A consortium of decentralized finance (DeFi) protocols has joined forces to address liquidity challenges within the Cosmos blockchain ecosystem. The collaborative effort includes cross-chain bridging protocol Wormhole, liquidity aggregator Swing, lending platform Tashi, and Cosmos network Evmos.
As per statements from the participating teams, Wormhole is set to introduce five new bridged tokens on Evmos: Tether (USDT), USD Coin (USDC), wrapped Ether (wETH), wrapped Bitcoin (wBTC), and Solana (SOL). A Wormhole governance vote regarding this proposal commenced on September 19 and currently enjoys near-unanimous support.
Once these tokens are deployed on Evmos, they will be seamlessly 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.
Tashi will also incorporate Swing into its user interface, streamlining the process of bridging and collateralizing these coins. Users will have the opportunity to utilize their collateral to secure loans in either Cosmos-based or Ethereum-based tokens, swap the borrowed assets for others, contribute to liquidity pools, and engage in other common DeFi activities.
Representatives from Swing and Tashi have confirmed that the integrations are prepared for deployment and await the approval and implementation of the Wormhole proposal. The voting on this proposal is scheduled to conclude on September 24, indicating that the new liquidity solution should become operational shortly thereafter.
In a conversation with MegalorPreneur Mazagine, Tashi co-founders Lindsay Ironside and Kristine Boulton emphasized the necessity of this new system to address a “liquidity crisis” within the Cosmos ecosystem. Boulton stated, “We have this blockchain that continues to offer fantastic opportunities, but it remains underutilized due to liquidity constraints.” She further noted that Wormhole is currently integrated with 29 different blockchains, offering an opportunity to alleviate this crisis.
Ironside explained that her motivation to develop this system stemmed from her initial user experience within the Cosmos ecosystem. During her first attempt to exchange USDC for Cosmos (ATOM) and transfer it to Evmos, she encountered difficulties. To obtain ATOM, she had to bridge her USDC to Cosmos Hub, but once the USDC was on the network, she lacked ATOM to cover the gas fee for the swap. This experience highlighted the need to address liquidity issues comprehensively.
Swing CEO Viveik Vivekananthan shared the belief that the new system has the potential to resolve these challenges. When a user desires to exchange USDC for another coin on Evmos, Swing will convert a portion of the sent coins into the Evmos native coin, which will be used to pay the gas fee for the swap. This mechanism will enable users to onboard onto Evmos using any supported coin.
Initially, Swing will primarily facilitate token bridges from non-Cosmos networks to Evmos, but the team has plans to expand compatibility to enable bridging between different Cosmos networks in the future.
In 2023, the Cosmos community has been actively working to attract users with new features, including the launch of a native version of the USDC stablecoin by Cosmos-based chain Noble on March 28, and the implementation of liquid staking on Cosmos Hub on September 13. However, the ecosystem faces competition from the Optimism Superchain, which aims to build an interconnected network of blockchains with features similar to Cosmos.