COSMOS REPORT H1 2024: MAJOR UPDATES, INTERCHAIN GROWTH & INNOVATIONS | EVERSTAKE

Cosmos, the "Internet of Blockchains," is a decentralized network where independent blockchains operate with the Proof-of-Stake mechanism. Its primary blockchain, known as Cosmos Hub, uses the native token ATOM for staking, governance, and transactions. Staking ATOM involves locking up tokens to support the network and earning stakers additional ATOM rewards. This mechanism enhances the security and decentralization of Cosmos.

The interchain ecosystem is currently witnessing an unprecedented surge. The Inter-Blockchain Communication Protocol (IBC), now interlinking over 100 Cosmos chains, maintains a sustainable and interoperable environment with swift and pragmatic data transfers. The recent extension of IBC to Solana, Ethereum, and Avalanche has enhanced the ecosystem’s role in the broader blockchain industry.

This report unveils updates and trends for blockchains from the Interchain family, including Cosmos Hub, Celestia, Injective, Osmosis, Babylon, and KAVA Network among the biggest impactors on the ecosystem.

Key insights and takeaways

The first half of 2024 has been a period of notable growth and developments for the Cosmos ecosystem. Despite several challenges discussed in this report, the staking and governance activities within Cosmos Hub have remained steady and experienced a moderate increase. 

Key Events in the Cosmos Ecosystem in H1 2024

1. ATOM Retail Stake Increase. The total amount of staked ATOM grew by 4.5% to 255.5 million, with a 45% surge in delegators, adding 443,611 new addresses.
2. Cosmos Hub ICS 2.0. Interchain Security 2.0, with its flexible and cost-efficient security for consumer chains, was officially introduced, and several chains are preparing to onboard in Q3 2024.
3. HYDRO Liquidity Management. HYDRO concept was introduced in May 2024, seeking to enhance Protocol owned liquidity management, enable projects to bid for ATOM liquidity, and bring additional value to the ecosystem.
4. Celestia’s Modular Expansion. The total stake increased to 728.4 million TIA. Over the same period, the ecosystem saw significant growth in active addresses and data publication, as well as the launch of Astra, a high-throughput Stargaze Layer 2.
5. KAVA Network Developments. The total stake grew to 136.2 million KAVA as the blockchain transitioned to a non-inflationary token model and launched WBTC issuance in partnership with BitGo.
6. Major releases enhancing Injective capabilities. The ecosystem boosted the total stake to 60.4 million INJ, introduced gas compression to reduce transaction costs, and released INJ 3.0 to enhance token deflation. Furthermore, the introduction of the world’s first Real World Asset (RWA) Module has substantially increased on-chain institutional adoption on Injective.
7. Osmosis Innovation. The blockchain’s total stake increased to 344 million OSMO as the team launched 1-Click Trading (powered by Smart Accounts), decreased block speeds to ~2.5 seconds, and introduced Alloyed Assets to unify different versions of like-kind assets and improved liquidity and UX.
8. Babylon’s Bitcoin Staking Protocol. The team launched the first trustless Bitcoin staking testnet and secured a $70 million funding round to advance Bitcoin-secured decentralized finance.

Cosmos Hub

The first half of 2024 has proved to be a time of significant growth and transformation for the Cosmos Hub. Substantial increases in total stake, the number of delegators, and the introduction of innovative solutions like the HYDRO platform and Interchain Security 2.0 were arguably the key events for the ecosystem.

Staked ATOM Hit a New High

Total Stake Growth

• The total stake in Cosmos Hub increased by 4.5% (11.4 million), reaching 255.5 million ATOM by the end of Q2 2024.
• A significant surge occurred from January to March, peaking at 254 million ATOM in February. This was followed by a slight decline and a steady recovery.

Open graph

Delegator Growth:

• The number of delegators grew by 45%, with 443,611 new addresses staking ATOM since the beginning of the year.
• Most of this growth occurred in January and February, adding 384,000 new staking addresses. Nonetheless, June saw a net outflow of 5,250 delegators, possibly due to high market expectations and volatility.

Retail Delegators Fuel ATOM Staking Surge

• Over the last six months, a noticeable shift has occurred towards more retail ownership of ATOM. Smaller stakers, particularly those staking under 100,000 ATOM, have increased their share at the expense of whale delegators. 

