November 11, 2022

What is Cosmos DeFi?

Existing DeFi opportunities rely heavily on ERC-20 tokens and the Ethereum network. There are a lot of new ideas coming out quickly, but there are also big problems like rising gas prices and slow transactions that make it hard to use and build out Ethereum’s DeFi products.
By Naman
Share:

Decentralized finance is a major financial development. DeFi has $47 billion in value locked in, according to DeFi Pulse. DeFi lets people stake, borrow, trade, and do business with fully automated, digital "smart contracts." There are several aspects of this industry that are ideal for the Cosmos Ecosystem.

What is Cosmos?

Blockchain networks are typically closed off from one another, but thanks to Cosmos, they can finally communicate with one another. Cosmos is creating an Internet of blockchains, similar to how the internet facilitates communication between disparate programs and protocols.

Cosmos provides blockchains with the scalability, interoperability, and sovereignty required for mass adoption with minimal environmental impact. Cosmos does this by giving developers easy-to-use open source tools like the Cosmos Software Development Kit (Cosmos SDK), the Inter-Blockchain Communication Protocol (IBC), and the Ignite CLI. These tools allow developers to launch a Cosmos Proof of Stake blockchain that is interoperable by default and can be optimized for a specific use case.

Watch this video to know more about Cosmos.

Why is "Cosmos DeFi" better?

Existing DeFi opportunities rely heavily on ERC-20 tokens and the Ethereum network. There are a lot of new ideas coming out quickly, but there are also big problems like rising gas prices and slow transactions that make it hard to use and build out Ethereum’s DeFi products.

Even though Ethereum already has a strong DeFi ecosystem, the Cosmos DeFi ecosystem is more robust, transparent, and future ready. This new ecosystem presents opportunities for investors who are looking for the next big thing in DeFi, as well as for users who are looking for an alternative to Ethereum's high transaction fees and slow processing times.

Where Umee Fits?

Umee is the first borrowing and lending platform that aims to offer universal cross-chain DeFi functionality. This functionality will combine the benefits of blockchain architecture with the fundamentals of traditional debt markets. Umee's mission is to offer universal cross-chain DeFi functionality. Umee will replicate the global debt capital markets, which are estimated to be worth $200 trillion, using open source code, crypto primitives, and web3 technology. This will enable the construction of a universal yield curve and lay the groundwork for a foundation for a modern monetary policy that is globally unified, transparent, and decentralized.

The global debt market is the largest financial market in the world with a value of two hundred trillion dollars. The web3 technology developed by Umee is able to provide support for the debt market without introducing the risks, costs, or inefficiencies that are typically associated with centralized intermediaries. Bonds will assist in shifting focus from short-term building and growth that is currently being prioritized by web3, to long-term building and growth.

The current crypto ecosystem is filled with countless platforms and products that are identical to one another but exist on different chains. The most popular platforms on the market are expected to begin acquiring smaller competitors in the coming years, which will lead to an increase in the number of mergers and joint partnerships that are formed, both of which will result in significant growth and consolidation across the crypto ecosystem. This gives birth to Umee’s institutional lending DAO, UDX.

Read More: What is UDX?

The Umee Blockchain relies on a network of validators to maintain the Tendermint BFT consensus in order to function properly. Tokens are tied to validators, or "stakers," that contribute to the network in order to provide Proof of Stake consensus. Validators are derived from a community of open-source contributors and infrastructure providers. Users can also delegate tokens to validators in order to participate in the underlying consensus mechanism by using this functionality. This contributes to ensuring that the Umee network continues to be decentralized.

Umee wants to build out the Cosmos DeFi ecosystem by offering decentralized money markets for Cosmos assets. Umee is working to bring DAI to Cosmos ecosystem, a stablecoin with a market cap of over $6 billion, and a 5-year track record of stability and reliability.

Final Thoughts

DeFi still has a long way to go before it can be used by billions of people, even though it has already shown that it can work as a good alternative to the traditional financial system. Umee is contributing to the widespread adoption of DeFi by constructing a cross-chain infrastructure that will serve as the basis for DApps and money legos.

For more updates, stay connected to our official channels.

Share:

Receive the latest from Umee, direct to your inbox

One weekly digest, and nothing else - promise!