USDe is a synthetic dollar cryptocurrency with a soft peg to USD, maintained via automated delta-hedging trading operations.

 cryptocurrencies have revolutionized the crypto market since their arrival more than ten years ago. Assets like 

 and other popular stablecoins have been instrumental in reducing crypto volatility and connecting the worlds of crypto and fiat currencies.

USDe is a synthetic dollar asset issued by 

 that doesn't suffer from these common limitations of stablecoins. Backed by delta-hedging 

USDe offers enhanced security through its decentralized structure, with proven stability, high scalability and no single custodian.

 is a synthetic dollar asset that maintains a soft peg to the USD through delta hedging of its underlying assets during minting.

 (DeFi) protocol on the Ethereum blockchain. Users can flexibly acquire, stake and liquidate their USDe holdings with 1:1 collateralization.

Ethena is the Ethereum-based DeFi protocol that issues USDe. Ethena Labs was founded in 2023 by its CEO, Guy Young, and the Ethena protocol launched its native cryptocurrency, ENA, in early April 2024. Although Ethena's vision extends beyond USDe, this synthetic dollar asset is its flagship product and primary focus.

To maintain a soft peg to the US dollar, USDe utilizes a 

 on derivatives markets. This allows the value of USDe to remain stable despite being backed by volatile cryptocurrencies.

To mint USDe, users deposit collateral in the form of volatile or semi-volatile digital assets, such as Ether (ETH), Bitcoin (BTC), staked Ethereum (stETH) or stablecoins such as USDT. The protocol doesn’t require overcollateralization, which is often a burden in other decentralized stablecoin systems like that of Dai (DAI). Instead, USDe maintains a 1:1 collateral ratio, which improves capital efficiency.

Once collateral is deposited, Ethena automatically opens a short perpetual futures position for that asset on a derivatives exchange. This position offsets the market exposure created by the collateral, effectively neutralizing the price volatility of the underlying asset.

For example, when a user deposits ETH as collateral:

This delta-hedging model ensures that the total portfolio value remains relatively stable, preserving the dollar peg of USDe.

Automated smart contracts and price feeds

All minting and redemption operations on Ethena are managed by 

 that also automatically open and close hedge positions. To ensure pricing accuracy, Ethena integrates with multiple 

 systems, including Pyth and RedStone and data feeds from centralized exchanges such as Bybit. This redundancy mitigates price manipulation risks and ensures robust peg maintenance.

Unlike traditional stablecoins that rely on single-custodian models, USDe adopts an Off-Exchange Settlement (OES) model. Collateral is held by independent custodians, separate from trading venues, reducing counterparty risk and improving systemic resilience.

The Ethena reserve fund serves as a critical stability mechanism for USDe. This dedicated pool of assets provides an additional layer of security to maintain USDe's peg during market fluctuations, and acts as a financial buffer against unexpected events in the crypto markets.

The fund consists primarily of highly liquid assets, including USDT, USDC and ETH. This diversified composition ensures that the reserve remains resilient across various market conditions, while providing immediate liquidity when needed to support the peg mechanism.

During periods of negative funding rates or unusual market stress, the reserve fund activates to support USDe's dollar peg. This intervention capability helps prevent 

 events that could affect user confidence, and ensures continuous stability, even when market conditions become challenging.

The reserve operates transparently, with regular updates on its composition and size. Through Ethena's governance system, the reserve fund's management adapts to evolving market conditions, allowing for strategic adjustments to better secure USDe's stability as the DeFi industry changes.

USDe benefits from Ethena's governance framework, which allows for strategic adaptation and community input. Protocol decisions regarding reserve fund composition, collateral management policies and other key operational aspects can evolve through this system as market conditions change.

The protocol’s governance structure enables responsiveness to new market developments and regulatory landscapes. For example, Ethena can adjust which assets are accepted as collateral, or determine how the reserve fund is allocated across different instruments, based on changing liquidity conditions in the market.

This adaptability is particularly important for maintaining USDe's security and stability over time. As DeFi’s environment evolves, governance decisions can implement technical and risk management enhancements that protect Ethena's integrity and user assets.

