A comprehensive look at Coinlist's latest launch Nibiru: The next star project in the Cosmos ecosystem?

1. What is Nibiru? What problems does it solve?

Nibiru Chain is a Layer 1 blockchain and smart contract ecosystem that offers exceptional throughput and unparalleled security. Nibiru aims to be the most developer-friendly and user-friendly smart contract ecosystem, leading mainstream Web3 adoption through innovation at every layer of the stack: dApp development, infrastructure, consensus, a comprehensive developer toolkit, and value accumulation.

The on-chain crypto ecosystem suffers from fragmentation, with each application residing in its unique ecosystem. This fragmentation is a natural result of different developer communities around the world, leading to rapid innovation but also unnecessary complexity.

Applications and blockchains are often developed in isolation, lacking a central authority to integrate them into a larger ecosystem. This presents challenges for users and developers who want a seamless application or development journey. The key to broader adoption lies in improving the usability and scalability of these systems. Enabling a wider audience to access Web3 is a crucial next step.

2. Why choose to build with the Cosmos SDK?

Choosing the Cosmos SDK to build Nibiru Chain is both a pragmatic and strategic decision. Several core contributors to Nibiru have extensive experience in projects like Tendermint and Sommelier, or have been innovators and maintainers of the Cosmos SDK itself. But beyond the team's familiarity, building with the Cosmos SDK brings several advantages that provide a technical edge in scalability, interoperability, and low-level flexibility, making it one of the few strong competitors to modern scaling solutions like Ethereum Layer 2.

Strategic advantage of inter-chain connectivity: The SDK stands out for its modular design and support for infinite horizontal scaling through the Inter-Blockchain Communication (IBC) protocol. These two factors enable developers to build custom sovereign chains while maintaining the ability to interoperate with other IBC networks in the ecosystem by default. This is why projects like dYdX, Wormhole Gateway (Wormhole bridge on IBC), Composable Finance (Polkadot and Kusama on IBC), Landslide (Avalanche on IBC), Axelar, and Injective choose to build with the Cosmos stack: for ease of use and unlocking emerging capabilities greater than the sum of their parts.

Improving developer efficiency/time to market: Base Tendermint Core provides an upper limit of about 10,000 TPS for a single zone/network (Buchman, 2016, pp. 65-70) without any enhancements or optimizations. Additionally, the Cosmos SDK offers out-of-the-box features such as staking, decentralized governance, fungible token standards, and robust abstractions to avoid directly dealing with the complexities of the consensus layer. It allows teams to focus on core differentiation and product features rather than rebuilding generic blockchain functionalities from scratch.

3. There are many incredible L1s. What makes Nibiru more developer and user-friendly than other smart contract platforms?

About Developer Friendliness:

Security of Wasm VM: Smart contracts in Nibiru's main execution engine (Wasm) are not affected by the vast majority of common attack vectors, such as reentrancy, arithmetic overflow/underflow, ERC20 short address attacks, and many other attacks that plague the Web3 space. This means that highly reliable applications can be deployed faster and scaled to serve a growing cryptocurrency user base.
Familiarity with EVM: In addition, Nibiru Chain will offer EVM support in 2024. For developers, the ability to build and deploy applications in a familiar EVM environment with a lower barrier to entry is a significant advantage. They can continue using existing tools like Solidity, Truffle, Remix, and Metamask while enjoying the scalability improvements of Wasm smart contracts, faster finality times, inter-blockchain composability (IBC), and modular benefits. Nibiru Chain will adopt the Ethereum protocol logic of Geth (Go-Ethereum), allowing nodes to run simultaneously in both Wasm VM and EVM execution environments.
Multi-language SDK: We have developed high-quality software development kits (SDKs) in various popular languages, such as Python (popular in data science and programmatic trading), JavaScript/TypeScript (the most widely used programming languages across all domains), Golang (common in Web3, particularly in the Cosmos stack), and Rust (for CosmWasm smart contract developers).
GraphQL API for Simplified Data Processing: The Nibiru team developed Nibi-Indexer, a service that listens to blockchain events, messages, and transactions, storing data in structured database tables for easier historical retrieval and search. This indexer was initially built as an internal tool and now supports an open GraphQL API. Nibi-Indexer is conceptually similar to The Graph's protocol-specific API but is universal, providing utility across the entire network.
Low-latency Decentralized Oracles: On the Nibiru blockchain, validator operator nodes act as oracles by reaching consensus on off-chain data and publishing votes on the network through transactions. This system ensures data integrity, as validators may face penalties or slashing risks if they behave maliciously or submit inaccurate data. The speed of the oracles is only limited by the block completion time (just 1.4 seconds). Smart contracts also provide first-class support for querying merkleized data from oracles.

