On Tuesday, pSTAKE, a liquid staking protocol from decentralized finance (DeFi) platform Persistence, announced in a statement provided to Cointelegraph that it had closed a $10 million strategic funding round from venture capital firms. Tendermint, the core developer behind the Cosmos network, powers Persistence blockchain with its consensus engine.
Liquid staking is the practice of users “double-dipping” with their crypto assets — i.e., allowing them to stake their crypto in one pool and use their staked assets to farm yields in a liquidity provider pool, or vice versa. The process enables higher compounded yields, as assets generate returns in two pools instead of one, but it is also riskier, as investors hold multi-layer derivatives of their original token.
We’re rewarding the best article on #LiquidStaking.
Topic: Is Liquid Staking the Future of PoS?
Winner will be published on the pSTAKE blog & will receive:
— pSTAKE Finance (,) (@pStakeFinance) November 12, 2021
The funding was backed by various venture capital groups, such as Three Arrows Capital, Sequoia Capital India, Galaxy Digital, DeFiance Capital, Coinbase Ventures, Tendermint Ventures, Kraken Ventures, Alameda Research, Sino Global Capital and Spartan Group. In addition, angel investors such as Ajit Tripathi, head of institutional business development at Aave; Do Kwon, founder of
Ever since the launch of the inter-blockchain communications, or IBC, protocol in March, which enabled the communication and transfer of digital assets across different blockchains, development activity seems to have picked up pace on the Cosmos (ATOM) network.
Transaction volumes, the creation of decentralized applications, and the number of chains connected via IBC have all been trending upwards in recent months. Speakers at the Cosmoverse Conference, which took place last week, presented many of the latest technologies under development on the blockchain. Its biggest-ever hackathon will also take place in Lisbon tomorrow.
#HackAtomVI is trending in the dev community!
1000+ Developers Have Already Registered to the Biggest HackAtom in Cosmos History!
Don’t miss your chance to win $1M+ in Prize Pool and start your journey in the Internet of Blockchains with a Bang!https://t.co/TqAedC16jn pic.twitter.com/w1hasCxyQo
— Cosmos – Internet of Blockchains ⚛️ (@cosmos) November 9, 2021
Tendermint is the core developer behind the Cosmos blockchain and serves as its gateway to the ecosystem. On Wednesday morning, Peng Zhong, the company’s CEO, joined Cointelegraph in an exclusive interview to discuss the future of the Cosmos network.
Cointelegraph: What are some of the development highlights surrounding the Cosmos blockchain in terms of the decentralized finance, or DeFi, ecosystem?
Peng Zhong: I think the biggest highlight was early this year when IBC [Inter-Blockchain Communications] launched on the Cosmos hub for the first time. Not much happened after that. People were like, okay, IBC is live, now what do I do? But now, we are seeing 22 blockchains that support IBC. They have all been able to connect to various DEXs [Decentralized exchanges] available in the Cosmos ecosystem, such as Osmosis, Gravity DEX. So there’s been a lot of cross-chain activity, much more than anyone expected. And we are seeing a very positive growth cycle with IBC enabled.
Total transaction volume on the Cosmos blockchain in the past 30 days. | Source: ATOMSc
CT: Interesting, so where do you see the IBC ecosystem heading, say, five years from now?
PZ: That’s very far in the future. I was going to present tomorrow that we are seeing 22 chains today, and next, we’ll see about 200 chains connected through IBC next year. I haven’t thought about five years out, but my long-term vision running Tendermint and with our focus on bringing more users to Cosmos and a better development experience to the Cosmos Stack. We’ll see a million blockchains in the future. Five years from now, I would expect that number to be tens of thousands, if not hundreds of thousands of chains linked through IBC. And that’ll be absolutely spectacular, but we have a lot of work to do on the infrastructure side to handle all that encrypted data.
CT: Regarding the recent Cosmosverse, an intriguing development that came up was the concept of liquid staking. Would you mind providing more information on that?
PZ: I believe there are at least three different implementations of liquid staking as presented at Cosmoverse. It was a fantastic conference; I met many people who’ve been working in this space during the pandemic and never got a chance to see them face to face until now. And then people working at Cosmos for over five years and are still around — and it speaks to the strength of the ecosystem. So liquid staking at a high level is the ability to allow users to double-dip with their assets. Most commonly, in PoS [Proof-of-stake] protocols, you need to stake your tokens to secure the network as a user. And by staking your tokens, you earn yields. For the Cosmos Hub, it’s generally between 7% to 20% APY. But then you look at some DeFi protocols, for example, Osmosis or other DEXs built on Cosmos, and you can see that during the launch of these DEXs, they [the developers] want to increase liquidity.
