As the dust settles on the UST/LUNA debacle, and many in crypto-land are licking their wounds, an announcement from the team at Comdex has caught some attention. They were already well advanced in planning for a new stablecoin, and have announced a new name and the design of this new stablecoin in this post.
Cosmos eco-system needs a new stablecoin.
UST was rapidly becoming the primary stablecoin across the range of Cosmos eco-system DeFi protocols. Osmosis had significant UST liquidity, and the newer Crescent network was also heavily linked to UST and LUNA. In addition, it was also the primary stable for Junoswap. With the collapse of Terra, this has left more than just a great big hole in the wallets of Cosmos DeFi participants.
Assets bridged from Ethereum are just starting to flow through to Cosmos DeFi, with the stables of $USDT, USDC and DAI starting to become available on DEX's like Osmosis. However, bridged assets always carry some extra risk, and a native solution that lives in the IBC eco-system will gain adoption, if it is safe.
Enter Comdex.
Comdex has had building its own stablecoin as part of its plans from the start. This is not just a rush job to capitalize on the UST debacle. The team has indicated that it will be pegged to USD, via overcollateralized positions in a manner very similar to the DAI stablecoin.
@bitcoinflood recently posted a great post about DAI, I'd recommend taking a look if you are fuzzy on how DAI works.
Composite is a stablecoin designed to be a stable representation of purchasing power and is therefore soft pegged to $1; however, as the global macro landscape develops, that may be subject to change in the future.
This leaves it open to the possibility that they may change the nature of the peg, possibly to a basket of currencies or some other measure.
Inspired mainly by the robust and reliable model built by MakerDao, CMST can be minted permissionless-ly as a debt against over-collateralized CDPs. Users can mint CMST by locking-up Cosmos ecosystem assets as collateral for $1.
$HARBOR, the governance token for $CMST, will serve as a backstop to the $CMST peg through a mint/burn-based mechanism.
So this will be a two token model, with a design like DAI/MKR. A range of Cosmos eco-system assets will be able to be used as collateral, to mint CMST. This will mean there is a basket of assets that will be utilized, reducing the risks of a single asset collapsing leading to mass liquidations and collapse. The $HARBOR token will act as the backstop, and governance token.
Benefits for CMDX holders.
$CMDX will accrue value through on-chain network gas fees and a portion of protocol revenue used to buy and burn $CMDX. $CMDX holders will also be able to mint $CMST by collateralizing $CMDX and earn incentives from providing liquidity on dexes.
As I see it, here are the main benefits for CMDX stakers.
- More TX's, more gas being payed as staking rewards.
- Some $CMDX burn from a portion of revenue.
- Can use CMDX as collateral.
- Liquidity farming.
- It has been speculated that CMDX stakers will receive an airdrop of the HARBOR governance token. No confirmation yet, so purely speculative for now.
Risks.
- De-peg risk. (obvious concern after the UST situation)
- Bridge risk. (IBC has been safe so far, but I still class a possible IBC exploit as a risk)
- Collateral value collapse leads to mass liquidation. (Cosmos assets have fallen dramatically in the last few months, if this had been around, most assets would have been liquidated).
- Exploits. (We see exploits, flash loan attacks and all sorts of issues with EVM smart contracts, CosmWasm which will be the base for Comdex has seen a couple of issues, likely to be tested more).
- Oracles. (As above, Oracles seem to be an issue leading to exploits)
- Macro circumstances. (is pegging your stablecoin to a shitcoin like USD really a good idea in the long run?)
Other use cases.
Additionally, Comdex intends to integrate $CMST into the payment settlements layer on the enterprise trading app for adoption in commodities trade settlements. The platform has already processed over $160M in on-chain trade workflows, which would be significantly bolstered with the addition of instant payments. The enterprise trading app also utilizes Comdex’s asset tokenization module, which enables the creation of NFTs to represent real-world assets. As adoption of these real-world asset NFTs within the ecosystem grows, we intend to allow the minting of $CMST by collateralizing these NFTs to create liquidity for CeFi participants.
This is the primary reason that Comdex had plans all along for a stablecoin. Their existing commodities trade settlement app (which currently lives on the Persistence blockchain I believe, but will be migrated over to Comdex) will greatly benefit from a native stablecoin. These use cases as outlined in the quote above will add a significant, and growing demand for the $CMST token, and backstop its adoption.
My thoughts.
Comdex is a project I have a significant amount of stake in, so my thoughts are biased.
I really hope this works. I think the DAI stable is possibly the best decentralized option around. USDT, USDC and BUSD as the big options have varying degrees of centralization, government regulation and controls. The Cosmos needs a new native option, and while I have seen that another project is being developed, I hope CMST works, and gains adoption and use across the Cosmos.
I'll keep you updated as more details come to hand.
All quotes in this post have been sourced from this blog post released by the Comdex team.
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