Decentralized finance is coming to the Cosmos network — a network of decentralized blockchains that bills itself as the “internet of blockchains” — with the upcoming launch of the Gravity decentralized exchange today at block 6,910,000.
Gravity DEX uses an inter-blockchain communication protocol to enable token swaps between blockchains connected to the Cosmos hub and beyond, including Ethereum when the Gravity Bridge — a two-way link between Cosmos and Ethereum — is launched this year.
Blockchain developers will be able to list their tokens using Gravity DEX, which removes the friction of regulatory barriers and listing costs on centralized exchanges. With high transaction costs — or gas fees — on Ethereum pricing out retail traders, Gravity DEX aims to level the playing field for DeFi with its significantly lower fees of US$0.01 to US$0.10 and provide users with access to tokens of projects in the Cosmos ecosystem that have yet to list on centralized exchanges, such as Regen Network’s $REGEN, Akash’s $AKT, Sentinel’s $DVPN, Persistence’s $XPRT and IRISnet’s $IRIS.
Gravity DEX is an attempt to address issues such as price slippage in the Ethereum’s Uniswap automated market maker model by providing the latest swap price through its equivalent swap price model and remove front-running and price manipulation by using batched execution for orders, which means orders in the same block are processed at the same time.
Growing pull of Cosmos ecosystem
The Cosmos ecosystem includes Cosmos Hub (ATOM), Binance Chain (BNB), Crypto.org Chain (CRO), Terra (LUNA), and more than 240 apps and services representing over US$75 billion in total market value, according to to a Cosmos blog post. Cosmos doesn’t see itself as a competitor to Ethereum but instead looks to complement Ethereum’s growing DeFi ecosystem.
“The name ‘Gravity’ for the Bridge, the DEX, and future products that will enrich and expand the utility of the Cosmos Hub holds powerful significance,” Cosmos said in a blog post. “Just as gravity is an invisible force that pulls objects toward each other, so will the Hub pull capital toward it, creating a positive feedback loop that drives user mass for both Ethereum and Cosmos.”
Making DeFi easier in Cosmos and beyond
Despite DeFi’s exponential growth, it has only 1.75 million users, representing about 1% of total Ethereum addresses, according to a ConsenSys Q1 2021 DeFi report. Ethereum hosts the vast majority of DeFi protocols and stablecoins, with over US$55 billion in total value locked.
But challenges to widespread DeFi adoption remain, such as fragmented offerings across DeFi protocols and poor user experience design.
Blockchain company Tendermint, a core contributor to the Cosmos Network, intends to provide a blockchain-agnostic, single, easy-to-use interface for users to access a wide variety of decentralized applications, including lending and yield farming, NFT marketplaces, payment applications and data storage.
Tendermint will this month launch a beta version of Emeris, a DeFi dashboard for dApps that will, as a start, provide users with a consolidated view of their crypto holdings across the different Cosmos chains. It intends to expand the Emeris product line to a mobile app and browser extension wallet and to expand support to blockchains beyond Cosmos, beginning with Ethereum. Emeris’s public launch is scheduled for late September.
ATOM, the native cryptocurrency of Cosmos, was trading at US$13.62 as of press time, with a market cap of US$3.8 billion, according to CoinGecko data.