Evmos, Swing, Tashi and Wormhole are working together to solve Cosmos’ liquidity problems

A group of decentralized finance (DeFi) protocols have come together to solve liquidity problems in the Cosmos ecosystem. Teams involved include cross-chain bridging protocol Wormhole, liquidity aggregator Swing, lending protocol Tashi and Cosmos network Evmos.

According to statements from two of the teams involved, Wormhole will register five new bridged tokens for use on Evmos: Tether (USDT), USD Coin (USDC), Wrapped Ether (wETH), Wrapped Bitcoin (wBTC) and Solana (SOL). A Wormhole governance vote on this part of the proposal began on September 19 and currently has near-unanimous support.

Once launched on Evmos, tokens will be implemented into the Swing protocol, allowing users to send them to Evmos from any network that supports Swing, including BNB Chain, Polygon, Fantom, and others.

Tashi will also implement Swing into its interface, allowing users to bridge and deposit coins as collateral with a minimum of button clicks. Users can then borrow either Cosmos or Ethereum-based coins using this collateral, exchange the borrowed coins for others, deposit them into liquidity pools, or perform other common DeFi actions.

Caption: Tashi UI. Source: Tashi.

According to representatives from Swing and Tashi, the integrations are ready to launch and are just waiting for the Wormhole proposal to be accepted and implemented. Voting on the proposal closes on September 24th, meaning the new liquidity system should go live soon after.

Related: DYdX launches decentralized order book exchange on Cosmos: KBW 2023

Speaking to Cointelegraph, Tashi co-founders Lindsay Ironside and Kristine Boulton claimed that the new system was necessary to address a “liquidity crisis” within the Cosmos ecosystem. “We have this chain that continues to provide these amazing opportunities, but no one is taking advantage of them because they can’t get liquidity there,” Boulton explained. But “[Wormhole]There are, I think there are 29 different chains at the moment […] So it’s an opportunity to address this crisis.”

Ironside stated that she felt a new system was needed after she first started using the Cosmos ecosystem. She had a bad user experience when she first tried to exchange USDC for Cosmos (ATOM) and send it to Evmos. To receive the ATOM, she first had to bridge her USDC to Cosmos Hub. However, once USDC was on the network, it did not have the ATOM to pay the gas fee for the exchange.

According to Ironside, this experience made her realize that the team needed to focus on this problem. “Join as new users […] and try to find out where the solutions to these problems lie, [that] was a big deal,” she noted.

In a separate conversation, Swing CEO Viveik Vivekananthan agreed that the new system may address these issues. When a user wants to exchange USDC on Evmos for another coin, Swing converts a small portion of the sent coins into the native Evmos coin, which is then spent on gas to complete the exchange. This will allow users to get into Evmos with any supported coin, Vivekananthan explained.

Initially, Swing will only be able to bridge tokens from mostly non-Cosmos networks into Evmos, he said, but the team plans to expand its compatibility to enable bridges between different Cosmos networks in the future.

The Cosmos community has made a concerted effort to attract users with new features in 2023. Cosmos-based chain Noble launched a native version of the USDC stablecoin on March 28th and Cosmos Hub launched liquid staking on September 13th. There is also a competitor in the form of the Optimism Superchain, which is trying to create an interconnected network to build from blockchains with similar functions to Cosmos.

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