Agustin Cortes | Tint.eth leads partnerships at Composable Finance.
This proposal is to get a temp check for the creation of a Yearn Finance vault made by the token ATOM. The integration of an ATOM vault aligns with Yearn’s mission to provide a diverse range of high-yielding crypto-asset management strategies to its users. The addition of ATOM to Yearn’s suite of vaults is expected to attract a new segment of DeFi users, enhance the platform’s TVL (Total Value Locked), and diversify its yield-generating opportunities.
ATOM represents a significant portion of the interoperable blockchain ecosystems, with a market capitalization that consistently ranks in the top tier of crypto assets. As of the last quarter, ATOM has shown a resilient performance in market capitalization and user adoption. The integration of an ATOM vault would capitalize on this growth trajectory, offering Yearn users exposure to one of the most prominent Proof-of-Stake networks.
ATOM is not only a governance token but also secures the Cosmos Hub through staking. The token accrues value through network fees and staking rewards. Cosmos employs a slashing mechanism to maintain network integrity, which can be considered in risk assessments.
Cosmos and ATOM are supported by thorough documentation and have undergone several audits, ensuring a high level of trust and security within the network. ATOM is also supported by various oracles for price feeds, which facilitates its integration into lending platforms.
- Market Cap: $4.4B
- Weekly Volume $244M
- Weekly txs 530k
- WAU 170k
- Diversification: Incorporating ATOM diversifies the asset base of Yearn vaults, mitigating risks associated with overexposure to any single asset or protocol.
- Increased TVL: The addition of an ATOM vault is projected to boost Yearn’s TVL significantly, as ATOM holders seek optimized yield farming strategies.
- Strategic DeFi Partnerships: The integration facilitates potential strategic partnerships within the Cosmos ecosystem, opening avenues for cross-chain yield strategies.
- Innovation Leadership: By adopting an ATOM vault, Yearn would position itself at the forefront of multi-chain yield optimization, reinforcing its reputation as a DeFi innovator.
- Fee Revenue: Additional vaults translate to increased fee revenue for Yearn, with a portion of the performance fees contributing to the protocol’s sustainability and profitability.
Specific Strategies (can change)
- Compound Finance Lender Optimizer
- Supplies ATOM to Compound Finance to generate interest and earn COMP. Earned tokens are harvested, sold for more ATOM which is deposited back into the strategy.
You can view our Compound forum post here [Temp Check] Add Atom as Collateral - #4 by HonestResearcher - New Markets - Compound Community Forum
- AAVE Lender Optimizer
- Supplies ATOM to AAVE to generate interest and earn stkAAVE tokens. Once unlocked, earned tokens are harvested, sold for more ATOM which is deposited back into the strategy.
You can view our AAVE forum post here [TEMP CHECK] Add Atom as Collateral on AAVE through IBC - New Market - Aave
We have our IBC bridge that will allow for these assets to become ERC20 tokens in the most secure and trust minimized manner. We are connected with the main hubs from Polkadot and Cosmos and will be advocating to get cross chain community support. Initially we plan on getting support from market makers and community pools to inject the initial liquidity.
Detailed IBC Overview
The Inter-Blockchain Communication Protocol (IBC) is a protocol designed to facilitate the authentication and transportation of data between two blockchains. It operates with a minimal set of functions defined in the Interchain Standards (ICS). Importantly, IBC does not limit the network topology or consensus algorithm of the blockchains it connects, making it versatile and adaptable for use with a wide range of blockchains and state machines. The following features highlight key benefits to utilizing IBC:
i) Permissionless and Secure: IBC offers a permissionless way to relay data packets between blockchains, unlike most trusted bridging technologies. The security of IBC relies on the security of the participating chains.
ii) Modularity and Composability: IBC separates the transport layer (TAO) responsible for secure connections and data authentication from the application layer, which defines how data packets are packaged and interpreted. This modularity enables composability and the ability to design applications on top of IBC.
iii) Light Clients and Relayers: IBC relies on light clients and relayers to ensure the validity of cross-chain transactions. Relayers are responsible for scanning the state of participating chains, constructing datagrams, and executing them on the receiving chain. Light clients efficiently verify the relevant state of the counterparty blockchain.
iv) Security: IBC’s security is based on trusting the consensus of the connected chains. It also implements fault isolation mechanisms to limit damage in case of malicious behavior.
The migration of adding ATOM into AAVE as an ERC20 will be facilitated through IBC and Composable Finance. More information on IBC and Composable Finance below.
Composable was the first company to connect a non Cosmos chain through IBC. This was through a custom mechanism to connect Polkadot and Cosmos. Our goal is to bring IBC everywhere, hence connecting to all chains. Connecting to Ethereum will be a major push in the terms of secure interoperability as we are moving away from centralized solutions and empowering users.
The creation of an ATOM vault on Yearn Finance presents a strategic opportunity to leverage a growing ecosystem, enhance yield-generating products, and attract a broader user base. This proposal is backed by empirical data and a strong value proposition, aligning with Yearn’s commitment to financial innovation and user wealth maximization.