Its governance mechanism provides transparency around protocol changes, with decisions about USDe's operations and security measures documented and accessible. This open approach helps build confidence among users that the platform can adapt, while maintaining its commitment to security and stability.

USDe is available on Bybit's Spot market through swap pairs with several leading large-cap cryptocurrencies, including 

USDe balances innovative advantages with practical considerations that users must evaluate when comparing it to traditional stablecoin options.

USDe's innovative delta-hedging model delivers key advantages over traditional dollar-pegged assets. Unlike centralized stablecoins USDT and USDC, which rely on a single custodian managing USD reserves, USDe operates through a decentralized Off-Exchange Settlement system. This structure eliminates single points of failure while providing transparent, verifiable backing for each synthetic dollar.

USDe is also a censorship-resistant asset because it doesn’t rely on the traditional banking infrastructure that controls USD emissions. Instead, it stores collateral on-chain in 24/7 auditable, programmatic custody account solutions. This structure enhances the security and accessibility of the collateral that backs USDe.

The synthetic dollar also has significant advantages over algorithmic stablecoins. Probably the biggest advantage is the absence of over-collateralization requirements. Some algorithmic stablecoins, such as 

, require ample over-collateralization to ensure stability. However, for many users, it almost defies logic to provide 150% or even more in collateral value – quite a usual requirement for algorithmic assets – to secure stablecoin funds. 

Owing to its unique peg-maintenance mechanism, USDe can operate without such onerous over-collateralization requirements. This mechanism also helps USDe achieve high levels of scalability, making it a useful asset for transaction and value storage within the DeFi ecosystem.

Theoretically, USDe faces funding risk during prolonged negative funding rates, which could affect its stability mechanism. The protocol also carries liquidation risk, as extreme market conditions could trigger forced closures of derivatives positions if collateral values fall significantly.

Although the Off-Exchange Settlement system is distributed, it still introduces some custodial risk if the entities that are managing collateral experience operational issues. Additionally, USDe depends upon the continued operation of the derivatives exchanges in which hedging positions are being maintained.

Ethena has implemented multiple safeguards to address these concerns, including its reserve fund and multi-exchange approach. These measures help mitigate potential vulnerabilities, though users should maintain awareness of underlying risk factors when incorporating USDe into their crypto strategies.

USDe stands apart in the stablecoin ecosystem through its innovative delta-hedging approach to maintaining a dollar peg. This technical architecture represents a significant advancement in the operation of decentralized stablecoins without the traditional weaknesses of either centralized or algorithmic alternatives. As USDe continues to mature, its unique combination of capital efficiency, decentralized structure and proven stability positions it as a compelling option for users seeking a secure, dollar-pegged asset in the cryptocurrency space.

Advanced

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What Is USDe: Ethena's Synthetic Dollar

PumpBTC (PUMP) enables secure multichain Bitcoin liquid staking via Babylon, with governance and rewards powered by its dual token ecosystem.

One of the most exciting parts of working with cryptocurrency is the ability to 

. Unfortunately, some older and more established coins like 

 (BTC) don't natively support staking, due to their 

 (PoW) consensus model. To overcome this limitation, 

 have emerged, which let you temporarily lock away your Bitcoin to support their networks while you earn interest on the side via 

 (DeFi). PumpBTC is one such platform that plans to expand the utility of Bitcoin staking. Built on Babylon, this liquid staking solution lets people stake their Bitcoin securely with even more flexibility and access to DeFi to maximize their earning potential.

PumpBTC is a multichain liquid staking solution for Bitcoin built on the 

 native staking protocol. Compared to other Bitcoin staking solutions, PumpBTC hopes to offer more flexibility and security.

 (WBTC) or Bitcoin Avalanche Bridged (BTC.b) tokens on the Babylon protocol. In return, PumpBTC gives users a yield-bearing token whose value is pegged to Bitcoin at a one-to-one value. The pegged token, pumpBTC, can then be used in a variety of DeFi protocols. For BTC holders, having a more liquid asset while their Bitcoin is staked ensures that they can maximize yields with ease. 

