Cosmos SDK Club: Comdex
Decentralised Finance
As Cosmos SDK projects continue to multiply, the entire ecosystem is gaining strength. With the launch of mainnet for Comdex (CMDX) just a few days ago, we see another powerful DeFi project come online. Boasting several products including an Enterprise Trading Platform, ShipFi and Synthetic assets, each of these products are designed to work interoperably together within the Persistence network and across the Cosmos network. Comdex is looking to be a very promising project amongst the Cosmos SDK club.
At the time of writing, Comdex is finalizing its initial price through the means of a Liquidity Bootstrapping Pool (LBP) on Osmosis. By opening the pool with ATOM/CMDX pairs set at a 10:90 ratio and moving towards a 50:50 ratio over a period of 3 days the CMDX token is able to find its market price. From a buyer’s standpoint, this means that the pool was listed with a maximum auction price, which declined gradually over a the three days until the pool balances of both tokens are of equal value. This mechanism made it essentially impossible for large token holders to try to corner the market and dump their tokens later. This approach is a very clever mechanism for achieving fair price discovery and broad token distribution, whilst preventing malicious action by bots or whales
Comdex is swiftly maturing into an ecosystem of solutions that will democratize finance and ultimately act as the bridge between DeFi and CeFi.
Enterprise trading platform: Helping solve problems of trust and efficiency in the commodity trade industry and SMEs/MSMEs have better access to financing.
ShipFi: Slated for a 2022 launch, this application focuses on bringing trade finance debt and receivable assets on-chain to obtain liquidity.
Synthetics: Enables the creation of synthetics so that DeFi investors may get exposure to real-world assets.
All these solutions were designed from inception to work interoperably together. To better grasp how these products are made to work synergistically, let’s review the ideal flow of operations:
Trades are executed on the enterprise trading platform.
At the time of receivable creation, traders can request to source liquidity from ShipFi funds, making capital from DeFi investors accessible.
These funds then collateralize NFTs backed by real-world assets and mint synthetics assets. These synthetic assets can then be sold to DeFi investors, allowing them exposure to financial derivatives of real-world debt.
The CMDX token plays five critical roles in the Comdex ecosystem-
1) Being the native token of the chain, CMDX powers the network’s staking economy. Transaction fees and staking of CMDX helps secure the network.
2) CMDX holders can also be involved in the governance of the protocol. CMDX holders play a role in making critical decisions for the protocol like whitelisting of synthetic as well as collaterals that can be used on the platform.
3) Comdex synthetics app users can collateralize their CMDX holdings to create and trade synthetic cAssets on Comdex.
4) CMDX tokens will be distributed as rewards to liquidity providers and other participants who perform critical functions in the network.
5) CMDX tokens will be minted and burned to maintain the stability of cAssets in the network and ensure the solvency of the net debt of the network.
The Comdex App
The Comdex app allows users to collateralize their Cosmos ecosystem assets (such as $ATOM, $XPRT, $AKT, $DVPN, etc.) to create synthetic cAssets.
Every cAsset created on Comdex is a Collateralised Debt Position (CDP) that the borrower can close by returning the assets borrowed as debt. Users pay fees at the time of creating and closing a cAsset debt position. Open debt positions that fail to maintain the minimum collateral/debt ratio are automatically closed by liquidating the underlying collateral to close the outstanding debt position and the liquidation fee/penalty.
Users can then trade or provide liquidity with the cAssets they create on cSwap, Comdex’s AMM for synthetic assets. Trades on cSwap take place via liquidity pools containing cAsset pairs. The liquidity providers of these pools get incentivized through CMDX rewards and trading fees.
All the fees earned by the protocol get allocated to various pools dedicated to performing specific functions in the network. Fees collected in the stability pool ensure the stability of cAsset prices. At different points, these fees get used to increase or decrease the supply of cAssets. A portion of the fees collected gets used to incentivize liquidity providers and the remaining CMDX tokens collected get burned.
Liquidity Provision Rewards
CMDX tokens are rewarded to various users for performing certain critical functions of the platform. One of those functions is to provide liquidity to the liquidity pools that power trades on cSwap. In addition to the trading fees earned, early liquidity providers will be rewarded in
5,000,000 CMDX of the total allocation to incentivization will unlock at listing, followed by 3,000,000 CMDX unlocked every quarter for the next two quarters. Subsequently, 2,000,000 CMDX will unlock every quarter for the next four quarters. 1,000,000 CMDX will then unlock every subsequent quarter for the next six quarters. This encourages early liquidity provision, which is key to thriving synthetics markets on cSwap. Having rewards spread over 36 months also ensures longer-term participation from LPs in the network.
In summary, Comdex has huge potential through many avenues to be a driving force of DeFi within the Cosmos ecosystem and from all accounts, providing liquidity is looking to be a very lucrative endeavor in the short to medium term.
As always do your own research before making financial decisions. Nothing contained herein should be considered financial advice.
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The Cosmos network is growing!! Every day there's something new to look into and get involved. Thanks for the info