from Cardano and Milkomeda C1 one on top of another. As an example of what may be possible in the future, users would be able to move their Cardano Staked ADA onto Milkomeda C1, generate a CDP (Collateralized Debt Position) which mints a stablecoin that they can bring back to Cardano mainchain, to then use to provide liquidity into a DEX like Wingriders or Minswap. They can then move the resulting pool token back to C1 to lend it out to borrowers.
To make it simple, such “Lego DeFi” between Cardano mainnet and Milkomeda C1 would allow a person to:
- Gain returns from their staked ADA while using it in DeFi thanks to Milkomeda C1.
- Profit from the CDP on Milkomeda C1 if the price of ADA increases.
- Earn trading fees on the Cardano mainchain DEX to which they provide liquidity.
- Receive returns from lending the DEX pool token on Milkomeda C1.
As such, the user can stack the different dApps like lego and thereby have completely novel portfolios that would have never been possible before. Whether the user is very bullish on ADA and wants to maximize rewards from four different protocols, or they want to take positions that leverage their ADA or other native assets conservatively with more distributed risk, these will all be possible thanks to Milkomeda C1 being tightly integrated with Cardano mainchain.
Conclusion
As can be seen from all of the points touched upon above, Milkomeda C1 has laid down the groundwork for a new phase of innovation in the Cardano ecosystem. Right now, we are already seeing millions of dollars of assets being moved from Ethereum through Milkomeda C1, multiple new developer teams deploying their first dApps in the Cardano ecosystem, and a lot of excitement from users eager to use smart contracts with their favorite hardware wallets.
In the near term, we expect all of these factors to compound further, with a focus on further developer teams (from other ecosystems) starting to see just how easy it is now to deploy their dApps. This will aid in bringing more and more use cases for ADA and Cardano Native Tokens, thereby bringing more value to all holders.
In the long term, the amount of unrealized research and technology before us is truly a thrilling sight to witness. Understanding just how much is possible helps mark the fact that Milkomeda C1 is here to stay and provide real lasting value for the ecosystem that wouldn’t have been possible otherwise.
It has been great to see the community’s excitement while enjoying using Milkomeda C1 during these first weeks of release. We look forward to watching the ecosystem grow, step by step, towards truly novel innovations.