The PumpBTC process provides many advantages for users. Compared to direct BTC staking on Babylon, it doesn't permanently lock up users' tokens until the staking period ends. People can still use their assets for other DeFi actions, such as participating in 

PumpBTC and Babylon: Security, staking and scalability

The integration with Babylon also provides plenty more useful features. Since Babylon is staked directly on the Bitcoin blockchain, minimizing security risks is another benefit. Instead of trusting a bunch of third-party bridges, users can enjoy centralized finance (CeFi)–level security. The native yield from Babylon provides a reliable form of income, no matter what users do with their liquid tokens. 

Furthermore, PumpBTC is also connected to several 

-compatible chains. Through the convenient PumpBTC website, users can also access projects on chains like Ethereum, BNB Smart Chain and 

. This provides even more flexibility for liquid staking and ensures PumpBTC is as scalable as possible.

PumpBTC launched just less than a year ago, in June 2024, but it's already expanded to over 27 other DeFi and crypto ecosystems. The site 

 in funding from 10K Ventures, Arcane Group, CoinSummer Labs and others. Little is known about the people who launched PumpBTC because the project aims to be pretty decentralized. Its 

 in early April includes news about creating The Pump Foundation and PUMP, a 

 that people can use to engage in governance.

PumpBTC’s architecture prioritizes security and transparency. Many other Bitcoin staking solutions manually pass tokens back and forth over third-party 

, which allows vulnerabilities to enter the equation. However, PumpBTC's method ensures users remain in control of their own assets. PumpBTC has partnered with fully licensed token custodians, such as CoinCover and Cobo, to implement Multi-Party Computation (MPC) in order to boost the protection of users’ assets. With MPC, after a user places their WBTC or BTC.b into the custodial wallet, multiple private keys are generated, and transactions can only be confirmed if all parties, including the user, are in agreement. 

Once the tokens are in the custodial wallet, a 

 with CoinCover or Cobo delegates the equivalent amount of tokens into the Babylon native yield staking network and triggers the minting of pumpBTC tokens, which are transferred back to the user. These tokens have a one-to-one value ratio with Bitcoin, and people can use them to participate in DeFi yield-earning solutions within the PumpBTC ecosystem. 

When BTC holders maximize yields and are ready to redeem their Bitcoin from the Babylon staking protocol, they turn in their pumpBTC tokens. The custodian triggers a smart contract that burns the pumpBTC tokens. Once the tokens are 

, the custodian returns both the Bitcoin (WBTC or BTC.b) and staking yields to the user. Throughout the entire process, users can maintain control of their tokens and view all on-chain transactions, so they can be fully aware of how the system works.

PumpBTC also has some intriguing mechanisms outside of its token staking process. The rest of the ecosystem is a community-led system run with PumpBTC points, a reward mechanism that encourages people to participate in the platform. You can earn them by participating in various activities and challenges, such as referring other people to PumpBTC and staking PUMP on PumpBTC or Babylon.

Simply holding pumpBTC tokens lets you earn one point per token per second. But if you choose to interact more actively with PumpBTC's ecosystem by staking PUMP in multiple liquidity pools or being a Team Captain in the referral program, your points will be boosted. Having these points allows you to unlock additional ecosystem rewards as the platform evolves.

In early April 2025, PumpBTC announced an enhancement to its protocol with the introduction of PumpBTC OS to incorporate AI-driven staking into its operating system. The integration of AI facilitates the automatic search for the best yields across networks, and the customization of strategies according to your risk profile.

The PumpBTC network contains multiple cryptocurrency tokens. Though they all share similar names, they have vastly different purposes. In addition to the pumpBTC token used for liquid staking transactions, there are also PUMP and vePUMP tokens.

, and can be used to vote on decisions within the ecosystem and for staking to boost rewards. It can also be used to lower fees and enhance returns across PumpBTC's products. There’s a total supply of 1 billion PUMP tokens, which will be allocated as follows:

To jump-start the user-led governance system, PumpBTC will be distributing 90 million tokens to loyal PumpBTC users at the time of token generation. You can check your eligibility for this airdrop by visiting the

. Depending upon how much you’ve participated in PumpBTC in the past, you can have quite a few PUMP tokens automatically sent to your wallet.

