Delphi Digital Co-Founder: Ending the Ghost Town Effect, Looking Ahead to New Projects Coming to the Cosmos Ecosystem
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Delphi Digital Co-Founder: Ending the Ghost Town Effect, Looking Ahead to New Projects Coming to the Cosmos Ecosystem
Although Cosmos has always been somewhat of a ghost town, various signs indicate it is finally evolving into a rich ecosystem with diverse applications.
Navigating Web3 tides with focused insightsAuthor: Luke Saunders
Compiled by: TechFlow
Almost a year ago, we published a report outlining why we focused on Cosmos. Since then, Cosmos has struggled to attract users and liquidity, leading many to doubt whether it could succeed. In this article, we will explain why and how we believe Cosmos can turn things around.
First, let’s recap the dynamics of attracting liquidity.
Ecosystems are sticky. The barrier for users on Ethereum to move to Cosmos is very high: they need to figure out bridges, download and set up new wallets, understand risks, and so on. It's a hassle. Why would they bother?
Well, the usual answer is yields. We've repeatedly seen that users will endure onboarding friction and risk for attractive returns. But yields are temporary—so they need good user experience and diverse DeFi tools to stay.
So why hasn’t Cosmos attracted liquidity recently?
After Terra, confidence in Cosmos chains was shaken, causing users and liquidity to leave—and remain unwilling to return. For one or two years prior, Terra had drawn most of the development activity, but those applications are now either dead or face long rebuilds elsewhere.
As a result, Cosmos went through a period with neither significant yield to draw in liquidity nor much to do once users arrived.
But signs suggest this is starting to change. A wave of new protocols and proposals are emerging that could bring much-needed utility and liquidity to Cosmos’ DeFi ecosystem:
Neutron brings stETH from Ethereum and uses it to build a new DeFi ecosystem around liquid staking derivatives.
Celestia is a data availability layer and Cosmos chain, likely the most important project in the modular stack. Its native token TIA will need to be bridged from Cosmos to other ecosystems, and Celestia’s rollups may bridge assets via IBC.
Mars Protocol v2 aims to combine leveraged trading and DeFi strategies under a sleek user experience.
Once established, no other application can match its capital efficiency or user experience. Combined with abstracting away bridge and wallet complexity for users, Mars should offer a compelling home for liquidity.
Namada is an upcoming Cosmos Zone and the first fractal instance of Anoma—an exciting Cosmos project built around intents.
It enables private transactions and, thanks to low fees + IBC + native ETH bridge, has the potential to attract privacy-conscious DeFi users.
Then there’s Sei, which I expect will draw substantial liquidity and developers. Noble aims to lower barriers to liquidity entry and hopes to launch native USDC soon. The dYdX launch is positive for Cosmos’ visibility, and more.
By the way, dYdX definitely makes cross-chain transfers and product interactions seamless from any other ecosystem/wallet, reducing entry friction for users and assets. I hope other Cosmos projects learn from and emulate this.
Lastly, I’m excited to see Levan finally launching successfully on Osmosis—they were originally scheduled to launch the week Terra collapsed. Levana enables perpetual contract trading within Cosmos, along with associated risk-free, high-yield (for now) cash arbitrage strategies.
While Cosmos has felt somewhat like a ghost town, growing signals suggest it is finally evolving into a rich ecosystem of diverse applications.
That said, it’s also important to recognize that Cosmos faces challenges: competition from the OP Stack; zkSync’s ZK Stack and upcoming frameworks for building standalone ZK apps; Solana’s resurgence; Ethereum’s rollup ecosystem being stronger than ever, and more.
But as discussed above, if Cosmos applications focus on lowering entry barriers and combine use cases that other ecosystems cannot achieve, it can attract meaningful liquidity and foster a thriving DeFi ecosystem.
Disclaimer: I personally, Delphi Labs, or Delphi Ventures have exposure to nearly every project mentioned in this article.
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