About User Friendliness:

Unified Web Application and dApp Registry: Nibiru Chain plans to launch a unified web application that integrates numerous decentralized applications (dApps) to enhance user experience. The platform will also provide a comprehensive registry to make it easier for users to discover and interact with various dApps. This initiative aims to simplify user interactions within the Nibiru ecosystem, providing a central portal for decentralized services.
Lower Gas Fees: Compared to many other L1 platforms, Nibiru Chain prioritizes affordability by maintaining lower gas fees. This cost efficiency makes it easier for a broader range of users and developers to utilize it, facilitating more transactions and interactions on the network without the burden of high costs.
Performance and Parallelization: Nibiru helps eliminate the trade-offs between decentralization, security, and scalability. Nibiru Chain achieves high throughput and reduces block times, significantly minimizing potential network congestion. This makes transaction processing smoother and more reliable.
Another benefit of having a scalable network that can handle more messages and transactions is that it opens the door for consumer-centric real-time applications. The enhanced throughput and parallelization capabilities of Nibiru Chain make it an ideal platform for real-time consumer applications. This technical advantage opens new possibilities for developers to create innovative, responsive applications (similar to those we see in Web2).

4. On-chain derivatives trading volume lags behind spot trading volume, with DeFi exchanges accounting for only about 5% of total trading volume. Given Nibiru's optimism about on-chain derivatives, what do you see as the main growth catalysts for the industry?

This belief largely stems from an analysis of what is happening in the centralized exchange (CEX) environment. A new trend is emerging in the digital asset space, where the scale and number of DeFi projects are tending to match those in the CeFi space over time. This situation is occurring in the spot market, as the overall trading volume of Uniswap often reaches or exceeds that of exchanges like Coinbase, Kraken, and Kucoin. The spot order book has been the dominant model until Uniswap created a new model that achieves similar capital efficiency and usability in a non-custodial manner.

In the cases of Aave and Compound, a similar pattern has emerged between centralized and decentralized lending. These decentralized exchanges (DEXs), while initially much smaller than their CEX counterparts, have now evolved into the most popular digital asset lending platforms, as they can provide the same utility as Binance Loans and OKX Loans but with greater transparency and decentralization.

So, why is the usage of on-chain DeFi derivatives lower than that of the DeFi spot market? Simply put: DeFi derivatives have not yet fully caught up with CeFi derivatives in terms of execution speed, lower maker and taker fees, or liquidity locking. It could be argued that derivatives are still in the "spot order book" stage.

A quick survey of trading volumes on CoinMarketCap (dated January 29, 2024) shows that the top 5 CEXs in the derivatives category are Binance, Bybit, OKX, Bitget, and Kucoin.

The derivatives trading volumes of all these exchanges far exceed their spot trading volumes: Binance's difference is over 3 times, Bybit's over 4 times, OKX's over 9 times, and so on. If you extract the same data for comparison on almost any day, you will see a similar pattern where derivatives usage is higher than spot usage. At least, that has been the case for the past few years.

Some top players in the DeFi derivatives space include dYdX (Ethereum L2 + dYdX Chain), Hyperliquid (Arbitrum), GMX (Arbitrum, Avalanche), ApolloX (BSC), and Drift Protocol (Solana). These protocols have different trade-offs in terms of capital efficiency, maker and taker fees, front-running risks, available liquidity, and execution speed. However, they all fall short compared to the futures offered by Binance, Bybit, OKX, etc. From a purely trading experience and technical capability perspective, decentralized derivatives are at a disadvantage compared to centralized products due to their complexity and difficulty in building products in a purely smart contract-driven manner.

That said, the derivatives space is highly competitive and continues to evolve rapidly with innovation. One of these decentralized participants could still become the "Uniswap of DeFi derivatives," and if this hypothetical exchange emulates the spot and lending models, it should reflect the patterns of centralized exchanges and multiply spot trading volumes. This is where the Nibiru team sees the potential in derivatives.

CeFi derivatives excel in (1) available liquidity, (2) lower trading fees, and (3) order matching and trade execution speed, while DeFi derivatives excel in:

Transparency: The collapse of centralized exchanges and platforms like Celsius, Voyager, and FTX highlights the inherent risks and lack of transparency in centralized systems. While web3 has potential, there is an urgent need for greater transparency and accountability. In traditional finance, practices like "B-Books," where brokerage firms act as counterparties, have raised concerns about market manipulation. In contrast, on-chain derivatives offer inherent transparency that promotes fairness in the market.
Composability/Interoperability: The advantage of on-chain derivatives lies in their ability to seamlessly integrate with other DeFi products on shared blockchain infrastructure. This enables direct interactions without intermediaries, fostering innovative solutions such as loans backed by derivative contracts, clever use of NFTs for trading-related metadata, or the creation of entirely new asset classes.