When users stake PUMP, they receive a non-fungible ERC-721 token called vote-escrowed PUMP, or vePUMP for short. It’s a secondary token (linked to the primary PUMP token) that grants stakers even more governance powers. Unlike standard PUMP, vePUMP isn’t used for basic decisions. Instead, vePUMP holders are entitled to a degree of influence over key ecosystem decisions. The longer a token is locked up, the more vePUMP the holder receives. In addition, vePUMP allows people to boost their liquidity provider rewards and gain a share of protocol revenue from the entire ecosystem.

PUMP is still quite a new token, so it's not yet available on most exchanges. However, Bybit's commitment to highlighting promising new tokens means interested users can access PUMP through Bybit’s exchange. Bybit is running a Launchpool event until Apr 8, 2024, 10AM UTC, in which 

 will be divided among users. Users can stake PUMP, BTC or USDT and in return get a share of free PUMP tokens.

Even if you don't plan on participating in the Launchpool event, buying PUMP as a Spot pair on Bybit is also possible (

). Moreover, you can opt to add PUMP tokens to your investment portfolio in just a few steps with Bybit's 

, which uses artificial intelligence (AI) to ensure that you always buy low and sell high.

Ultimately, PumpBTC facilitates effortless collaboration between key players in the Bitcoin staking ecosystem, bridging the gap between traditional Bitcoin holders and the rapidly evolving world of DeFi. By integrating with the Babylon staking protocol and employing MPC-secured custodians like CoinCover and Cobo, PumpBTC offers a secure, flexible liquid staking solution. 

Whether you're looking to earn passive income, participate in governance with PUMP and vePUMP or simply diversify your crypto portfolio, PumpBTC creates new, scalable opportunities for engagement with Bitcoin in a modern DeFi context.

Intermediate

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PumpBTC (PUMP): Secure multichain liquid staking for BTC

On Feb 21, 2025, Bybit suffered a major security incident, losing $1.5 billion and triggering a widespread sell-off in the crypto market.

On Feb 21, 2025, Bybit, the world's second-largest cryptocurrency exchange, faced a major security breach when an exploit of its Ethereum cold wallet resulted in a loss of $1.5 billion. This incident triggered a broad sell-off in the cryptocurrency market, with Bitcoin’s price dropping over 20%. The market reaction indicated that the hack was part of a larger trend of de-risking across crypto assets, exacerbated by macroeconomic factors such as rising tariffs and changing global risk appetite. Although there was a temporary spike in trading volumes for USDT pairs immediately after the hack, this increase was short-lived, and did not lead to sustained trading activity.

Recovery of trading volumes and bid-ask spread

In the days following the hack, Bybit's market share in spot trading plummeted from approximately 11% to around 4%. However, the exchange demonstrated resilience as it began to recover, with market share rebounding to about 6–7%. This recovery was facilitated by the introduction of Retail Price Improvement (RPI) orders on Feb 20, 2025, which enhanced liquidity specifically for retail traders. 

Despite the initial drop in order book depth, particularly for Bitcoin and Ethereum, liquidity conditions improved significantly due to RPI orders, which deepened the order books and maintained tight bid-ask spreads. This stability in spreads indicated sustained liquidity, allowing traders to execute orders with minimal price slippage.

Shift in trading behavior, and future outlook

The aftermath of the hack also brought a notable shift in trading behavior. Bitcoin’s proportion of trading volume fell below 20%, contrasting sharply with its usual dominance of 40–50%. In response, altcoins and meme tokens gained popularity, with their trading volume peaking at nearly 60% during this period. Bybit's proactive measures, including the successful rollout of RPI orders, have not only stabilized liquidity, but have also enhanced the overall trading experience for retail investors. As Bybit continues to rebuild market confidence and improve liquidity conditions, it’s well-positioned for future growth in the competitive cryptocurrency exchange landscape. The metrics reflect a consistent recovery in trading activity, indicating a strong outlook for the platform moving forward.

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Bybit incident postmortem: How Bybit rose from the hack and protects its RPI retail users

Discover how stablecoin wallets are bridging traditional finance and blockchain, enabling fast, secure, and accessible global payments using digital dollars.

 have cushioned crypto users from market volatility. Now, stablecoin wallets are providing a new utility for stablecoins by facilitating the use of these blockchain-based products to make traditional payments.

