Will the DeFi big bang soon be on the blockchain?

The ATOM token of the Cosmos blockchain has made it north in the past few weeks. The reason for this may have been the growing expectation of the Cosmoverse conference and the Interchain Security Update. A roadmap for the update scheduled for January 2023 was released on September 13, to which ATOM’s course responded very positively.

The ambitious project aspires to become the “Internet of Blockchains”. The focus is on interoperability. With the so-called Cosmos Software Developer Kit (SDK), developers can build their own Proof of Stake blockchains on Cosmos. Thanks to the SDK, these chains can even be linked to one another. All are then connected to the Cosmos Hub. The most famous projects on Cosmos include the Binance Smart Chain and the Terra ecosystem.

This blockchain architecture designed as “Layer 0” also inspired other projects like Polkadot. It could become the dominant form for the blockchains of the future. Cosmos therefore seems to be a real “evergreen” and defies the bear market. Is there a boom here?

ATOM is doing well

The domestic ATOM token has previously been hit hard by the Terra collapse. What was still considered a showcase project for the ecosystem at the beginning of the year has long since become an eyesore. ATOM’s recovery since the crash in May is all the more remarkable.

The token is up 250 percent from its June low. Most recently, ATOM was even stronger than BTC and ETH. The upcoming updates, which could make the comparatively young project one of the leading ecosystems in the crypto sector, are causing a little euphoria among ATOM holders.

Cosmoverse in full swing

On September 26th, the Cosmoverse started in Medellín, Colombia. The conference, which runs until the 28th, is all about developers, influencers and the project community and offers the opportunity to exchange information about current and future milestones of the various projects in the Cosmos ecosystem.

The new white paper for ATOM 2.0 was also presented there. With the introduction of the IBC protocol, which enables direct communication between different blockchains, the original Cosmos Hub white paper was already completed in 2021.

Now modified tokenomics and other innovations are intended to strengthen the position and value of ATOM within the ecosystem and beyond. The whitepaper is presented by the leaders from different Cosmos development teams, released for discussion by the community and then goes through an on-chain governance process.

One of the leading Cosmos community members, Zaki Manian, haughtily announced at the conference that ATOM’s new tokenomics will “make Ethereum’s EIP-1559 burn mechanism look like a joke”.

The new updates would be a huge boost for the projects on Cosmos. The upcoming changes could continue to stream many users into the ecosystem. And they will find a wealth of applications and DeFi protocols here.

DeFi boom soon on Cosmos?

Due to its architecture, Cosmos enables the various projects to have an autonomous blockchain for their application. This then has specifications specifically designed for the application. It becomes more scalable and interoperable.

It is not without reason that the Ethereum-based exchange dYdX announced that it would run its project on its own Cosmos-based blockchain in the future. While the focus in terms of DeFi has so far been more on Ethereum, Solana or the Binance Smart Chain, the Cosmos ecosystem is constantly evolving in the background.

The largest projects include Osmosis, Kava and Thorchain, all of which are ranked in the top 25 blockchains with the highest Total Value Locked (TVL). They offer new opportunities to make DeFi infrastructures more interoperable and to transport liquidity across blockchains.

In addition, there are new yield opportunities hidden there. Those who participate in ATOM staking could win staking rewards of up to 18 percent. Also, some new projects on Cosmos tend to give out airdrops to Cosmos stakers.

For more exotic DeFi adventures, returns of up to 38 percent could be possible via protocols like Stride coupled with Osmosis-DEX. However, anyone who ventures in here should be prepared for all eventualities and be aware of the risk.

Built on Cosmos and tied to Terra, the anchor protocol once also offered such enticing returns on stablecoins. The subsequent collapse of Terra’s UST stablecoin showed that these were unsustainable.

Nevertheless: With such possibilities, it should not be long before the focus of many DeFi lovers will soon be directed towards the interoperable blockchain cosmos.