Stake Distribution Breakdown (by amounts of stake):

• 100,000+ ATOM: 50.38% (131.97M), a decrease of 3.53%
• 10,000 - 100,000 ATOM: 18.38% (48.15M), a slight decline of 0.01%
• 2,000 - 10,000 ATOM: 9.33% (24.4M), a reduction of 0.09%
• 0.5 - 2,000 ATOM: 7.35% (19.25M), an increase of 0.28%
• <0.5 ATOM: 14.57% (38.16M), an increase of 3.37%

The most substantial growth was seen among those staking between 0.01 and 2000 tokens, which aligns with the overall increase in the number of retail delegators.

Redelegation Activity

The volume of redelegation transactions has risen dramatically, with 129,000 unique redelegators recorded in the first half of 2024—an increase of 75,000 compared to the entire year of 2023. 

This surge was largely driven by the change in minimum validator commission from 0% to 5% following governance proposal #826, prompting many delegators to shift away from low-fee validators. 

All validators experienced redelegation activity, but despite the increased activity, the total stake impacted by redelegations only slightly increased with 26.51 million of ATOM redelegations against 45.65 million for entire 2023. This suggests that most active redelegators were staking smaller amounts.

Liquidity Initiatives

In 2023, several governance proposals (800, 853, and 858) were passed to provide liquidity from the Cosmos Hub’s Community Pool, allocating a total of 1.95 million ATOM into various liquidity pools. These time-limited allocations generate profits and partially return them to the Hub. This arrangement benefits Liquid Staking Token (LST) issuers like Stride and pSTAKE and platforms hosting liquidity pools such as Neutron, Osmosis, and Astroport.

The HYDRO platform, following the concept of ATOM Wars published earlier, was introduced in May 2024 to enhance the structure and automation of protocol-owned liquidity management. HYDRO addresses one of the critical challenges in crypto: ensuring efficient and effective token liquidity.

Key Features of HYDRO:

• Bidding System: Projects can bid for ATOM (and other tokens) liquidity, thus enhancing the ecosystem’s overall security and adding value to ATOM.
• Stakeholder Rewards: The platform provides extra rewards for ATOM delegators while boosting new Cosmos projects and making the interchain ecosystem more efficient.
• Auction Mechanism: HYDRO operates by receiving assets from the Community Pool and setting tranches for distribution via bidding auctions. Projects seeking liquidity compete in these auctions, and the winning bid rewards its voters.
• Voting Process: ATOM stakers lock their stakes for periods starting from one month, earning hATOM for auction voting. The longer the lock period, the more voting rights they gain. Voters favor higher bids but face penalties if their chosen project performs poorly or misbehaves. On the other hand, they earn bonuses if the project overperforms.
• Monthly Tranches: The winning tranche is allocated for one month, after which it is redistributed through a new auction. The initial winner can re-enter to continue using the liquidity backed by this tranche.

HYDRO operates with assets from the Community Pool, so external testing is required to ensure the tooling is safe and viable. As per proposal 827, Oak Security will conduct these audits.

Interchain Security 2.0

Interchain Security (ICS) is a feature of the Cosmos Hub that allows it to provide security to other blockchain networks, known as consumer chains. Consumer chains can thus leverage the Cosmos Hub's validator set to secure their networks and enhance the overall security of the ecosystem.

The first iteration of Interchain Security (ICS), known as the Replicated Security model, has been serving consumer chains like Stride and Neutron. Despite its steady performance, the model faced significant drawbacks in cost efficiency. It required validation by the majority of active ATOM validators, who control 95% of the voting power, which made it impractical for many validators. 

• In 2024, the combined returns from Stride and Neutron amounted to $147,500. Still, the break-even rate to cover operational costs is approximately 16 times higher annually.
• Neutron’s allocation of 10,000 NTRN to each Hub validator supporting Neutron has significantly decreased this gap.
• The issuance of new Liquid Staking Tokens (LSTs) such as stDYDX, stTIA, and stDYM in 2024 also contributed to the increased returns.

Source: datalenses.zone

Introduction of ICS 2.0

To address these challenges, the Cosmos community developed Partial Set Security, or ICS 2.0. This model introduces greater flexibility and cost efficiency by allowing active ATOM validators to choose which consumer chains to support. Its key benefits are flexibility, meaning that validators can decide to support specific consumer chains; and cost efficiency, since the partial validator set is more economical and therefore can attract more consumer chains.