So APYs can be at thousands of percent within a few weeks or hundreds of percent for a few months. And they are much much higher than staking yield. So there is this constant battle, or tug of war, between the incentives for staking, which is to secure the network and is good for everyone, but you earn minimal yield. This is compared to incentives provided by DEXs for acting as liquidity providers, which is very tantalizing. So liquid staking is the ability to allow you as a staker to stake your assets, but at the same time, you get a token that represents your staked position.
So if you stake 100 ATOM, instead of receiving nothing in return other than a steady stream of staking rewards, you would receive [both] staking rewards in ATOM, and you would receive a staked version of your ATOM, let’s say sATOM. And that is only IBC-enabled, which means you get to permissionlessly transfer it to DEXs and use that to provide liquidity in pools. That’s the general idea of liquid staking; it’s a big feature that’s coming to multiple blockchains at once.
The version that’s coming to the Cosmos hub is more standard, it’s where you stake the assets, and you get a token that you can use interchain. The version proposed by Osmosis is called Superfluid staking, which is the ability to provide liquidity in a DEX while being issued liquidity provider tokens (LPs) back, which you can use to stake on the blockchain. So whether you LP first or stake first, you always get the representation you can use across IBC, which is a lot of flexibility and freedom.
However, it adds a lot of added risk because this is now like a second-level derivative of your original token. So if anything breaks down along the way, you might be in trouble. But for those of you who have a big appetite for risk, liquid staking offers more than what you can get off traditional yields.
CT: Is this technology theoretically applicable to all kinds of pools? For example, can I receive a lending token to back deposit into a staking pool to earn yields if I lend out my crypto?
PZ: Exactly, you’re on the right track. And there can be many levels of this, and each level gives added risk to your portfolio, so it’s a matter of figuring out how much risk you are willing to take. A lot of this [liquid staking] has happened in Ethereum due to the power of ERC-20 tokens, but it’s only started to be developed in the Cosmos ecosystem. And of course, in Cosmos, there is an added layer of complexity on top due to the differences in the level of security. So part of the proposed benefit of liquid staking is the ability to share security between multiple chains at once. Which is sort of a looser version of Ethereum where everything is secured by the token.
CT: Another recent development discussed at Cosmoverse is ABCI++ and how it can help improve cross-chain functionality and oracles. Would you mind elaborating more on that?
So the Tendermint Core protocol hasn’t been updated in quite a long time in terms of new features. And ABCI++ is a very big new feature. What it does is that it increase the features that Tendermint Core can support. So right now, a function can be run at the end of every single block, which is what all Cosmos blockchains use to do their business logic. At the end of every single block, which on Cosmos, is usually six to seven seconds, some activity can happen. But the Tendermint Core Consensus, while it does create consensus around new blocks, it’s not a single-step process; it’s, in fact, a five-step process of block consensus creation.
There’s, in fact, a built-in block explorer in the past, which hasn’t been updated much, but actually shows every step of Tendermint block consensus. What ABCI++ is, is that it allows a developer to tap into each one of these five steps. You can imagine them; instead of just admitting one event for every block that’s complete, it admits now five events, and now you can pick and choose which step you want to admit to a consensus that you want to run for that function. And that introduces a lot of potential for more efficient calculations.
The New [v0.35] #TendermintCore Release:
• Prioritized Mempool
• Peer-to-peer Network Makeover
• StateSync Improvements
• Go API Internalization and Stability
…and additional Great Features to discover https://t.co/zXP4t6EBiF pic.twitter.com/zQtV6paZgm
— Tendermint (@tendermintHQ) November 5, 2021
CT: Is Tendermint taking any steps to introduce Cosmos into the Metaverse?
PZ: Yeah, so I think the Metaverse is quite undefined right now. It’s everyone building things as Web 3.0. Of course, Facebook can take a claim that they’re building the Metaverse, but it’s only going to be Facebook’s wall garden Metaverse. There’s going to be Google’s wall garden Metaverse and Apple’s version of that. I would assume Steam and Epic Games have their own version. But the version that most of us want today is open-ended and permissionless.
CT: What are some of the highlights of the upcoming hackathon?
