Cosmos Liquid Staking And The Interchain: A Game-Changer For Defi In 2023

Cosmos Liquid Staking and The Interchain: A Game-Changer for DeFi in 2023

September 28, 2023 written by 01NODE

In the vast and dynamic world of blockchain technology, few ecosystems are as ambitious and multifaceted as Cosmos. In this article, we’ll dive into the heart of the interchain, exploring Cosmos’s vital components and the recent strides it has made, with a particular focus on liquid staking and its role in shaping the decentralized finance (DeFi) landscape.

Cosmos Hub: Nucleus of the Interchain

At the epicenter of the Cosmos ecosystem stands the Cosmos Hub, a blockchain that orchestrates a wide array of ecosystem services, making it an indispensable player in the interchain realm. Here’s a glimpse of its essential functions:

1. Marketplace

Cosmos Hub is poised to revolutionize decentralized exchanges by facilitating the seamless swapping of digital assets from across the interchain. What sets it apart are its remarkably low transaction fees and instantaneous confirmation, promising a superior trading experience.

2. Security Provider

With the forthcoming Interchain Security feature, ATOM (Cosmos’s native cryptocurrency) will extend its protective mantle over multiple chains, earning ATOM holders additional staking rewards as they secure these chains.

3. Router

A central mission of the Cosmos Hub is to forge connections within the interchain. It achieves this by establishing IBC connections with compatible chains and operating decentralized bridges with prominent blockchains like Ethereum and Bitcoin.

4. Custodian

Situated at the crossroads of the interchain, the Cosmos Hub offers unparalleled security. It serves as the ideal repository for digital assets, allowing users to manage their accounts across multiple chains with confidence.

The Interchain: An Ocean of Possibilities

The interchain concept brings forth a myriad of opportunities, including interchain accounts, decentralized exchanges, liquidity pools, and cross-chain assets like wrapped ETH and BTC. Cosmos Hub, as the first public proof-of-stake blockchain built on a Byzantine Fault Tolerant consensus engine, is primed to take a leading role in this transformative journey by offering vital services.

Key Features of the Interchain

Interchain Account

Interchain Accounts are the linchpin of the IBC-enabled world. They empower blockchains to securely control accounts on other chains through IBC, enabling users to access the entire interchain using a single Cosmos Hub account. One account to rule them all.

Gravity Bridge

Backed by substantial ATOM staking on the Cosmos Hub, the Gravity Bridge is set to be the epitome of secure, efficient, and decentralized cross-chain bridges, particularly to Ethereum. It will facilitate the flow of Cosmos assets into the Ethereum ecosystem as ERC-20 tokens and vice versa, enhancing interoperability.

Interchain Security

Staked ATOM will no longer be confined to securing just the Cosmos Hub. Validators will have the option to validate “child-chains” on an opt-in basis, using their ATOM delegation as collateral. This expansion of responsibilities comes with additional rewards, incentivizing further adoption.

Chain Name Service

Blockchains will soon have their equivalent of domain names: chain names. Managed on the Cosmos Hub, the Chain Name Service simplifies user interactions within the interchain by providing easily recognizable chain identifiers.

Liquid Staking

Liquid staking is poised to be a foundational element in the cross-chain DeFi space. Essentially, it represents claims against staked ATOM, accruing staking rewards that can be freely transferred. However, it carries the risk of partial burning if the underlying ATOM gets slashed.

Liquid Staking Module (LSM): Bridging the Gap

One of the most significant developments in Cosmos is the integration of the Liquid Staking Module (LSM) through the “Gaia v12” upgrade on the Cosmos Hub. LSM is a pivotal addition that enables native liquid staking within the Cosmos network, eliminating the need for lengthy unbonding periods and allowing users to seamlessly transition between staking and DeFi activities.

This module introduces governance-controlled parameters, offering flexibility and adaptability to the ecosystem. Additionally, validators seeking delegations from liquid staking providers must self-bond a specific amount of ATOM, enhancing network security and decentralization.

Leading Liquid Staking Protocols on Cosmos

With liquid staking taking center stage in the Cosmos ecosystem, several protocols have emerged as leaders in this domain. Here are some of the standout contenders:

1. Stride

Stride offers a robust liquid staking solution, allowing ATOM holders to maximize their participation in DeFi activities while still earning staking rewards. Its user-friendly interface and security features make it a top choice for Cosmos enthusiasts.

2. pStake

pStake stands out with its efficient staking and DeFi integration, providing a seamless experience for users looking to leverage their staked ATOM. Its strong security measures and attractive yields make it a popular choice within the Cosmos community.

3. QuickSilver

QuickSilver is known for its speed and versatility. It enables users to quickly convert staked ATOM into liquid assets for DeFi purposes. With its efficient smart contract capabilities, QuickSilver is a force to be reckoned with in the liquid staking landscape.

Challenges on the Path to Liquid Staking Dominance

Despite the promising developments in the Cosmos ecosystem, there are challenges to overcome before liquid staking can achieve widespread adoption. These challenges include ensuring security, building user trust, and navigating regulatory considerations.

Catalysts for Future Growth

Looking ahead, Cosmos is poised for further expansion and innovation. Upcoming developments, strategic partnerships, and projects within the ecosystem hold the potential to propel liquid staking to new heights, solidifying Cosmos’s position as a leader in the blockchain and DeFi landscape.


Cosmos continues to evolve, pushing the boundaries of what is possible in the blockchain space. With the introduction of the Liquid Staking Module and a thriving ecosystem of liquid staking protocols, Cosmos is at the forefront of the DeFi revolution. As challenges are addressed and catalysts for growth come into play, the future of Cosmos and liquid staking within the interchain looks promising, offering exciting opportunities for blockchain enthusiasts and investors alike. Stay tuned for the next chapter in the Cosmos saga, where the interchain continues to expand its horizons.

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