Implementation and Onboarding

Preparations for ICS 2.0 are complete, with the community approving the concept and the software part implemented through the Gaia 17 upgrade. 

• Several Cosmos chains, including the new Elys network, Aether, Lorenzo Protocol, and existing ones like Evmos and Comdex, are set to onboard ICS 2.0 starting in Q3 2024.
• The transition aims to increase participation, enhance security, and improve the financial viability of the Cosmos Hub's interchain security offerings.

Cosmos Hub Maintains Active Governance 

The Cosmos Hub maintained a steady level of governance activity in the first half of 2024. During this period, 21 proposals were put to vote, and only three were rejected. Additionally, 30 spam proposals with malicious intent were swiftly dismissed due to active community participation.

This level of governance activity is comparable to 2023, which saw 60 proposals voted on with an impressive passage rate of 86%. 

Most-Voted Proposals in H1 2024

Thirteen proposals in the first half of 2024 exceeded 55% approval, with six surpassing 58% of quorum, indicating that most staked ATOM participated in the voting process.

Source: Smart Stake Analytics

Most-voted Proposals:

• #867: Validator Incentivization. Allocation of NTRN tokens from the Hub’s Community Pool to incentivize validators supporting Neutron within Replicated Security, helping cover operational costs.
• #920: AADAO Oversight Election. The community voted for Grace as the new member of the Oversight Committee of Atom Accelerator DAO, tasked with monitoring grants from the DAO to Cosmos-oriented projects.
• #899: Agoric Spend Proposal. Directed 179k ATOM into liquidity pools consisting of Agoric’s stable IST, stATOM, and stkATOM, aiming to earn an annual return of 18% for the Hub.
• #895: Permissioned CosmoWasm Signaling Proposal. The community intended to implement CosmoWasm smart contracts into the Hub, particularly for governance improvements and DAO developments.
• #885: Gaia V15 Upgrade. This major release updated all crucial Cosmos elements to newer versions, including IBC, CometBFT, and Interchain Security, ensuring the Hub remains at the forefront of blockchain technology.
• #871: Update Client to Realio. Revived the expired IBC channel between the Hub and Realio, allowing users to transfer assets between the two chains.

Celestia

Celestia, a modular blockchain network, has witnessed significant growth and numerous updates in the first half of 2024. This section details the progress in staking, delegator activity, data publication, and key ecosystem integrations.

Total stake and delegators’ growth

The total stake on Celestia increased by 54.8%, from 470,363,844 TIA to 728,440,000 TIA.

With over $4B staked, Celestia boasts the highest staking ratio (69%) across all Cosmos chains, making it a secure foundation for deploying mainnet rollups and applications.

The most significant stake increase occurred in April, with a 24.6% growth (+137 million TIA staked).

The number of delegators nearly quadrupled from 9,397 to 39,169, with the most notable increase in April, coinciding with the peak in stake growth.

Redelegations

In the first half of 2024, 102,190 unique Celestia delegators participated in redelegations between validators, resulting in a total redelegation amount of 274.5M TIA. Most redelegations (93.01%) were directed towards validators offering lower fees.

Celestia cumulative data published

Rollups and Layer 2 solutions use Celestia for publishing and making transaction data available. Celestia provides a high-throughput data availability layer that can be easily verified with a light node. Data submission to Celestia involves blob transactions (BlobTx), which include a standard Cosmos-SDK transaction (MsgPayForBlobs) and one or more data blobs. 

Data publication on Celestia accelerated over the last six months, reaching approximately 27GB cumulative by June 2024. Data posted to Celestia steadily increased throughout June, hitting an all-time high in daily statistics on June 19.

Active addresses growth

Active addresses on Celestia more than doubled from 308.7K in January to 845.7K in June 2024.

Source: Smart Stake Analytics

Modular Blockchains 

The first half of 2024 saw rapid modular expansion, with top Layer 2 solutions like Aevo, Lyra Finance, Hypr Network, Orderly Network, Eclipse, and Public Goods Network choosing Celestia for modular data availability. 

