A Journey Through the Cosmos
Dexter has finally found a home for setting up its AMM base in the Interchain — Persistence.
Let’s look at Dexter’s journey through the Cosmos and find out why Dexter believes in the Cosmos vision and what makes Persistence a suitable home for the Interchain DEX for Yield — Generating Assets.
Building in Cosmos
Cosmos is the Internet of Blockchains, a network of application-specific blockchains that can pass assets and messages among each other. If Ethereum is a mainframe computer, Cosmos is a protocol for networking independent servers.
The Cosmos tech stack focuses on the sovereignty of blockchains and interoperability among them, allowing anyone to spin up a blockchain while offering complete customization, making it suitable for application-specific use cases.
L1s like Ethereum face limitations to performance owing to network congestion due to several applications running on a single shared chain. Cosmos avoids this challenge by building an infrastructure for communication between individual application-specific blockchains — IBC.
IBC (Inter-Blockchain Communication) protocol allows individual blockchains in Cosmos to communicate among themselves.IBC is built-in with Cosmos chains, eliminating the use of bridges with inherent risk.
Cosmos scales with independent chains, each with its own set of validators, offering greater scalability than platforms where everything has to be secured by all validators. This also avoids gas fee competition between applications on a single chain, allowing applications to scale efficiently.
Cosmos allows applications to deploy on a range of chains, each serving a specific use case, like Secret Network for privacy and Persistence for liquid-staking.
Liquid-Staking in Cosmos
Cosmos-based chains leverage the Tendermint consensus mechanism, an optimized version of Proof-of-Stake consensus, which requires users to stake their assets with validators to secure the network.
Proof-of-Stake networks aim to maintain a large amount of assets staked across several validators to ensure network security and prevent attacks. This presents users with a dilemma of staking their assets or using them in DeFi.
Liquid staking allows users to mint representative tokens for their staked assets, which can be used in DeFi, while these assets grow in value over time based on an exchange rate.
Liquid Staking zones like Persistence and Stride will unlock liquidity for staked assets in Interchain DeFi.
With over 50 zones and still growing, Cosmos is an ever-expanding ecosystem of PoS blockchains, with a total market cap of around $60B at the time of writing and over $5B worth of assets staked.
The Cosmos ecosystem is a perfect neighborhood for Dexter — AMM focused on liquid-staked assets.
Interchain Security and Liquid Staking
Interchain Security on Cosmos would allow a provider chain (like the Cosmos Hub) to be in charge of producing blocks for a consumer chain by sharing validators. Hence, avoiding the need to set up a set of validators for new chains, lowering the barrier to launching and running public blockchains.
Since all consumer chains will rely on validators on the Cosmos Hub for security, a large amount of ATOM must be staked across validators to prevent attacks.
On the other hand, the rise of DeFi in Cosmos has led to a greater utility for ATOM.
Cosmos Hub should maintain a high staking ratio while preserving liquidity for ATOM for a thriving DeFi ecosystem.
Hence, liquid staking zones will be essential to drive the growth of the Cosmos ecosystem.
Dexter facilitates liquidity for staked ATOM in the Interchain DeFi ecosystem by building an AMM for liquid-staked assets like stkATOM and stATOM, allowing users to swap for instant liquidity.
DeFi in Cosmos
DeFi in the Cosmos ecosystem has seen significant growth. The app-chain model is becoming increasingly popular as projects look forward to sovereignty and customizability while being a part of a thriving ecosystem.
As a result, the utility for ATOM and other Cosmos assets has grown, providing more opportunities to DeFi users.
With the growth of DeFi protocols like money markets in Cosmos, users can mint interest-bearing tokens, which generate yield as the interest accrues on them. Dexter would support these tokens to maximize capital efficiency for users.
The Cosmos DeFi ecosystem is still nascent compared to L1s like Ethereum and Solana and is limited to a few zones. Pioneers in the AMM space, Like Balancer and Uniswap on Ethereum, have gone through multiple iterations of innovation to build gold-standard DeFi applications. The growth of the Cosmos DeFi ecosystem needs more innovation.
Dexter has learned a lot about AMMs on his adventures throughout the DeFi ecosystem and plans to use all of his wisdom to build his AMM base. By supporting multiple types of AMM models on the protocol, Dexter aims to bring the best innovations in AMMs across DeFi to the Interchain and will serve a multitude of users with varying needs.
Persistence — The Liquid Staking Hub
After a long journey across the Interchain, Dexter has finally chosen Persistence as its home for its endeavors. Let’s look into how it chose its new home.
Persistence has been a pioneer in the Cosmos ecosystem, being at the forefront of the liquid staking revolution, an early adopter of IBC, and one of the most active contributors.
The Persistence chain comprises Persistence SDK with modules focused on liquid staking and Interchain modules such as ICA, ICQ powered by IBC, and Cosmwasm, and facilitates the issuance and deployment of liquid-staked stkASSETs while supporting all kinds of liquid-staked assets from other zones.
On top of the Persistence Core-1 chain sits the liquid-staked asset issuance layer powered by protocols such as pSTAKE Finance which allows users to stake their PoS assets (e.g., ATOM, XPRT, OSMO, etc.) and issues liquid-staked representative tokens (e.g., stkATOM, stkXPRT, stkOSMO). Over time the Persistence ecosystem will have liquid-staked assets from multiple protocols such as Stride, Quicksilver, Lido, etc.
Persistence offers a great developer experience and support for CosmWasm contracts. This enables developers to build high-performance applications with easy upgradability.
