Several decentralized finance (DeFi) protocols have collaborated to address liquidity challenges in the Cosmos ecosystem. Among the participating projects are cross-chain bridge protocol Wormhole, liquidity aggregator Swing, lending protocol Tashi, and Cosmos network Evmos.
Wormhole's part in this collaboration involves registering five new bridge tokens for use on Evmos, including Tether, USDC, Wrapped Ethereum (wETH), Wrapped Bitcoin (wBTC), and Solana. Currently, the proposal has garnered near-unanimous support through Wormhole's governance voting , which began on September 19.
Once these tokens are available on Evmos, they will be integrated into the Swing protocol. Swing enables users to send tokens to Evmos from any network supported by Swing, such as BNB Chain, Polygon, Fantom, and more.
Tashi, a lending platform, will also incorporate Swing into its user interface, streamlining the process of bridging tokens and using them as collateral. Users can then employ this collateral to lend Cosmos-based or Ethereum-based tokens, swap them for other tokens, deposit them into liquidity pools, or execute other typical DeFi actions. The integration is prepared for deployment but awaits the approval and implementation of Wormhole's proposal. Voting on this proposal concludes on September 24.
Lindsay Ironside and Kristine Boulton, co-founders of Tashi, emphasized the pressing need to address the liquidity "crisis" in the Cosmos ecosystem. Boulton stated that despite Cosmos offering great opportunities, it remains underutilized due to the lack of liquidity. With Wormhole's launch of support for various chains, there's an opportunity to resolve this crisis.
This effort aims to address issues encountered by users when attempting to exchange and transfer assets within the Cosmos ecosystem. For instance, Ironside shared a challenging experience involving converting USDC to Cosmos and sending it to Evmos, ultimately highlighting the need to address liquidity and user experience challenges.
Swing CEO Viveik Vivekananthan added that the new system has the potential to address these issues by enabling users to log into Evmos using any supported token. Initially, Swing will facilitate token bridging from most non-Cosmos networks to Evmos, with plans to expand compatibility to enable bridges between different Cosmos networks in the future.
In 2023, the Cosmos community has actively worked on enhancing the ecosystem. Projects like Noble launched a native version of the USDC stablecoin on Cosmos, while the Cosmos Hub introduced liquidity staking. Nevertheless, it faces competition from projects like Optimism Superchain, which aims to create a similarly interconnected blockchain network with comparable functionalities to Cosmos.