One notable development is the launch of Astra, a new high-throughput Stargaze Layer 2 built on Celestia. Astra L2 relies on Celestia for data availability, while Stargaze L1 functions as the liquidity and routing hub.

Another major release was the launch of Forma, the first sovereign rollup built with Celestia underneath and powered by Astria Sequencing Layer.

Liquid Staking on Celestia 

MilkyWay, a liquid staking solution for Celestia's TIA, went live on December 18, 2023. Within 12 hours of the launch, over $1.2M USD of milkTIA was issued, and the milkTIA pool on Osmosis surpassed $1.4M USD. 

On February 1, 2024, Stride launched the second liquid staking solution for TIA, reaching an all-time high of $63 million in TVL in March.

Main Ecosystem Integrations and Milestones 

• Rollchains
  March marked the release of rollchains, enabling any Cosmos L1 to post its data to Celestia.
  Stride was the first blockchain to transition to a rollchain, followed by Noble. Noble's transition allows Celestia rollups to interact with Noble assets like USDC, fostering interoperability within the modular ecosystem.
  
  
• Blobstream
  In March, Celestia Labs introduced Blobstream, which streams Celestia’s modular data availability layer to Ethereum. Blobstream unlocks new use cases for high-throughput applications on Base, with Celestia underneath.
  
  
• Lemongrass Hardfork
  The upcoming Lemongrass hardfork, introduced in H1 2024, is set to bring a number of changes, including the following state-breaking CIPs (Celestia Improvement Proposals):
• CIP-6: Price Enforcement
• CIP-9: Packet Forward Middleware
• CIP-10: Coordinated Upgrades
• CIP-14: Interchain Accounts
• CIP-20: Disable Blobstream module

• Infinite Space Bazaar Hackathon
  Announced on March 18, the Infinite Space Bazaar Hackathon took place from April 2 to May 17. It offered over $100k in prizes and attracted numerous promising projects and workshops.
  
  
• Modular Summit
  Modular Summit 3.0 2024 brought together the industry's leading experts, featuring a variety of speakers over a three-day event centered on insights from pioneering figures in the modular blockchain space.

To revisit the event, you can access the Modular Summit Presentation Library by Modular Media. This library archives the summit recordings and organizes them by specific categories for easy navigation.

Injective

Injective is a blockchain optimized for building financial applications, leveraging the Cosmos SDK and a custom implementation of the Tendermint BFT consensus mechanism. It is an interoperable and environmentally friendly Layer-1 blockchain that provides developers with plug-and-play infrastructure for building advanced DeFi applications, such as spot and derivative exchanges, perpetuals, RWAs, lending protocols, and more.

Injective Stake Grew Significantly in the First Half of 2024

In the first half of 2024, the total stake in Injective increased significantly, rising from 46,580,941 INJ to 58,930,225 INJ (a 26.51% increase). The number of delegators also substantially increased, growing by 89.05% from 149,732 to 283,074.

April was particularly noteworthy as the most productive month for Injective regarding the total stake growth, with an 11% increase, which corresponds to an additional 5 million INJ staked.

Active Injective Delegation and Trading in the First Half of 2024

During the first half of 2024, 51,790 unique Injective delegators participated in redelegations between validators, resulting in a total redelegation amount of 11.5 million INJ. Notably, 88.75% of these redelegations were directed toward validators offering lower fees, highlighting a preference for cost-efficient staking options.

The cumulative trading volume on Injective surpassed $34.3B, fueled by numerous ecosystem releases and integrations.

Main Internal Releases and Tokenomics Updates

Injective rolled out several key updates to enhance the platform’s performance and economic model. These updates reduced transaction costs and introduced new mechanisms to optimize token value and support ecosystem growth.

Introducing the Groundbreaking RWA Module

Further boosting institutional adoption, Injective has unveiled the world's first Real World Asset (RWA) Module, offering a novel method for creating and managing permissioned assets with extensive customization capabilities.

This module allows institutions to effortlessly launch and access a diverse range of structured products and RWAs. These offerings include tokenized fiat pairs, treasury bills, exclusive credit products, and more, all accessible via compliant gateways. Furthermore, the platform supports the creation of tokens with tailored features, such as specific allow lists that regulate asset access.

This advancement paves the way for on-chain institutional adoption by providing the robust infrastructure necessary for compliance and efficiency.

