Cosmos Ecosystem, the DeFi Trends and Comdex
The Rise of DeFi
Over the recent years the growth of DeFi products have seemed to have taken the world by storm.
As of 2020, decentralised finance (DeFi) had gained traction and by September 2020 it had grown to a $7 billion market.
Fast forward to now reports have shown that the total value locked (TVL) which is a measure of DeFi transaction volume has quadrupled in figures amounting to about $112.07 billion. This actually shows the increase in use of DeFi products.
The Cosmos Ecosystem and its sustainable DeFi Economy
The Cosmos ecosystem has grown exponentially in the last year. A variety of new protocols and chains have emerged, increasing its versatility considerably. However, genuine DeFi instruments for mainstream users are few and far between.
Over the years, the Cosmos ecosystem has seen tremendous growth, due to its strong community of buidlers. However, the ecosystem as a whole is yet to see the emergence of a flourishing DeFi economy within it.
Before we delve any further we would want to first establish that cryptocurrency Markets though it is in its infancy stage does work like any other market, and by this the crypto market will be subject to seasonal tendencies which in most cases appears to be mysterious.
There are infinite factors, data and information manifested in a single price and its movement. Investors ranging from the professional analyst to retail investors seek to recognize investment ideas which is why the Cosmos ecosystem seeks to go beyond the speculative nature of the crypto currency market to offer its Cosmos blockchain and DeFi solutions to attract long-term investors and not just speculative investors.
The DeFi Summer Frenzy
The summer of 2020, and due to the rise of Decentralised finance a term was coined, which was, “DeFi Summer.’’ It saw large amounts of crypto capital locked into various newly emerged DeFi protocols built to generate yield on crypto assets. In large part, the adoption of DeFi is driven by individuals who no longer see crypto merely as speculative trading assets but as assets of long-term value, and in-turn, seek liquidity and passive yield/income on holding these assets.
However, DeFi protocols shouldn't just be built for speculative reasons by attracting speculative investors through offering attractive yield-farming.
In this regard, for DeFi to meet with the increasing demand for good decentralised finance systems, its products must evolve and for this significant evolutionary steps to take place:
- Protocols must be built to create sustainable revenue while rewarding adopters sufficiently.
- Adopters must learn to identify sustainable yield-generating DeFi protocols driven by adoption-generated revenue.
This is the reason Comdex’s goal is focused on creating an ecosystem of DeFi products that help bring sustainable and not speculative yields to the multi-chain.
Challenges Facing DeFi Protocols
The problems and risks associated with DeFi projects in general are usually related to the technology they are built upon; which is the blockchains themselves.
These problems can be narrowed down to:
- Problems associated with Scalability
- Problems associated with Uncertainty
Cosmos Ecosystem: DeFi in Cosmos
Despite its tremendous growth, Cosmos’ lack of a flourishing DeFi ecosystem can be pinned down to two significant factors:
- DeFi products are often complex and require a high degree of development effort, especially when deploying the Cosmos SDK.
- Large DeFi ecosystems grow on the back of robust stablecoins that allow investors to move capital seamlessly.
Reliability of the Cosmos SDK
The Cosmos ecosystem has been able to combat problems associated with Uncertainty in its Cosmos SDK design.
A proof of this is seen in its ongoing stability and growth in the Cosmos ecosystem which also shows a growing faith in the technological prowess of the Cosmos SDK.
We wouldn't quickly forget the recent collapse of the $UST stablecoin and $LUNA which has further demonstrated the robustness of the Cosmos blockchain.
The Cosmos blockchain has been able to successfully handle such a large volume of transactions without any interruptions in the chain.
Scalability of the Cosmos blockchain
The deployment of DeFi applications (DApp) on the Cosmos blockchain is easy and to make deployment of DeFi applications easier, Comdex has built out a modular blockchain, focussing on the core DeFi primitives that form the backbone of all financial structures in DeFi as well as CeFi.
In the Cosmos Ecosystem: The Comdex Modular Chain and its Merits
Creating liquidity for collateralized assets in the secondary markets has made comdex stand out in the Cosmos ecosystem.
The narratives below create a mental picture of how a large part of the liquidity is generated in finance (be it DeFi or CeFi).
Liquidity generated in DeFi or CeFi comes from debt caused by collateral assets of value. Often, these collateral assets can come in physical assets like land, real estate, gold, or commodities. Such assets often lack liquidity and mobility to be used transactionally. Therefore, there is a need for financial systems to tokenize these assets into recognizable digital/paper assets of value. These systems are further strengthened by creating liquidity for these collateral assets in secondary exchange markets.
Inspired by the core primitives of finance explained above, Comdex has built a modular chain allowing the creation of apps based on smart contracts to:
- Tokenize assets on the chain
- Collateralise on-chain assets
- Generate debt against on-chain collaterals
- Facilitate lending against on-chain collaterals
- Facilitate the exchange of on-chain assets
While Comdex aims to create a flourishing DeFi economy for Cosmos, the focus remains on bringing dApps that generate sustainable and attractive investor yields.
This will continually be achieved by bringing DeFi to Cosmos. Ultimately bridging DeFi and CeFi can only be achieved through the coordinated efforts of builders, building DeFi applications for the multi-chain. As Comdex’s ecosystem of DeFi solutions grows, there is tremendous potential for builders to contribute with solutions that work interoperably into the existing ecosystem of Comdex’s solutions to add synergistic value.
How about the comdex community
Comdex also seeks to increase the involvement of the community and builders as critical stakeholders to improve the protocol on an ongoing basis.
Comdex develops possible solutions for the decentralization of finance (DeFi) and the democratization of commodities by handing investors the knowledge of a widened scope of asset classes with rewarding features.