Cosmos is “the internet of blockchains.” Built with interoperability at its core, it supports an ecosystem of blockchains connected to each other through its own inter-blockchain communication (IBC) protocol. This has made Cosmos the center of a rapidly developing DeFi scene full of innovative L1 chains, application chains, and infrastructure.
Of these, decentralized exchanges (DEXs) act as seminal gateways to the flow of users, assets, and ideas. This is because through IBC, DEXs on Cosmos support asset transfer across the different IBC-enabled blockchains. This has helped unlock new levels of liquidity and opportunities for investment in DeFi.
Here are three promising DEXs on Cosmos.
Osmosis Osmosis is an interchain automated market maker (AMM) built using the Cosmos SDK framework. It’s the largest and most active DEX in the Cosmos ecosystem. At its peak in March this year, the protocol had a total value locked (TVL) of more than $1.5 billion. Its daily trading volume peaked on May 11, 2022, at just over $500 million.
The Osmosis DEX is the center of an ecosystem of dApps like aggregators, bridges, and blockchain explorers. It features a friendly user interface that allows users to swap between tokens from different chains conveniently.
Osmosis users can also become liquidity providers and earn rewards in interest, albeit through an inflationary reward system. In fact, the protocol’s generous liquidity incentives are credited for its relatively higher TVL. During the bear market, the TVL currently hovers around $200 million, with a daily trading volume of around $20 million.
Sifchain Sifchain is one of the most innovative projects on Cosmos. The DEX is built with the Cosmos SDK and is IBC enabled, allowing users to cheaply and efficiently swap tokens across blockchains on the Cosmos ecosystem. However, it’s the only DEX that currently supports transferring to non-IBC enabled chains as well.
Sifchain is the only appchain DEX on Cosmos with a built-in bridge to EVM-compatible blockchains. Therefore, users have access to significantly more Ethereum tokens on this protocol than on others within Cosmos. This is made possible with Sifchain’s own Peggy Bridge technology.
Peggy allows for bidirectional connectivity with EVM blockchains. This, in turn, facilitates permissionless trading between Sifchain and EVM chains. Furthermore, the technology allows for double pegging, which is the ability to import a token from one chain and export it to another. An EVM token imported into Sifchain is usable in any IBC chain and EVM chains through double pegging.
Sifchain has also introduced margin trading on its platform. Traders can currently open margin positions and long tokens at up to 5x leverage, however, the platform plans to increase that to as much as 100x. They can also open numerous positions per wallet, close positions, and view open positions and interest rates. Interest paid by traders is returned to liquidity providers as non-inflationary revenue. This is a big step away from the current trend that has most platforms paying out in highly inflationary reward tokens.
Overall, these will take trading on the Sifchain DEX to a whole new level.
SiennaSwap SiennaSwap is a cross-chain decentralized exchange designed with a special focus on privacy. It is built on the Secret Network, a custom blockchain on the Cosmos ecosystem with privacy-preserving smart contracts. It also offers low transaction fees.
Unlike in other exchanges, transactions on SiennaSwap are private instead of public. Being on the Secret Network allows users to swap private SNIP-20 tokens anonymously. SNIP-20 is a crypto standard for private fungible tokens based on the smart contracting platform CosmWasm.
The DEX also has bridges to Ethereum and Binance Smart Chain. These allow users to convert Ethereum-compatible tokens into their private equivalents and use them in the Cosmos ecosystem.
The future of blockchain and interoperability During this crypto winter, DEXs on Cosmos are holding strong. Their decentralized nature gives them the resilience to keep going in an environment that is causing more centralized DeFi projects to stumble.
Through interoperability, the Cosmos ecosystem is pushing DeFi a step closer to achieving its full potential. And, as DEXs like Osmosis, Sifchain, and Siennaswap take advantage of this and keep innovating, it won’t be long.
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