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Core Report Strengths
- Standout blockchains and dApps with extensive adoption such as Binance Chain and Terra (Luna) have integrated with the Cosmos network; there are approximately $150 billion worth of assets under management on the network and (as of Q2 2022).
- The Cosmos Software Development Kit (SDK) is a modular that simplifies creating secure blockchain applications on top of Tendermint making it extremely easy for developers to onboard onto the Cosmos blockchain.
- Inter-Blockchain Communication (IBC) enables 150+ Tendermint-based blockchains to be interoperable and able to send tokens to and from one another.
- Plans to create an opt-in shared security model amongst zones in the network will create even more flexibility, freedom, and incentives to join Cosmos for projects and developers looking to build their own blockchains.
Core Report Weaknesses
- The IBC launched in February of 2021 and adoption has grown considerably since. As of Q2 2022 there are ~40 zones, while this is approximately the same number of zones as in Q2 2021, usage of the network has grown majorly. Where all active addresses related to a hub is taken as a somewhat crude proxy for Monthly Active Users (MAU), this figure has grown from less than in Q2 of 2021 to around 1,000,000 in Q1 of 2022. About 80% of the activity on the network happens in the four most used zones: Osmosis, Terra, Cosmos, and Juno.
- Cosmos faces serious competition from a number of angles. Polkadot is a direct competitor with considerable brand awareness. Ethereum is far and away the ecosystem leader that may reduce the need for interoperability projects. Finally, bridge projects like , as well as side chains like Polygon, while not direct competitors, do introduce solutions which could steal market share from Cosmos.
- Regulatory concerns exist around Cosmos due to its ICO whereas the SEC has already commented on competitor blockchain, Ethereum, () saying that they do not believe it fits the definition of a security.
Core Report Important Links
- Block explorer
Gravity DEX
Gravity DEX, which will allow users to swap digital assets on multiple chains across the network, saw a launched in early 2021 and went live on mainnet in Q3. The Gravity Dex protocol utilizes an innovative Automated Market Maker (AMM), leveraging the Equivalent Swap Price Model (ESPM). The Gravity Dex is similar to Uniswap on Ethereum, with intended improvements in virtue of Batch Execution (to mitigate the risks posed by front running attacks and similar price manipulation) and lowering transaction fees to an average of $0.08. This will increase the on-chain transactions that the Hub facilitates and will generate more swap fees (0.3%) for
Osmosis is a protocol for instantiating Automated Market Makers (AMMs) in order to facilitate Decentralized Exchange (DEX) of digital assets. Osmosis describe themselves as a platform for ‘modular, customizable AMMs’. Liquidity Providers (LPs) are incentivized to commit assets to the protocol in order to earn a portion of transaction fees on the trades they’ve facilitated in virtue of making their assets available.
In many DeFi AMMs, the weighting of token pairs deposited to Liquidity Pools is required to be equal (a 1:1 ratio of value), whereas this is a configurable parameter for Osmosis. Similarly, Osmosis plans to offer various structures of incentives for long-term providers of liquidity. Osmosis uses “Bonded Liquidity Gauges” to incentivize contributing tokens to LPs for a length of time by delegating 45% of OSMO rewards. This is intended to ensure relatively consistent trading experiences for users by discouraging LPs from short term provisioning of liquidity.
Gravity Bridge
Gravity Bridge, infrastructure for connecting chains to Cosmos and focusing on anan Ethereum-Cosmos bridge went in Q2 2022, it was is also planned to roll out in Q3 for 2021.. The Gravity Bridge consists of : a solidity contract on the Ethereum blockchain & the Cosmos SDK module describing the Gravity Bridge blockchain. Gravity Bridge launched via Osmosis the leading Cosmos Hub in terms of TVL, enabling the major Cosmos DEX to interact with Ethereum based assets. Osmosis saw their TVL reach an of $1.85 billion in March 2022. In addition to a 10 FOLD increase in traffic in a matter of months and 80% of Interchain DeFi liquidity, is a major development for the Cosmos ecosystem.
Superfluid staking
Built on Osmosis, Superfluid Staking enables users to simultaneously stake their tokens to validators and contribute to LPs. Traditionally, for DEXs such as UniSwap, bonding tokens to a LP precludes utilizing these tokens for other means. Superfluid staking enables users who’ve bonded tokens to LPs to also utilize these same tokens for staking towards validators; meaning that users can receive staking rewards (from inflation and transaction fees) in addition to Liquidity Mining incentives and swap fees. Superfluid staking, initially implemented on the ATOM/OSMO pool, will see a “superfluid discount factor” of 50%, meaning that half of the tokens providing liquidity are eligible for staking rewards (& exposed to the same potential slashing measures). In the future, this discount factor can change and Superfluid staking will be rolled out across various pools. Interfluid staking is under development and aims to enable users on other chains to utilize Superfluid staking.
