Understanding White Whale — A Hidden Gem in the Cosmos
A detailed description of what White Whale aims to solve in the Cosmos ecosystem.
Learning objectives:
Ecosystem Problem-1: Fundamental building blocks are needed for the development new, exciting apps. The Migaloo L1 blockchain needs additional building blocks, and utilities (dex, liquid staked derivatives [LSD], NFT marketplace, money market, etc) to complete the ecosystem and to allow new defi apps to be developed. White Whale has spun up the Migaloo L1 chain in the Cosmos Inter-Block-Chain (IBC) Ecosystem with state-of-the art features (compliant with latest Cosmos SDK, and Alliance staking [Terra]). On Migaloo, White Whale implemented a decentralized exchange (dex), Alliance staking of LSD-$LUNA, LSD-$WHALE, and LSD-$WHALE bonding for additional yield, but additional building blocks and utilities are required.
Solution: White Whale recognizes that it cannot be all things for all people but that win-win partnerships with other developer groups will produce needed additional utilities for Migaloo. This mutually beneficial program is called the Ride Program (#ridethewhale). The White Whale team provides tokenomic advice, technical assistance, promotion support, and even funding for Ride Teams. In return, ride partners agree to: (i) develop on Migaloo, (ii) use the White Whale dex, (iii) implement on chains where White Whale dex has been implemented, and (iv) to provide benefits $WHALE holders. The ride partners may help $WHALE holders by airdrops, purchasing and/or burning $WHALE, providing incentives to Liquidity Provider (LP) pools.
Ecosystem Problem-2: Duplication and rebuilding of the fundamental building blocks for each Cosmos chain wastes resources. Like Migaloo, each chain in the Cosmos Ecosystem must build its own DeFi building blocks: dex, LSD-tokens, NFT marketplace, lending market, and perps, each with their own UX/UI and teams. Creating the building blocks from scratch limits the ability to innovate on chain until the building blocks are in place, and it is expensive to recreate the fundamental building blocks on each chain.
Solution: White Whale has developed the Sail Program (#sailwiththewhale), a DeFi infrastructure-as-a-service program where White Whale and the Ride Teams launch on each new chain that joins the Sail Program (i.e., a satellite chain) to provide basic building blocks and utility. In return, the “New-Sail-Chain” provides benefits to the Ride Team, such as investing in protocol-owned liquidity for LPs in White Whale dex on the New-Sail-Chain.
Ecosystem Problem-3: Expansion of the number of chains solves bottleneck and speed problems but, in turn, creates the following inefficiencies: (i) market (fractured liquidity and price disparities), (ii) capital (idle capital for arbitrages and liquidation), and (iii) market making (capital and knowledge barriers).
Solution: White Whale’s infrastructure decreases the above inefficiencies by providing (i) on-chain flash loans for liquidations and price arbitration, (ii) local liquidity hubs with managed interchain liquidity in the future, and (iii) liquidity as a service.
Vision of the Cosmos Ecosystem
On chain congestion leads to a poor user experience because of the long times to process transactions as well as the increased cost; the cost/transaction increases as on chain congestion increases. One solution for on chain congestion is to have multiple chains functioning in parallel to process transactions. The Cosmos Ecosystem (cosmos.network) is designed to make an architecture of parallel chains easy to implement. The Cosmos SDK (https://tutorials.cosmos.network/academy/0-welcome) is a blockchain framework designed for multiple parallel chains that communicate with each other through the Inter-BlockChain (IBC) protocol. Each Cosmos chain has its own focus or utility.
Problems with the Cosmos Ecosystem
Problem 1: Each chain in Cosmos Ecosystem needs to develop its own set of fundamental building blocks (e.g., a dex, and liquid staked derivatives LSDs of the chain token) likely with independent developer teams. How does a new chain incentivize teams to develop the needed infrastructure on the new chain, ensure that a quality product is built, and that the product is not a ponzi or scam? Grants of the new chain token are often used to incentivize developer teams, but these teams may just dump the new chain token without developing the product (e.g., Wynd dex on Juno Chain). The developer team moves onto the next chain needing the infrastructure and repeats the scam.
