IST liquidity has been SUPERCHARGED with the launch of a new native stabletoken pool on Osmosis, NobleUSDC/IST
Let’s dive into why this is such a big deal for the Cosmos ecosystem, and why you should be as excited as we are…
In case you missed it, the Noble chain has gone live on Cosmos and brought with it natively issued USDC to the IBC ecosystem.
While at first glance this might seem like a drawback for IST, which already offers a native stabletoken option on Cosmos, in fact the opposite is true. For the interchain to attract more liquidity, there needs to be multiple secure stabletoken options for users, with seamless integration to other blockchain ecosystems that allows this liquidity to move around. No stabletoken has this in abundance more than USDC. Both USDC and IST have important roles to play in bringing liquidity and security to the interchain.
Noble enables the Cosmos community to trade and swap USDC without the bridge risk previously associated with Axelar or Gravity versions. It also enables USDC to flow natively across a number of blockchain ecosystems such as Ethereum, Cosmos, Aribtrum and more thanks to Circle’s Cross-Chain Transfer Protocol (CCTP). The ability to now unify liquidity across all these chains through Noble is a big step forward in helping to attract new liquidity into the Cosmos ecosystem.
IST offers a complimentary option. Censorship resistant, decentralized and over collateralized by an increasing number of interchain assets, it offers traders looking for a truly decentralized stable solution another option. As more collateral types are voted in by the community, such as stATOM, DOT and more, IST will continue to become more decentralized and less reliant on the basket of stable token assets that currently make up the PSM.
The mix of USDC for liquidity and IST for decentralized interoperability makes for a competitive and attractive DeFi trading landscape.
So to ensure the effective proliferation of these two important assets across the interchain we need highly capital efficient liquidity. And we need it to be easily accessible and liquid. This is where Osmosis Supercharged pools and Quasar vaults come in.
Concentrated liquidity is a novel Automated Market Maker (AMM) design introduced by Uniswap V3. Supercharged Liquidity, which was launched earlier this year as part of the release of Osmosis V16, is Osmosis’ version of this same design for IBC.
The novel design creates immense capital efficiency, which is realized by enabling liquidity provision in specific user-selected price ranges. This is different to how previous AMM pool designs worked where liquidity was deployed across the whole spectrum of the price range from 0 to infinity, leading to a lot of unutilized capital and loss of rewards for LP’ers.
In this new Supercharged USDC/IST pool, Liquidity Providers (LPs) can strategically allocate their capital within a narrow range centered around $1, rather than spanning the entire spectrum from 0 to infinity. This focused approach results in an impressive 200-300x increase in capital efficiency on average, according to Osmosis. Additionally, traders experience reduced price impact, as the pool encourages deeper liquidity around the current price.
This efficiency attracts more traders, which attracts more liquidity, which in turn attracts higher yields, more traders and so on. A strong growth flywheel effect for two important assets in the ecosystem.
But that’s not all. As a supercharged pool, Quasar can now launch a Concentrated Liquidity (CL) Stablecoin Strategy Vault on top and enable traders to make use of managed positions on Qasar for even greater capital efficiency and rewards. Yet another tool likely to drive demand and liquidity for IST.
While Osmosis Supercharged Pools have already improved the user experience in the Cosmos ecosystem, Quasar CL Vaults are elevating that experience to new heights.
Data from Quasar shows that more than half of all Osmosis users were at some stage outside the optimal range with their supercharged positions. This means they didn't receive any incentives or swap fees during that period. Most also don’t ever amend their positions.
Quasar offers Supercharged Pool strategies through CL vaults, which means users don’t have to manually intervene, and can benefit from the automated rebalancing of positions for maximum incentives and fees.
What’s more Quasar has unique permissions to upload CosmWasm contracts to Osmosis directly, which means unbonding time is instant, avoiding the need for any wasted capital to be left sitting idle.
The USDC/IST pool is now live on Osmosis, with Quasar CL vaults soon to follow. Start your journey with Inter Protocol today and join us as we continue to make IST the most ubiquitous and important decentralized stabletoken for the interchain.