Harbor Protocol: What it is, and its Role in Securing $CMST Stablecoin.
Comdex, the DeFi infrastructure layer for the Cosmos ecosystem, has been developing a number of DeFi applications to provide unique services to the Cosmos ecosystem, and to the DeFi world at large. This is in line with its vision, "Build bleeding-edge DeFi applications with Comdex."
The products include, but are not limited to:
- Comdex Enterprise Trading - A B2B application built to tokenize real world assets and facilitate instant trade, settlements and financing;
- cAsset - A decentralized synthetics app that facilitates the creation of synthetics assets by collateralizing crypto assets;
- Commodo - A decentralized, IBC-native, collateralized lending-borrowing protocol;
- cSwap - A hybrid DEX with AMM and traditional Orderbook mechanism to facilitate swapping and LPing of crypto assets;
- Harbor - The dApp that enables safelisted assets to be locked in Vaults and mint $CMST against them; etc.
Some of these products are live, while some are in their testing stage, awaiting Mainnet.
The focus of this article will be on one of the products which is in the testing stage, and will be of great importance to the Cosmos ecosystem - Harbor Protocol.
Anyone who is aware of Comdex’s upcoming decentralized and overcollateralized $CMST stablecoin should be aware of Harbor Protocol, an interchain stablecoin issuance protocol on the Comdex chain which will be the platform for minting of the stablecoin.
If you wish to know why the Cosmos ecosystem needs the $CMST stablecoin, read this.
Harbor Protocol has a native cosmos-based coin - $HARBOR. This coin will serve two primary functions, which are:
- Governance: holders of $HARBOR token can be part of the decision-making process of the protocol, that includes setting stability fees, earning interest rates, liquidation ratios, liquidation fees, risk management parameters, or submitting proposals to implement platform changes; and
- Recapitalisation: the token will help to maintain the health of the system in case of exceeding debt in the system, and it will be the final backstop to re-peg $CMST token in secondary markets (during catastrophic events).
Users can mint the $CMST stablecoin in the Harbor Protocol by depositing their safelisted IBC assets in the vault as collateral. Users can also interact with their open vaults and can repay/withdraw $CMST and deposit/withdraw their assets if they want.
Why Minting of $CMST is not one of the Functions of $HARBOR
In the events where a collateral asset loses value, the protocol triggers liquidations. During liquidations, the protocol sells a portion of the collateral to recover $CMST to ensure that the minimum collateralization ratio is restored and the protocol remains solvent.
The first line of defense against market volatility happens to be Liquidations, while Recapitalisation is the last line of defense for the protocol. Liquidations are triggered when collateral assets lose value, and recapitalization is triggered when collateral assets have lost enough value to liquidate vaults entirely.
If $HARBOR is used as a collateral asset, it would be ineffective in recapitalising the protocol if the need arises. The protocol recapitalizes by minting $HARBOR equivalent to the portion of outstanding debt under-collateralized on the protocol. Therefore, mass liquidations of $HARBOR would cause a drastic fall in the value of $HARBOR. Minting $HARBOR to recapitalize the protocol after it has been liquidated would require large volumes of $HARBOR to be added to the circulating supply. This added supply of $HARBOR will cause further dilution in the value of $HARBOR and reduce its effectiveness in recapitalizing the protocol.
You can read more about this in Harbor’s article here.
Harbor’s Testnet has been LIVE for about two months now.
This means you can test the network to see how $CMST minting will be done in the Mainnet. Everything required to make the testing easy has been provided.
Participants can request faucets of $CMDX, $ATOM, and $OSMO from the "#request-faucet" channel of Comdex’s Discord server here, by typing the command, "$testnet <your wallet address>."
You can access the testnet using this link.
N/B: You need to connect your Keplr wallet to the platform. If you do not have the Keplr Wallet extension already, you can install it using this link.
After connecting your wallet, you can deposit IBC Assets in the platform, Mint $CMST, and many more. You can find a walkthrough here.
Comdex Mainnet Software Upgrade Proposal Discussion.
On October 21st, the discussion on Comdex Mainnet Software Upgrade Proposal went LIVE on Comdex Forum.
The software upgrade will be done on the Mainnet chain, Comdex-1, so it would be possible to bring Harbor and cSwap dApps on the Comdex Mainnet.
A number of Harbor Protocol’s parameters require governance proposals before they can be deployed on-chain. They are:
- Stability fee,
- Liquidation penalty,
- Drawdown fee,
- Surplus threshold, and
- Auction duration.
You can join the discussion on Comdex Forum here.
The community always plays a crucial part in decision-making as it concerns the Comdex ecosystem.
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.
For more information, and to stay connected with Comdex, you can use the links below:
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