User experience, especially considering the complexity of derivatives trading, has always been a barrier that keeps the field primarily in the hands of advanced users. Nibiru aims to provide the functionalities needed to bridge this gap, thereby offering the flexibility, ease of use, and capital efficiency of large centralized exchanges while avoiding drawbacks such as off-chain settlement, full custodial fund delegation, or designated market advantages for makers.

5. You recently announced several notable gaming partnerships. How do you view Nibiru's entry into the Web3 gaming space?

The gaming industry has over 3 billion players globally, attracting a diverse population across various age groups. Web3 allows players to truly own in-game assets and achieve cross-game compatibility. This enables players to own, trade, and sell in-game assets, elevating interaction to a new level, thus enhancing engagement and retention rates. Traditional Web2 games are flooding into the blockchain, and Web3 gaming represents one of the largest verticals that have achieved market-validated product-market fit.

Not only does the Nibiru community view gaming as a primary pastime, but Nibiru also sees gaming as a core vertical and provides the toolkit needed to achieve this goal. Game developers choose Nibiru because it can handle 40,000 transactions per second (TPS) and has instant finality.

Game studios and developers can leverage the technical stack of Nibiru Chain to:

Tokenization: In-game assets as NFTs for ownership and trading.
Security: Players can safely access in-game economies using CosmWasm smart contracts, all verified and proven on Nibiru's blockchain.
Performance: Providing high transaction throughput and low latency; crucial for a smooth gaming experience.
Interoperability: In-game assets can serve multiple purposes and use cases; providing developers with a powerful and easy-to-use toolkit.
Royalties: Asset creators can earn rewards and fees each time their creations are traded.

Nibiru has partnered with the Blockchain Game Alliance, which will enable Nibiru and its ecosystem partners to further penetrate the broader gaming community.

Currently, Nibiru has announced games including mobile role-playing games and prize savings games. These types have the potential to attract a large initial user base through exciting, easy-to-understand, and familiar gaming experiences. Building on this, Nibiru plans to extend its reach into other verticals, including full-chain games, card games, strategy games, puzzle games, racing games, and more.

6. What mechanisms are in place to ensure the sustainable growth and decentralization of the protocol?

A) Foundation Delegation Program

Validators are crucial for maintaining the health, performance, and security of the network. Recognizing this, Nibiru Chain has implemented a delegation program aimed at distributing the foundation's token allocation to a select group of active validators who have made significant contributions to the ecosystem.

The program is guided by three main objectives:

1. Recognition and Incentives: Designed to recognize and reward validators who actively enhance the ecosystem. This recognition serves as motivation for continued participation and greater contributions.
2. Enhancing Decentralization and Accessibility: The program aims to provide a fair competitive environment for smaller independent validators. By facilitating their access to voting rights and commission income, it reduces the need for large initial capital, thereby increasing decentralization.
3. Promoting Balanced Distribution of Stake: A focus of the program is to ensure diversity and balanced distribution of stake. This is achieved through delegation among various types of validators, geographical locations, and service providers, mitigating the risk of any single validator accumulating excessive control over the network due to disproportionate voting power.

B) Nibiru Chain Grant Program

To encourage external development, Nibiru offers a grant program that provides financial support, guidance, and other resources to developers committed to enhancing the Nibiru ecosystem. Interested community members are encouraged to develop (1) resources that make building on Nibiru easier, and (2) applications across a broad range of areas in Web3, such as DeFi, gaming, payments, real-world assets (RWA), NFTs, and more.

For more information: [Request for Proposals (RFP) ] [ Nibiru Grants]

C) On-chain Governance

Nibiru Chain is a community-driven decentralized blockchain that utilizes the Tendermint consensus algorithm for delegated proof of stake. Within this framework, the NIBI token serves a dual purpose: it is used for paying gas fees and for securing the network. This security is crucial for the generation of new blocks and the validation of on-chain transactions.

During staking, users lock their NIBI tokens as a form of capital. This action is essential for participating in the network's consensus mechanism, allowing stakeholders to add new blocks to the chain. As a reward for their contributions, stakers receive returns proportional to the amount of tokens they have staked.

A key aspect of this mechanism is the concept of "slashing." If validator operators act maliciously or attempt to compromise the network, they risk losing their staked tokens as a penalty. This "slashing" serves as a strong deterrent against dishonest or harmful activities by validators.

In addition to securing the network and block production, staking NIBI tokens also empowers users to participate in decentralized governance. This on-chain governance process allows members of the Nibiru ecosystem to make decisions collectively and influence protocol changes. They do this by voting on various "proposals," with their voting power proportional to the amount of NIBI they have staked. This mechanism ensures that those with a stake in the network have a voice in its development.

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