[IDEA] Collaborate on Cross-Ecosystem Polination of Polkadot's native token, DOT

General Ideas
1

Summary
The purpose of this discussion is to explore potential cooperative efforts in bringing DOT into the Neutron ecosystem via collaboration between Composable, Neutron, and dApp deployments within the ecosystem.

Composable has developed a cross-chain bridge, Centauri, utilizing IBC beyond the Cosmos ecosystem. Centauri exists as a mainnet chain within Cosmos itself, and acts as an intermediary between asset transfers. In its current state, Centauri connects the Polkadot and Kusama relay chains with one another as well as allows the DotSama ecosystem to bridge assets out into the Cosmos ecosystem.

As a result of the connection established between DotSama <> Cosmos, DOT may now be readily accessible to an entirely new suite of applications within the Cosmos ecosystem. In particular, Neutron hosts multiple dApps that serve as an excellent staging ground for DOT outside of its own ecosystem.

Problem

The Polkadot network’s native token, DOT, has remained largely restricted to its own ecosystem. While other bridge providers have created access to DOT outside of its eco by using “wrapped” versions of the asset, cross-chain utility for DOT remains largely lacking. Given Centauri’s use of IBC as its transfer protocol, we believe that it serves as the ideal vehicle for DOT to reach the broader Cosmos ecosystem due to the use of native IBC across the Cosmos.

Solution

Neutron’s smart contracting platform has attracted attention from core DeFi primitives within Cosmos and may serve as an excellent staging ground to proliferate DOT throughout Cosmos applications. We have seen Neutron attract deployments from Astroport as well as Mars, and in the near future Levana as well. These platforms serve as excellent vehicles to allow users to utilize DOT in various forms outside of its native ecosystem.

Astroport - DEX

Currently, a small DOT/USDC pool exists within the Astroport DEX deployed on Neutron. Availability of liquidity via DEX underpins using a token in broader applications. Foremost, establishing deeper liquidity for DOT via a DOT/NTRN pool on Astroport allows additional protocols to move forward with DOT integration.

Mars - Lending

Mars is a lending protocol currently deployed on Osmosis + Neutron. Mars’ ability to host a new asset listing is heavily dependent on available liquidity for that asset. This is due to the fact that in the circumstance that a lender/borrower needs to be liquidated, the protocol has a venue where it is able to sell the liquidated assets. Because of this, Mars becomes an obvious second step for integration once DOT liquidity is deepened on Astroport.

Levana - Derivatives

Similar to Mars, Levana is currently deployed on Osmosis, with plans to deploy on Neutron in the near future. Levana offers users the ability to access derivatives markets on-chain. As DOT has become a highly valued token, holding an FDV of nearly $7bn, creating an easily liquid market for users to trade against.

Closing Thoughts

Neutron hosts a strong suite of early application deployments across decentralized exchange (AMM), lending, and soon derivatives. These DeFi primitives offer multiple ways for new users to utilize and interact with DOT as it is bridged into the Cosmos. As such, we feel that a close integration partnership with Neutron serves a mutually beneficial purpose of creating broader use-cases and utility for DOT outside of its native ecosystem, while also bringing liquidity and activity to Neutron and the applications deployed upon it.

5 Likes
2

This is an exciting initiative. What next steps do you foresee for deepening the integration of DOT on Neutron?

2 Likes
3

Thanks for the response ser. Currently, we have a treasury proposal on Polkadot aimed at securing a loan to facilitate significant DOT liquidity within the Cosmos ecosystem. Sf this proposal is successful, our intention is to collaborate on the use cases outlined in the original post, as well as any new opportunities that may arise in the forthcoming months. These initiatives are expected to be mutually advantageous for both DOT and the associated protocol…

As a part of the next steps in this initiative, we are going to be going through various proposals and discussions with the communities in the Neutron ecosystem. Firstly,proposing to the Neutron community that we jointly establish a DOT/NTRN liquidity pool on Astroport. The DOT funds for this pool would originate from the loan, contingent upon the approval of the proposal, while the NTRN funds would be sourced from the Neutron community pool. We believe that conducting this collaboration entirely on-chain, without resorting to a multisig solution, is in the best interests of both parties.

A possible solution for this is to utilise the contracts developed by Timewave labs. Should this not be ready in time, we could look to deploy the funds into a smart contract operated by NTRN governance. Once the pool has been seeded, Composable’s plan is to incentivise participation in the pool through two strategies: (1) providing PICA/NTRN LP incentives to the liquidity pool, and (2) seeking ASTRO incentives from the Astroport Protocol. We are confident that these measures will increase activity within the pool, attracting more users to the ecosystem.

In regards to Mars Protocol, we are going to put up a proposal to accept DOT for borrowing and lending via a governance proposal. Should the treasury proposal on Polkadot pass, we would look to deposit DOT into Mars vaults for liquidity provisioning, enabling DOT holders an avenue to earn yield by providing further DOT or take out loans in the form of DOT.

Levana has proven itself as a user-friendly derivatives protocol, and incorporating DOT perpetual contracts for traders on the platform would be a significant benefit. Given DOT’s high liquidity and a daily trading volume of around ~1 billion as of today’s date (24/08/2023), offering DOT as a perpetual asset could prove advantageous for traders on the protocol.

Additionally, it would provide DOT holders with an opportunity to engage in leveraged trading of the token in a decentralised and user-friendly manner, a feature that is unavailable elsewhere. We are also keen to explore the possibility of incentivising the initial set of users for the DOT perpetual contracts to bootstrap this offering on Levana.

1 Like
4

Can I ask, why DOT? It seems like quite a bit of work to leverage a partnership and honestly, the Polkadot eco is just not worth it when compared to larger and more flourishing ecosystems on the OP stack or the EVM network… Even Solana would be a more strategy choice.

disclaimer I am only fresh to Cosmos but the outsiders view on this is Cosmos lacks users and liquidity and partnering with other chains in the same position is not likely to change that.