A dex and LSD-$New-Chain tokens are fundamental building blocks for each new chain. Each sovereign L1 chain needs a token for governance and fee collection that in turn requires a dex so users can exchange other tokens for the chain token. LSD-$New-Chain tokens are powerful because they have value of the chain token plus the continuing inflation of the chain token (staking rewards). Because the investor does not have to constantly collect these inflation rewards when using LSDs, this is more tax efficient than staking in most tax jurisdictions. In addition, the investor does not waste time and fees collecting the rewards.
New apps (e.g., gaming, lending markets, NFTs) developing on “New-Chain” need the fundamental building blocks for their success and cannot develop without it. In gaming, players need to submit their bets or purchase in-game items for the game to earn funds. In the best scenario for users, players may participate using any coin in their wallet and play without concerns about underlying chains. The game app converts the coin into the GAME token using the on chain dex. Once the game is played, the GAME token is converted back the same coin via the dex and deposited in the player’s wallet.
In lending markets, users could deposit the $New-Chain token. Because the new chain token is not yield-bearing, this is not as capital efficient as using LSD-$New-Chain token. The depositors earn both the staking yield of the token and interest on their deposit. The lending market loans the deposits to borrowers and earns the difference between the lend- and deposit-yields. LSD-tokens are the building blocks of LSD-fi and are seeing increased utility and usage.
Problem 2: Apps that want to go cross-chain and implement on other chains besides the original base chain face expensive technical, financial, and protocol hurdles to make this happen. The technical hurdles include: (i) rewriting contracts for the new secondary chains, (ii) rewriting the code to interface with the secondary chain’s building blocks (dex, LSD-fi), and (iii) moving the token to the secondary chain and creating LPs. The financial hurdles include (i) funding the LPs, (ii) lost developer time in overcoming the technical hurdles rather than developing improvements for the app, and (iii) the opportunity cost of not developing new features for the app. The protocol hurdles include: (i) approval to move to secondary chain if it is permissioned and implement contracts there, (ii) need to create excitement for the app on the secondary chain so investors will use the app, (iii) obtain approvals with thought leaders/influencers on the secondary chains to increase recognition and adoption, and (iv) continually work with secondary network-validators for the approval of proposals needed to improve the app (if on a permissioned secondary chain).
Problem 3: Fractured liquidity is a result of the same LP (e.g., $USDC-$TOKEN on the Terra) being on different dexes (e.g., White Whale dex, Astroport, and Terraswap) on Terra plus dexes on additional chains (Migaloo, Osmosis, Sei, Juno, Injective, Kuji, etc). Each LP on each dex must be funded with sufficient liquidity to accommodate high value swaps with acceptable slippage, which is the problem because the LP liquidity is dispersed amongst the dexes and chains.
White Whale’s Current State in the Cosmos Ecosystem
White Whale has spun up the Migaloo L1 chain in the Cosmos Ecosystem with compliance to the latest Cosmos SDK version (Token Factory) and state-of-the art features developed or being developed by other chains, such as Alliance staking (sharing fee to improve interchain security), and Enterprise (software tools for Dao implementation).
White Whale Dex: White Whale has developed a dex that currently operates satellites on 6 satellite chains (Chihuahua, Injective, Juno, Sei, Terra, and Terra Classic) plus the home chain, Migaloo. White Whale is an automated money market (AMM) dex with additional features (LP incentives, bonding, and Alliance staking). Each LP can be incentivized without any governance vote; a user/protocol/app may offer incentives of their token to the LP defining the number of tokens and period of release. LSD-$WHALE tokens, which earn staking rewards, may be bonded on satellite markets to earn additional yield that is paid daily from the fees generated by White Whale on the satellite market. The bonder is rewarded by a multiplier that increases with the length of bonding with a maximum of 16-fold after 2 years. LSD-$WHALE may be Alliance staked on the Terra chain to earn additional yield paid in $LUNA (currently >20%, which may increase as Terra increases the fee sharing from 0.3% to 3% over 6 months. Conversely, LSD-$LUNA, and LSD-$SWTH (Carbon) may be Alliance staked for yield paid out in $WHALE collected from Migaloo network fees. Compliance with Token Factory facilitates the creation of new tokens on Migaloo, and these tokens can be transferred to other Token Factory compliant chains. The White Whale Dex also implemented on-chain flash loans (i.e., loans made and paid back in a single block) for on-chain arbitrage and liquidations, decreasing the need for idle capital to implement arbitration and liquidations.