Gas Compression

Injective has always offered some of the lowest fees in the industry. In the first half of 2024, several tokenomics upgrades, including the gas compression release, further reinforced its position among other blockchains. This update aimed to reduce transaction costs on Injective drastically. 

With gas compression, transactions on Injective—whether for staking, participating in governance, trading, lending, or minting an NFT—now incur almost zero cost (approximately 0.00001 INJ or $0.0003). This development opens numerous opportunities for developers, users, and institutions. For instance, it enables dApps and high-frequency traders to process thousands of transactions per second more cheaply than most other blockchains.

The effectiveness of gas compression is reflected in the correlation between daily transactions and fees. Particularly, daily transaction volumes have continued to rise over the reviewed period, while fees have concurrently decreased.

INJ Tokenomics Updates

As the ecosystem of Injective users and dApps grows, new technical enhancements are being introduced to support this expansion. Following the INJ 2.0 tokenomics upgrade released in 2023, Injective introduced INJ 3.0 in April 2024, which marked a new milestone in its development.

Injective has a unique burn mechanism, whereby a portion of protocol-generated revenue is collected on a weekly basis from dApps leveraging the exchange module. The pooled assets are then put up for a public auction denominated in INJ, with the auction winner receiving the entire basket of assets. The winning INJ bid is then subsequently burned. This system has made Injective one of the blockchains with the highest burning ratios in the industry. 

Initially, the burn auction only included assets sourced from protocol-generated revenue from dApps employing the exchange module. The release of INJ 2.0 expanded the burn auction’s reach, allowing all Injective dApps—not just those using the exchange module—to participate without any restrictions on the amount of fees that can be burned. This change significantly increased the amount of INJ burned. Injective’s April 2024 Burn Upgrade further broadened the scope of this feature, enabling individual users to participate. Consequently, any project or user can now directly contribute to the Injective Burn Auction, thereby potentially increasing its overall value and impact.

As of June 12, after concluding another INJ burn auction, Injective reached a milestone of 6 million tokens burned to date.

During the first half of 2024, the amount of INJ burned on a weekly basis nearly quadrupled, rising by 274% with an average weekly increase of 5.85%.

Pic: Growth of the Injective Burn Auction

Another tokenomics update, INJ 3.0, reduces the supply of Injective’s native token, making it one of the most deflationary assets within the blockchain industry. In particular, the INJ supply is set to decrease over the next two years with accelerated deflation rates according to the percentage of INJ staked on-chain. Injective uses a dynamic supply mechanism, whereby the supply rate adjusts within a lower and upper bound block by block, targeting a percentage of INJ staked on-chain. INJ 3.0 set forth a schedule to decrease the lower and upper bounds quarterly, as well as increasing the responsiveness of the network to staking activity. This allows for increased network stability while accelerating deflation rate. 

Introduction of the Injective Tokenomics Paper

In June 2024, Injective unveiled a groundbreaking paper detailing the Injective Token, its core utilities and the mechanisms driving a programmable token economy.

The paper offers an in-depth analysis of the genesis distribution and vesting schedule that form the basis of Injective’s economic framework and illustrates how INJ is revolutionizing the crypto landscape through its dynamic supply mechanisms and innovative token burn system.

Dive into the full Injective Tokenomics Paper here.

Active addresses growth

Over the first half of the year, the active addresses on Injective increased from 292,000 to 542,000 (an 85.62% increase). This boost can be attributed, in particular, to numerous integrations, the Ninja Ambassador program update, the growth of Helix DEX, new pre-launch futures markets, and the launch of a trading competition.

Ecosystem dApps Progress

As Injective expands its technical features, the ecosystem of dApps also grows and evolves. The most influential developments over the past six months are listed below.

• Helix 2.0: Helix, a top-tier decentralized exchange on Injective, unveiled Helix 2.0. This upgrade brings new features designed to improve user experience, broaden trading options, and further enhance the platform's ability to link users with the most widely traded currencies and commodities.
  
  

• Mito: Mito debuted on the Injective mainnet in February 2024. It brings a state-of-the-art automated vault platform and Launchpad to the wider Web3 audience.
  
