A consortium of decentralized finance (DeFi) protocols has joined forces to address liquidity issues within the Cosmos ecosystem. The collaboration involves Wormhole, a cross-chain bridging protocol, Swing, a liquidity aggregator, Tashi, a lending protocol, and Evmos, a Cosmos network.
These teams have proposed the registration of five new bridged tokens on Evmos: Tether (USDT), USD Coin (USDC), wrapped Ether (wETH), wrapped Bitcoin (wBTC), and Solana (SOL). This proposal has received overwhelming support in the ongoing Wormhole governance vote, which is set to conclude on September 24th. Once approved, these tokens will be integrated into the Swing protocol, enabling users to transfer them to Evmos from any network supported by Swing, including BNB Chain, Polygon, Fantom, and others.
To simplify the process for users, Tashi will incorporate Swing into its user interface, allowing seamless bridging and collateral deposit with a few button clicks. Through this integration, users can utilize the collateralized tokens to obtain loans in either Cosmos-based or Ethereum-based coins. They can also swap the borrowed coins for other assets or deposit them into liquidity pools, among other common DeFi actions.
Representatives from Swing and Tashi have confirmed that the integrations are ready for deployment as soon as the Wormhole proposal is implemented. With the vote ending on September 24th, the newly enhanced liquidity system is expected to go live shortly after.
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According to Lindsay Ironside and Kristine Boulton, co-founders of Tashi, this collaborative effort aims to address a liquidity crisis within the Cosmos ecosystem. They emphasize that despite the ecosystem’s potential, it suffers from underutilization due to the lack of liquidity. Boulton mentions that Wormhole’s presence on multiple chains, currently 29, presents an opportunity to resolve this crisis.
Ironside highlights her own negative user experience when attempting to swap USDC for Cosmos (ATOM) and send it to Evmos, realizing the need for a better system. The process involved bridging USDC to Cosmos Hub, without having sufficient ATOM to cover the gas fee for the swap. This experience motivated Ironside to focus on addressing such issues, particularly for new users who struggle to find solutions.
In alignment with Ironside’s perspective, Swing CEO Viveik Vivekananthan believes that the proposed system can effectively rectify these problems. Swing plans to convert a small portion of the coins sent by users who want to swap USDC for another coin on Evmos into the Evmos native coin. This will cover the gas fee for the swap, enabling users to access Evmos using any supported coin.
Initially, Swing’s bridging capabilities will be limited to mostly non-Cosmos networks, but the team intends to expand its compatibility to facilitate bridges between various Cosmos networks in the future.
The Cosmos community has been actively striving to attract users with new features in 2023. The launch of the native version of the USDC stablecoin on the Cosmos-based chain Noble, and the implementation of liquid staking on Cosmos Hub are examples of these efforts. However, the ecosystem faces competition from the Optimism Superchain, which is building an interconnected web of blockchains with similar features to Cosmos.
In conclusion, a coalition of DeFi protocols, including Wormhole, Swing, Tashi, and Evmos, has collaboratively devised a solution to address liquidity issues within the Cosmos ecosystem. The proposal to register five new bridged tokens on Evmos has received widespread support and awaits implementation. Once live, this enhanced liquidity system will facilitate seamless transfers, borrowing, and other DeFi actions for users across multiple networks.