White Whale Ride Program. The White Whale team believes in creating collaborations that are win-win situations for both the collaborator and White Whale. In this spirit, White Whale created the Ride Program (#ridethewhale) for app and protocols to develop on Migaloo. The White Whale team provides support to ride participants to make them as productive as possible. This support includes:
*technical help to build on a state-of-the art, permission L1 in the Cosmos ecosystem;
*cross-chain assistance: cross-chain vision is included in the Ride Teams’ development and planning;
*collaboration/interconnection: Ride Team members share resources (devs with critical experience), knowledge, and their plans so all Ride Teams are successful, develop new inter-team interactions, and contribute to improving the Ride Team’s collective performance;
* tokenomics (e.g., limit pitfalls of poor tokenomics design that have plagued Cosmos tokens) and token listing (token factory on Migaloo);
* public relations and community expansion (White Whale spaces, influencer spaces, YouTube and other video channels, and X/Twitter); and
* funding of initial development on Migaloo (Funded: Backbone Labs, Eris Protocol, and Racoon/Shark; Pending: Ginkou Labs, and SparkIBC)
A summary of the current Ride Teams on Migaloo are provided below:
* Eris Protocol has built on Migaloo: $ampWHALE: a LSD of $WHALE; $arbWHALE: where an arbitration bot autocompounds yield in $WHALE by arbitraging $WHALE price differences across different chains and dexes; $ampWhalet: where rewards from Alliance-staking of $ampWhale on Terra are collected and autocompounded in $ampWhalet:; and $vampWHALE, to control governance decisions of Eris Protocol, such as delegations of $WHALE within $ampWHALE to validators (see docs.erisprotocol.com/products). As mentioned previously, the amp products are tax-efficient because the income is autocompounded in the token and distributed as a capital gain upon sale. The purchaser saves time and fees by not having to purchase rewards and is rewarded with automatic compounding, amplifying their rewards.
*Backbone Laboratories has build $boneWHALE, a LSD of $WHALE (Gravedigger) analogous to Eris Protocol, NFT marketplace (Necropolis), and a NFT launchpad (Necromancer for Migaloo Whales).
*Racoon is a cross-chain gaming platform that uses the White Whale dex to process transactions, thereby allowing users to play games using any token supported by the White Whale dex. The Racoon Team is also building the Shark Protocol, which is a novel prediction market that is currently in beta testing.
*Ginkou is a state-of-the-art money market that improves the Anchor Protocol that was popular on Terra Classic before the $LUNA crash.
*SparkIBC is a funding platform that is migrating to Migaloo. SparkIBC is building a venture capital funding platform based on the Pylon Protocol from Terra Classic.
*Redacted. Additional teams are developing with the White Whale’s team support in stealth-mode and others are in negotiation to join. The key factors for joining are to: (i) create a win-win situation where both teams benefit, and (ii) develop new approaches or important improvements upon existing apps and protocols.
In return for the White Whale support, the Ride Teams agree to benefit the White Whale community. This benefit is not one size fits all and is tailored to the circumstances. One obvious benefit of Ride Teams to White Whale are the additional building blocks, and/or utilities that Ride Teams bring to the Migaloo chain. The Ride Teams also provide return to White Whale community by: (i) providing airdrops of their tokens to $WHALE stakers (Eris, Backbone, and SparkIBC), (ii) repurchasing and/or burning $WHALE (Eris Protocol, Racoon), and (iii) providing incentives to LPs (Backbone Labs, Racoon).
The technical hurdles for the Ride Team as a group to move cross chain in the Cosmos Ecosystem are now lower because the in-place CosmWasm contracts and code should function on other Cosmos chains. The Ride Team’s building blocks and utilities are implemented on Migaloo, programmed to interact, and conform to Cosmos standards. The Ride Team apps calls to each other (e.g., the White Whale dex) remain unchanged, so the apps are easily moved to the subsequent chain. In fact, the app may become chain agnostic by reading the user’s wallet and then make conversions in the background using White Whale dex on satellite chains. For example, Racoon may convert the $LUNA in a user’s wallet on Terra chain to $WHALE, move the $WHALE to Migaloo and convert to $RAC to use for gaming. Cashing out reverses the procedure provides $LUNA back to user’s wallet. As White Whale develops more LPs and more chains, then the process may occur on a single satellite chain. Note, the gamer is not aware of the chains being used, just the tokens used to convert to the gaming token RAC. The gamer can play with any token in their wallet that is has an LP on a White Whale dex.