  In the first half of 2024, Mito received noticeable support from the Injective community. Initially, it gathered over 150,000 members during its testnet phase. Later, it released its launchpad with the NFT Fi collection called Quants, which the Injective community had selected through voting. Additionally, Mito introduced permissionless vaults, enabling projects to create their vaults independently.
  
  

• DojoSwap: DojoSwap is a native AMM DEX built on Injective. It quickly gained traction in the DeFi community, amassing $49 million in TVL just weeks after its launch.
  
  

• Hydro Protocol: Hydro Protocol, an LSD & LSDFi infrastructure platform on Injective, launched at the beginning of 2024. Since its launch, Hydro Protocol has reached $93.91 million in total value locked, 65,980 total users, and over $14.79 million in total market cap.
  
  

• Talis Protocol: Launched in June 2023, Talis Protocol is the first NFT marketplace built on Injective. It is the central hub for all NFT activities on Injective, including launchpad sales, peer-to-peer trades, and collection offers. Since its debut, Talis has achieved a trading volume of 470.96K INJ with 255,862 NFTs created.

Osmosis

Osmosis is an appchain (application specific blockchain) and decentralized exchange (DEX) built on the Cosmos SDK that enables seamless and efficient swapping of digital assets. It is a primary DeFi hub within the Cosmos ecosystem and beyond, leveraging the Inter-Blockchain Communication (IBC) Protocol to facilitate cross-chain transactions.

Total Stake and Delegators’ Growth

Over the year's first half, the total stake in Osmosis increased by 24 million OSMO, rising from 320,002,504 OSMO to 344,157,648 OSMO. The number of delegators also grew substantially, rising by 171,982 from 1,488,193 to 1,660,175.

June was particularly notable, with a 7.4% increase in total stake (+2.5 million OSMO).

Active Addresses Growth

Active addresses on Osmosis are nearing 1 million, with a 38% increase over the first half of 2024, translating to an addition of 267,008 addresses.

Trading Volume and IBC Activity

2024 began with a significant surge in trading volume on Osmosis. Starting in December 2023, the Osmosis DEX maintained over $1 billion in trading volume for five consecutive months.

As Cosmolytics data suggest, Osmosis remains at the forefront of the Cosmos ecosystem in terms of IBC activity and transaction volume.

User retention in Osmosis

According to PYOR data, in addition to leading in IBC activity and transaction volume, Osmosis boasts the highest user retention rates among major blockchains and leading DEXs.

Main Internal Releases

Several significant internal releases for Osmosis enhanced its performance, user experience, and overall ecosystem integration.

Faster Block Speeds 

With the v25 upgrade, Osmosis introduced faster block speeds, reducing block time to approximately 2.5 seconds. 

Burn Mechanism 

The v25 upgrade also implemented a burn mechanism, allowing for the burning of 1.3 million OSMO tokens shortly after the upgrade. Nearly 2 million OSMO have been burned to date and removed from the circulating token supply.

Smart Accounts

To enhance the DeFi user experience, Osmosis enabled the Smart Accounts feature, which aims to simplify onboarding with intuitive tools such as Passkeys, Face ID, and Touch ID. Osmosis Smart Accounts offer several essential features and functionalities:

• Automation and 1-click trading
• Multi-key and multi-device support
• Simplified onboarding and account recovery
• Advanced security protocols
• Extensibility and composability

Astroport Passive Concentrated Liquidity Pools 

Another significant development was the launch of Astroport passive concentrated liquidity (PCL) pools on Osmosis. This collaboration aims to improve the trading experience and boost capital efficiency by bringing together two dynamic DEXes in the Cosmos ecosystem.

Primary Liquidity Hub for Solana and Ethereum Assets 

Thanks to the Picasso Network’s extension of the IBC Protocol to Solana and Ethereum, Osmosis will serve as the primary liquidity hub for assets from these ecosystems within the Cosmos network.

Alloyed Assets

Osmosis launched its Alloyed Asset solution, which merges different versions of like-kind assets into a single, unified token. The first asset to utilize this system was USDT, designated as the canonical version of USDT on Osmosis in Proposal 792 (approved on June 18).

BTC Staking on Osmosis

With the introduction of the Alloyed Asset solution, Osmosis is set to introduce Alloyed Bitcoin, a tradable asset representing a share in a liquidity pool composed of several types BTC. This product combines various BTC variants across the ecosystem, including nBTC from Nomic, wBTC from Ethereum, and Osmosisnative wBTC issued by BitGo. Staking BTC on Osmosis will boost security and attract additional liquidity to both Osmosis and the broader Cosmos network.

