At the heart of the Cosmos ecosystem is the Cosmos Hub and its native token ATOM. Today the Inter-Blockchain Communication (IBC) protocol, enabling the transfer of digital assets & messages b/w Cosmos chains & more, lifts the Cosmos Hub to new levels of scalability and utility.
The key developments that are bringing the cross chain and DeFi future to the Cosmos Hub are Liquidity Protocols, Staking Derivatives, Interchain Staking and Accounts, and NFTs.
Liquidity pools are the core point behind the current DeFi ecosystems. They are very important in the process of Automated Market Making. They are very important in borrow-lend protocols, yield farming, synthetic assets, on-chain insurance, blockchain gaming and the list goes on. In simple terms, a liquidity pool is basically funds thrown together in a big digital pile.
Staking is active participation in the transaction validation process which is similar to mining on a proof-of-stake (PoS) blockchain. Anyone who has got the minimum-required balance of a specific cryptocurrency will be able to validate transactions to further staking rewards. Staking is worth it when it is done correctly.
For clarity, staking derivative is alien token, which represents proof of holding the token and earning interest at a specified date in the future.
Staking derivatives refers to the products linked to the amount of staking rewards distributed by the protocol to network validators or participants. Staking derivatives are issued by electronic Dapps or a smart contract. Staking derivatives provide additional functionality to the staked coins.
Interchain Staking and Accounts is a method of securing interoperability between protocols. Interchain Staking makes it possible for staked $ATOM to secure more than just COSMOS.
Interchain accounts permit an IBC-connected foreign blockchain to send a transaction through the local account of the local blockchain. Stake accounts are created and managed differently than a traditional wallet address.
Those who are trying to understand DeFi on Cosmos should understand: Gravity DEX protocol Gravity Bridge and also Starport.
For clarity, Blockchain developers are in demand and global spending on blockchain tech is expected to grow from $1.5bn in 2018 to $15.9bn by 2023. Now is an excellent time for all developers to discover Starport, the easiest way to build your blockchain.
The key difference between building a blockchain with Starport and creating a smart contract on Ethereum is that, with Starport, you’re building an entirely autonomous application-specific blockchain that lets you be the layer one protocol.
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