White Whale Sail Program. In the same spirit as the Ride Program, the White Whale team has created the Sail Program (#sailwithwhale) to create win-win situations between block chains and White Whale. As described above, the Ride Team has built important building blocks and utilities for the Migaloo chain and are continuing development and maintenance of these building blocks as well as developing new ones. By joining the Sail Program, the new Sail-Chain benefits by:
*improved infrastructure and utility: receiving the building blocks and utilities (see above) of Ride Team members with swift and guaranteed deployments.
* technical help to implement a state-of-the art, permission L1 in the Cosmos ecosystem with additional features, such as Alliance staking and Enterprise Dao developed by Terra. The White Whale team guided Sail team member HuaHua in updating their L1 to latest Cosmos SDK, and to implement alliance staking.
*collaboration: on-Sail-Team-chain developers are encouraged to collaborate with Ride Team members share resources (devs with critical experience), knowledge, and their plans so all team members are successful.
*tokenomics (e.g., limit pitfalls of poor tokenomics design that have plagued Cosmos tokens) and token listing (token factory on Migaloo); and
* public relations and community expansion (White Whale spaces, influencer spaces, YouTube and other video channels, and X/Twitter).
In return for the White Whale support, the Sail Chain agrees to benefit the White Whale community. This benefit is not one size fits all and is tailored to the circumstances. Support could include: (i) grants to Ride Team members, (ii) invest Sail-Chain-owned liquidity in LPs on Sail Chain (not Migaloo) for LSD-$Sail-Chain: $Sail-Chain LPs; (iii) provide liquidity incentives for Sail-Chain selected LPs on White Whale dex on Sail-Chain; (iv) joint marketing efforts; and (v) enhance utility of Ride Team’s token by using this token in an app (e.g.; list $ampSailToken and $ampWHALE in on new Sail-Chain lending markets).
White Whale Distributed Liquidity. White Whale’s approach will be to link LPs on the different chains and automatically route the swap and/or liquidity to where it is needed. In its final iteration, the user will submit the swap to White Whale dex and the dex will manage the swap using the available liquidity across all chains to achieve the best swap for the user.
How White Whale Helps Solve Problems in the Cosmos Ecosystem
Problem 1: Development of sets of fundamental building blocks (e.g., a dex, and liquid staked derivatives LSDs of the chain token) for each chain. The Ride Team have developed the key building blocks and new utilities that are Cosmos Ecosystem compliant, which therefore may be easily migrated to new chains. This migration of audited, tested (running on Migaloo) building blocks and utilities ensures guaranteed, timely delivery of these building blocks. Funding of mercenary development teams with the inherent risks of scams is not needed. New on-chain developers can create new innovative products on the foundation of Ride Team building blocks instead of reinventing the building blocks.
Problem 2: Development of cross-chain apps. The Sail Chains will have implemented a uniform set of building blocks and utilities across multiple chains. New cross-chain apps will access these building blocks in chain-agnostic manner for the user and implement their function depending on the user and tokens in their wallet (see Racoon gaming example above).
Problem 3: Fractured liquidity. White Whale will integrate their dexes on each satellite chain so that liquidity is moved to where it is needed or the swap is fragmented and occurs in the most efficient manner over multiple chains.
White Whale with its Ride and Sail Programs are helping to build a new cross-chain future in the Cosmos Ecosystem and beyond. White Whale has created a flywheel for success: the state-of-the-art, permissionless L1 chain Migaloo provides base layer functionality and the White Whale team has competently maintained and upgraded Migaloo. The Ride Team members recognize the utility of Migaloo and build-out the infrastructure, which in turn attracts additional developers to Migaloo. The suite of building blocks and utilities built by Ride Team members are inter operable, Cosmos SDK compliant and therefore are migrated to new chains that join the Sail Program. Success on Sail Chains increases the usage of Ride Team applications on Sail Chains and their fees, consequently increasing the value of both Sail Chain and Ride Team tokens. Finally, new cross-chain apps and protocols may be developed to abstract away the underlying chains for the users, which will make crypto useful for normal users.
Definition of Terms.
Dex: decentralized exchange.
LSD: liquid staking derivative.