Babylon

Babylon is a Bitcoin staking protocol designed to activate Bitcoin holders' idle capital, allowing them to stake their bitcoins without bridging them to a PoS chain. 

This protocol serves as a modular plug-in that works with various PoS consensus algorithms and lays the foundation for building restaking protocols. By staking Bitcoin, users can unlock new uses for their assets and advance Bitcoin's integration with the Proof-of-Stake economy.

Launch of the Babylon Bitcoin Staking Testnets

Launching testnets is crucial for thoroughly testing every component of Babylon's architecture before its Mainnet release. It also provides access to all network participants, from PoS blockchains to individual users. 

In February 2024, Babylon announced the public launch of its Bitcoin Staking Testnet, the world's first trustless Bitcoin staking testnet. This testnet allows Bitcoin holders to store Bitcoin's value, use it as a means of payment, and unlock staking opportunities to earn rewards for providing security.

The Babylon Bitcoin staking testnet (bbn-test-3) saw immense success, with over one hundred thousand pioneer stakers joining to test BTC staking functionality. 

The Testnet-4 focused on the security of staked Bitcoins, ensuring that only the owner can control the staked assets. A key feature of this testnet was its gradually increasing staking caps, with the first 5 sBTC cap fulfilled in only 13 minutes.

Source: X Everstake

The Babylon Ecosystem Overview

Babylon's Bitcoin staking protocol ecosystem significantly advances the DeFi landscape, providing Bitcoin holders with new opportunities for yield-generating activities. The ecosystem includes various projects from DeFi and Liquid (Re)staking to Rollup infrastructure and Finality Providers. 

Liquid (Re)staking, in particular, enhances yield-generating activities by offering a flexible and efficient way to stake Bitcoin while maintaining robust security and decentralization.

Notable projects within this ecosystem include:

• pStake: Created by Persistence, this liquid staking protocol allows users to access the liquidity of their staked assets while earning staking rewards.
• Bedrock: Offers native rewards from Ethereum, Bitcoin, and DePIN, providing instant liquidity and enhanced rewards through integration with DeFi, EigenLayer, Babylon, and Bedrock Diamonds.
• Lombard: Developing LBTC, a yield-bearing liquid-staked BTC on Babylon, set to unlock over a trillion dollars in capital for DeFi.
• Chakra: A ZK-driven Bitcoin restaking protocol that establishes a secure Bitcoin Proof-of-Stake system, activating the liquidity of long-term Bitcoin holdings.
• PumpBTC: A liquid-staked BTC on Babylon, compatible with EVM chains, boosting yield while ensuring security and liquidity, maintaining a 1:1 peg to BTC.

$70 million Funding Round

Babylon completed a $70 million funding round led by Paradigm, with significant contributions from Polychain Capital, Amber, Everstake Capital, Galaxy, Bware Labs, Hack VC, Mantle, and others. This investment will advance Babylon's mission to create a Bitcoin-secured decentralized economy. The Babylon Bitcoin Staking protocol allows Proof-of-Stake systems, including PoS chains, Layer 2 solutions, data availability layers, and oracles, to source staking capital from Bitcoin. 

By offering this novel staking solution, Babylon bridges the gap between Bitcoin’s robust security and dynamic opportunities within the DeFi space, paving the way for broader adoption and innovative financial products.

Source: X Babylon

Kava

Kava is a software protocol that uses multiple cryptocurrencies to allow its users to borrow and lend assets without the need for a traditional financial intermediary. 

In this way, Kava is considered one of a number of emerging decentralized finance (DeFi) projects. However, whereas most DeFi projects run on Ethereum, Kava is instead built on Tendermint Core, a design decision its team argues adds additional functionality. 

Total stake and delegators’ growth

In the first half of the year, the total stake in Kava increased from 127,494,463 KAVA to 136,235,450 KAVA, while the number of delegators rose from 65,118 to 68,833. The most significant surge in stake occurred in January 2024, driven by the Luganodes validator, which attracted around 15 million KAVA.