PZ: So it’s the biggest Cosmos hackathon. And I think Cosmos is the second largest crypto ecosystem in the world, with over $170 billion [of assets] built on the Cosmos infrastructure. It’s a very significant event for the world at large. Zooming out a little bit and looking at what happened last year, which was on a much smaller scale. That was when this proof of concept DEX project called Osmosis won the biggest prize. And today, Osmosis is a live blockchain with over $700 million in TVL [Total value locked]. Maybe it’s a fluke, but I’m hoping to see projects of this caliber this year. This time around, we have far more prize categories; I believe it’s seven, each with over $200,000 worth of prizes. This wide array of prizes is our way of making sure people are solving a diverse set of problems. There’s so much unbuilt infrastructure, and it doesn’t make sense to award only one prize.
Growth of TVL on the Osmosis DEX. | Source: DeFi Llama
CT: Would you like to share any other comments or visions regarding Tendermint and the Cosmos blockchain?
PZ: Yes, I believe that Cosmos is the only ecosystem that tries to democratize access to finance, more so than any other ecosystem. Because in Cosmos, you don’t need to buy a token to get involved in the ecosystem. When you build on Cosmos, you don’t have to buy anything; you don’t have to pay for gas, and that I believe is something very valuable in economies where you can’t really afford expensive transactions, and when you don’t really have the capital to really experiment with these hybrid ecosystems, like Polkadot or Avalanche or Polkadot or Ethereum, and appealing to people with time. Young people with time but no capital are out of Web 1.0 today, and Cosmos will win Web 3.0. And that’s really the core mission of Tendermint, to bring newcomers, make it as easy as possible to build things, and we welcome everyone.
One of the leading companies behind the Cosmos network, Tendermint, has launched a new fund worth around $20 million to support projects with potentials. Tendermint believes that the fund will be one of the largest investment milestones for the Cosmos ecosystem, which would pave the way for more investments.
Major Development for Cosmos
Following the announcement today, the CEO of Tendermint, Peng Zhong, revealed:
“We are trying to lay the foundations for decentralized networks to flourish as part of Cosmos. So, we are just providing another source of liquidity for people that want to build on our stack.”
In addition to that, the company activated its inter-blockchain communication protocol (IBC), a project that was launched earlier today. The inter-blockchain communication protocol (IBC) allows interoperability between different blockchains built on Tendermint Core. And this could increase the use-cases for financial products in the Cosmos network.
For now, the Cosmos ecosystem will consist of the Tendermint Ventures fund, which is denominated in IRIS token and ATOM.Peng adds: “Tendermint Ventures is similar to ConsenSys Ventures, the investments wing of Joe Lubin’s Ethereum workshop. We are going to identify promising projects, build them using Cosmos tech and provide venture capital to accelerate their growth,”
A Rapidly Growing Ecosystem
The fund will complete other projects in the ecosystem, such as the $10 million Terraform Capital Fund announced in February 2021. But since Terraform focuses on decentralized finance on just the Terra blockchain, Tendermint Ventures will extend its arms to other promising projects.
Meanwhile, Tendermint Ventures already invested in Terra’s latest project known as Anchor (a high-yield savings account). The firm has also invested in B-Harvest, Tgrade, and Regan.
The Chief of Staff heading the new venture fund in Tendermint, Jin Kwon, further explained that the company plans to expand the Cosmos ecosystem in the nearest future by introducing different projects to encourage versatility;“In the near term, we are focusing on creating a robust DeFi ecosystem within Cosmos. Our goal at the end of the day is that these projects that we will launch will complement each other. So one may be doing something in one aspect of DeFi, and another project will be to leverage that project,”
The Cosmos Network was launched with a significant number of partners on board, including the largest crypto exchange by trading volume, Binance, Loom (a gaming platform), and currently, has over 50active projects.
Cosmos (ATOM) price has increased 240% since the beginning of February as excitement builds for the approaching Stargate upgrade on Feb. 18 that will help connect all Cosmos-based chains together using Inter-Blockchain Communication (IBC).
Data from Cointelegraph Markets and TradingView shows that ATOM was trading at a price of $7.83 on Feb. 1 before a series of positive announcements, including the ability to stake ATOM on Binance, helped lift the token to a new all-time high of $26.68 on Feb. 16.
Stargate has been a much-anticipated upgrade for the Cosmos community as the introduction of IBC will enable the exchange of transactions of value and data across compatible chains.
Cosmos-based blockchains are currently siloed and unable to communicate or interact in a secure way. IBC is expected to help bring the separate chains together into the new Cosmos Network ecosystem.
Other features included in the upgrade are the Protobuf migration, which helps accelerate front-end development and improve overall blockchain performance, and state sync, which helps new nodes synchronize 200 times faster and participate in consensus in just minutes rather than days.
