Author: José Maria Macedo, Delphi Ventures

Compiled by: Deep Tide TechFlow

The Cosmos ecosystem has demonstrated strong growth momentum and technological innovation to the outside world.

Delphi Ventures partner José Maria Macedo reviews some of the driving events in the Cosmos ecosystem: the launch of dYdX v4, the launch of two permissionless chains Neutron and Sei, and support from Metamask, all of which will bring a large number of new users and dApps. This article will provide a more detailed analysis of these developments. Here is the original text:

We have always been optimistic about Cosmos and chose it as the home for Delphi Labs' incubation projects. This view is gradually being validated, with many exciting projects on the horizon.

1) Native $USDC on Noble

Through Noble, native USDC has finally entered Cosmos. The importance of this stablecoin cannot be overstated.

Every ecosystem needs a native stablecoin, as no one wants to hold non-native assets long-term in the face of over $2 billion in cross-chain bridge attacks that continue to grow. $UST once filled this role in Cosmos, but its demise has left a significant liquidity gap for stablecoins.

Native USDC will be issued on Noble and circulate in Cosmos via IBC, meaning it can be used on any of the 60+ Cosmos chains.

2) dYdX v4

dYdX is the most successful on-chain derivatives DEX in history, with a total trading volume of approximately $1 trillion.

The team has long embraced L2 and chose Starkware in 2020. Similarly, they began researching application chains early and announced their move to a Cosmos application chain in 2022. This decision is bold and well-founded.

This is a team that already has one of the most successful dApps in the field, with daily trading volumes reaching 9-10 figures. Yet they still chose to rebuild from scratch using the Cosmos SDK.

Why did they do this?

In the words of founder Antonio, he is not interested in building a relatively successful protocol; he wants to "win the entire market and seek real change/innovation." He believes that application chains are the best way to achieve this goal.

Why?

The primary reason: sovereignty.

This move means that dYdX's products are no longer dependent on the decisions or development speed of the Ethereum core team or any specific L2. They can proceed at their own pace and customize the chain to fit their own use cases.

This means they can choose their point on the scalability-decentralization-security trilemma. While L2s are fast, they are several orders of magnitude slower than what is needed to run a large-scale DEX. They also sacrifice decentralization for speed.

The customizability of application chains allows dYdX to maximize scalability by letting validators run an in-memory order book (i.e., off-chain), where only matching orders reach consensus.

This also increases decentralization compared to L2s, as everything (i.e., on-chain and off-chain components) can be run by a decentralized network of nodes rather than a single sequencer or other centralized failure points.

While a single sequencer does not pose a security risk since users can withdraw to L1, it is a vitality risk. Vitality is crucial for derivatives DEXs, as high leverage means that even a brief interruption can lead to user losses and/or bad debts for the protocol.

Application chains also allow dYdX to explore more: sovereign MEV, mempool encryption, native oracles, etc. All of these help reduce external dependencies and capture additional value for stakers/users.

In summary, the launch of dYdX v4 will:

• Bring many new users and liquidity to Cosmos;

• Showcase the power and diversity of the Cosmos SDK technology stack;

• Set an example for other teams aspiring to build customized application chain products.

3) Neutron

Neutron is the first general-purpose, permissionless cosmwasm SC chain protected by the Cosmos Hub (i.e., $ATOM).

As the name suggests, Neutron positions itself as a "neutral" hub for developers to deploy dApps on Cosmos without permission.

While general-purpose application chains may seem disconnected from the narrative, not every dApp needs to become an application chain. Launching an application chain is more expensive and time-consuming than deploying an SC. For many dApps that cannot benefit from customizability, this investment is clearly not worth it.

Juno and Terra attempted to fill this role, but without the backing of $ATOM to support their security, they lack the credibility of neutrality that Neutron possesses. Besides having the highest economic security in Cosmos, a more important benefit may be the narrative/meme value and philosophical consistency.

Neutron makes it easier to launch dApps by including modules in its chain binary. Through this move, it also aims to become a governance and staking center for cross-chain dApps, such as Mars Protocol/Astroport. This is a smart move, as it means that cash flow from various outposts in Cosmos will flow back to Neutron, enhancing its internal GDP.

Finally, Neutron is built by the P2Pvalidator team, the founders and core contributors of Lido Finance. This not only means that one of the strongest building teams in the crypto space is focusing on Cosmos but also holds the potential to solidify Neutron's position as an LSD liquidity center.

4) Sei

Sei is also a permissionless SC chain. However, unlike Neutron, it does not intend to position itself within Cosmos but aims for a broader scope.

Sei's goal is to become the fastest L1, competing with Solana, Aptos, and Sui.

Unlike its competitors' focus, Sei recognizes and accepts the fact that the current driving force in the crypto space is speculation and attempts to build a chain fully optimized for trading.

This means speed and throughput (Sei has already achieved 500ms finality + 22,000 TPS on its testnet), but also includes order book matching engine infrastructure, native validator-protected oracle price feeds, prevention of front-running, and more.

But good technology is only half the victory.

Sei understands that becoming a winner in the DeFi space requires not only good technology but also a thriving ecosystem to facilitate and drive speculative behavior.

Sei learns from the experiences of other L1s and has the best growth/BD I have seen in cryptocurrency. This is rare in the crypto space and even rarer in Cosmos.

As a result, they have built a strong ecosystem through social media in less than a year, with 375,000 followers on Twitter and 440,000 followers on Discord. While it remains unclear how many of these will convert to actual chain usage, the launch of Sei could bring a large number of new users and dApps to Cosmos.

5) Metamask Snaps

Metamask has 30 million monthly active users, several times more than any other wallet. Besides native stablecoins, MM's integration is undoubtedly the biggest boost to adoption, allowing users to interact with new chains without learning new UX patterns.

You can think of MM Snaps (Note: MetaMask's MM Snaps is a system that can extend MetaMask's functionality. It allows you to add new APIs in MetaMask, support different blockchain protocols, or modify existing features) as an app store that allows developers to write plugins, which users can then add to their MM. Some Cosmos OGs are developing a new Snap that allows users to sign Cosmos transactions using their MM.

This will significantly lower the entry barrier for users to interact with Cosmos. Unlike requiring users to install a new wallet, manage new mnemonic phrases, and learn new UX patterns, MM Snaps will enable users to access Cosmos seamlessly.

So far, this article has been long enough, but there are still many driving events that have not been mentioned. Here are a few roughly listed:

• New privacy chains are about to launch, including Anoma, Namada, and Penumbra, which could make Cosmos a leading privacy ecosystem alongside Secret;

• Osmosis is launching concentrated liquidity + order book;

• Injective is launching Project X, a one-click launch platform for raising funds/launching projects on Cosmos;

• The launch of ABCI++ will further expand the customizability supported by the Cosmos SDK.

Disclaimer: Delphi Ventures is an investor in dYdX, Sei, Neutron, and Anoma, and the original author personally holds $INJ and $OSMO.