The stable growth in the number of delegators indicates a sustained interest in staking KAVA. The most significant increase occurred in Q1 2024, with approximately 3,000 new KAVA stakers joining. After a brief correction, the positive trend continued from March onward. 

Starting January 1, 2024, KAVA's tokenomics transitioned to a non-inflationary model, halting the issuance of new tokens and switching to paying rewards from a dedicated pool following their Upgrade 15. Despite somewhat reduced returns for stakers, the KAVA token has become more stable and less volatile, making it increasingly attractive to long-term investors.

KAVA Delegators distribution

The distribution of delegators among validators is mainly uniform, with nineteen validators having more than 1,000 delegators ranking from 1 to 45 by voting power. This signals a high rate of decentralization among the active set of 100 staking providers.

USDT and WBTC Issuance

KAVA became the third chain, along with Ethereum and Tron, to provide both USDT and WBTC issuance. Partnering with BitGo Trust Company, KAVA deployed WBTC in Q1 2024, further establishing its leadership in providing liquidity for the world's largest cryptocurrencies. This follows the deployment of USDT on KAVA in 2023.

The Kava Network has established robust connections with leading cryptocurrency exchanges like Binance and BitGo, serving as a dependable link between Ethereum markets and the Cosmos ecosystem for numerous institutional and retail users. 

Notably, it boasts native support for Kava EVM on Binance, marking a significant achievement. All WBTC issued on Kava are natively backed by BitGo with a $250 million insurance fund, and USDT is backed by Tether. As of June 30, 2024, over 100 million USDT and WBTC worth $4.5 million are in circulation on Kava. Both assets are fully compatible with all Kava ecosystem projects and the broader Cosmos ecosystem, driving widespread Kava adoption.

KAVA Updates Following Upgrade 16

Kava Lend, the core platform of the KAVA network, has set an ambitious roadmap for 2024. This includes enhancing EVM compatibility to integrate with the broader Ethereum ecosystem, launching cross-chain lending through IBC to target the Cosmos interchain ecosystem, and introducing wBTC and Real-World Asset (RWA) yields to bridge traditional finance and DeFi. Essential preparations were executed through Upgrades 16 to achieve these goals.

Main Changes After Upgrade 16

• Enhanced EVM Compatibility: Allows for seamless integration of Ethereum-based decentralized applications (dApps) and smart contracts on the Kava platform, including BEP3 assets integration with the Binance BSC chain. Cross-Chain
• Interoperability: Advanced cross-chain capabilities with added Inter-Blockchain Communication functionality to facilitate smoother asset transfers between Kava and other Cosmos chains within the Interchain ecosystem. 
• DEFI Tooling: CDP (collateralized debt position) smart contracts were improved, leading to better yields and a smoother customer experience.

KAVASCAN: Native Explorer Backed by Cosmostation

Kavascan is a powerful blockchain explorer designed for the Kava Chain, which operates on the Ethereum Virtual Machine (EVM) and leverages the Cosmos-SDK architecture. With 83% of Kava's on-chain activities occurring within its EVM layer and over 100 EVM-based dApps deployed, Kavascan offers an essential suite of features to navigate and explore this rich ecosystem.

Source: Kavascan

Kavascan Core Features

NFT Support: Users can manage and view their NFTs directly in Kavascan. The explorer displays transaction details for ERC-721 tokens, highlighting minting and transferring activities. Users can easily track LP positions backed by NFTs on Wagmi or Kinetix Finance DeFi platforms built on KAVA. 

Smart Contract Internal Transactions: Displaying contract interactions and token transfers. 

Future Block Prediction: The explorer gives precise dates for specific blocks, enabling stakeholders to avoid transactions during blockchain upgrades scheduled for a specific block height. 

Contract Information: Kavascan lists verified top ERC-20 contract tokens, providing details on token transfers, holders, and contract specifics. This includes WKAVA, a wrapped version of $KAVA, with full contract verification details and source code. 

By choosing Kava, users opt for a highly secure and efficient platform that continues to expand its ecosystem and integrate with top industry partners. Thus, KAVA offers a promising and dynamic environment for crypto enthusiasts in 2024 and beyond.

Future prospects

Cosmos is an expanded and complex ecosystem spanning numerous interconnected blockchains. Each of them brings much innovation to the table and caters to the specific needs of different audiences, making Cosmos's future prospects very positive and promising.