Optimism grows following the delayed release of Stargate
Excitement for Stargate’s release has been building for months while ATOM price traded flat. Price action began to pick up on Jan. 15 when it was announced that the Stargate launch, which was originally scheduled for Jan. 28, would be postponed until Feb. 18.
In the past few days meanwhile, VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for ATOM, prior to the recent price rise.
The VORTECS™ score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements, and Twitter activity.
As seen in the chart above, the VORTECS™ score began rising from a low of 55 on Feb.11 to a peak score of 82 on Feb.14. During that time ATOM price traded sideways and experienced a brief drop, just as the VORTECS™ score was peaking. The dip was short-lived, however, and the price soon began an 80% rally to its new all-time high of $26.68 on Feb. 16.
The launch of Stargate represents an important milestone on the Cosmos development roadmap. But the IBC integration is also expected to be followed by separate Tendermint-based projects like Band protocol (BAND) and Kava (KAVA) joining the Cosmos network for greater blockchain interoperability.
Right now, blockchains communicate via tacked-on solutions (state channels, sidechains, swaps, bridges and so on). With the Stargate update to Cosmos on Feb. 18, the tools for native blockchain interoperability will be live on mainnet.
“This is a long-awaited release for many Cosmos-based projects out there,” Band Protocol’s Kevin Lu told CoinDesk via email. “For us this will enable seamless and simple integrations with any Cosmos-based decentralized application, relaying oracle data in a highly scalable and tamper-proof manner.”
Iqlusion’s Zaki Manian, who leads much of the development for Cosmos, explained that once Stargate goes live, a governance vote will be required to switch on inter-blockchain communication (IBC), which will take two weeks to finalize.
So at the earliest, all systems go for IBC would be early March. That said, Tendermint chains need to upgrade to the Cosmos SDK for this to happen. Manian said this is probably one or two weeks of work for most dev teams and they don’t need to wait for Stargate to kick in to start.
If Tendermint-based chains activate Stargate en masse, this has the potential to be a big moment – not just for Cosmos but in the whole history of crypto.
There have been a lot of standalone bridges between blockchains built so far, but Stargage could mark a new era in composability, where we see one big system that lets lots of different chains trade value and build on each other’s strengths.
There are more notable Tendermint-based projects than many may realize.
A new site called Cosmos-Cap is tracking the market capitalization of projects in the ecosystem, currently valuing all the chains together at just under $13 billion. The native token of Cosmos, ATOM, is currently trading around $8, with a market cap of $1.9 billion on its own.
While not on that list, the payments and remittances blockchain Celo has also taken steps to connect with Stargate.
THORChain, which enables assets to be swapped across chains (sort of like Uniswap), told CoinDesk, “THORChain is Stargate-ready, but more work needs to be done to make it IBC-ready, that is in the works currently.”
Other teams are also busy.
“The current plan for Band Protocol’s Stargate connection is to have testnet by Q1 and mainnet by Q2 for Stargate support,” Lu wrote, enabling the team time to be very confident in its implementation.
Do Kwon, a co-founder of Terraform Labs, which runs the Terra chain, confirmed it would upgrade but not until Stargate has had some time in the wild. “The earliest we would move to upgrade is May,” he wrote in an email.
Spokespeople for Celo and Oasis confirmed the teams are working toward IBC implementation, but without giving a timeline.
Binance, whose BNB coin represents the most value in the ecosystem, sent CoinDesk the following statement: “We will not be able to join the Stargate timeline to support the IBC. The Binance Chain community will discuss when and how to support this initiative.”
THORChain also emphasized that, like many big upgrades, Stargate will add other benefits for Tendermint-based blockchains, such as faster throughput and implementation of Google’s protocol buffers standard (which should also be good for interoperability).
Close followers of the project may have heard Stargate would launch on Jan. 28, but the date was pushed back. Manian told CoinDesk this decision was driven by a bug that was found and fixed. It was useful anyway because the exchanges still were not ready for the update.
Since 2019, the Cosmos project has been as volatile as cryptocurrency generally.
While in late 2019 CoinDesk noted the financial health of the project thanks to conservative treasury management, by early 2020 it appeared to be falling apart from a personnel standpoint. By the summer, however, it seemed Cosmos had weathered its internal storms.
Going forward, every time a blockchain clicks into IBC it is likely to put pressure on other Tendermint projects to get their upgrades done. With even a few interoperating, composability should start kicking in and FOMO will drive stragglers to get in fast.
It could get very interesting; while Ethereum tests its beacon chain, Cosmos will have something very similar to a sharded system running on mainnet, tossing value back and forth at will.