With top names in the financial markets such as Fidelity Investments working on their own stablecoins, it's evident that these dollar-backed digital assets are increasingly replacing fiat and traditional payments.

 (WLD), the blockchain formerly known as Worldcoin, announced that it would integrate its wallets with Visa to open up the use of stablecoins en masse. Also, global payment giant BVNK has launched embedded wallets that include stablecoins, among other major currencies, to make seamless cross-border payments.

Let’s learn more about stablecoin wallets, and how they could change the way crypto moves around the world.

Stablecoins have provided users with the security and speed of 

 without exposing them to the volatility often faced by cryptocurrencies such as 

. However, their utility has been limited due to one major challenge: usability.

While stablecoins have continued to change the blockchain landscape, the real innovation lies in stablecoin wallets. These wallets — specifically, those that integrate fiat and traditional payment systems — are poised to become the critical bridge between 

 (DeFi) and traditional finance (TradFi).

Stablecoin wallets provide an essential missing link, allowing users to interact with both financial worlds seamlessly without needing to switch platforms or understand complex crypto mechanics. With stablecoin wallets, you can spend, send and receive stablecoins as easily as fiat currency — both online and in the real world.

Several innovative players are pushing the boundaries of what's possible by building wallets that blend DeFi technology with TradFi usability. Let's take a closer look at three emerging stablecoin wallets and platforms that are redefining what's possible when blockchain intersects with the financial world.

World Network and Visa’s stablecoin wallet vision

Visa has been one of the most forward-thinking traditional financial players in the crypto space. Its ongoing work to bring stablecoins into its payment ecosystem marks a bold step toward the convergence of decentralized and traditional finance.

Visa has recently partnered with World Network, a blockchain identity protocol whose token,WLD, powers transactions and governance within the World Network ecosystem. Together, the two companies are exploring how World Network's self-custody crypto wallet can integrate stablecoins into day-to-day transactions across Visa's vast global network. The vision is to allow users to store stablecoins in a stablecoin wallet, and spend them anywhere Visa is accepted. This would dramatically reduce the friction between holding digital assets and using them in the real world.

What makes Visa’s initiative significant is the infrastructure it already possesses. By embedding stablecoin capabilities directly into its existing systems, Visa isn’t just experimenting — it’s laying the groundwork for large-scale adoption. Merchants would be able to receive fiat in local currencies while users spend digital dollars, with real-time conversions and settlements happening behind the scenes.

This development would not only enhance convenience, but also create financial access to users in countries with unstable currencies or limited banking infrastructure. From a technical perspective, leveraging blockchain for near-instant settlement and programmable payments represents a leap forward in efficiency.

While Visa is focused on consumers, BVNK is tackling the enterprise side of the equation. It provides embedded wallet infrastructure that allows businesses to integrate stablecoin payments directly into their platforms.

For example, an e-commerce platform can offer its customers the ability to pay with USDC without having to develop its own wallet or crypto solution from scratch. BVNK handles the back end — wallets, conversions and compliance — while the front-end experience remains intuitive and familiar to end users.

This kind of abstraction is key to adoption. Most users don’t want to learn how blockchains work — they just want fast, low-cost, cross-border payments that “feel” like using a digital wallet or banking app. BVNK delivers this experience by allowing companies to offer blockchain-powered financial tools with the polish and UX of mainstream fintech platforms.

Its model also opens the door for new financial services — such as automated payroll in stablecoins, global supplier payments or on-chain settlement of business transactions — that are faster and more transparent than legacy methods.

 is a consumer-focused wallet that exemplifies the future of stablecoin usability. Stables allows users to store and spend various stablecoins — such as USDC, USDT, 

 — with a Mastercard debit card. connecting the benefits of digital currencies with the convenience of traditional spending.

The Stables app is designed for real-world application. Users can make everyday transactions, such as receiving payments, paying bills and even making in-store or online purchases, with their stablecoin balances. Behind the scenes, conversions from stablecoin to fiat currency happen in real time, so users don’t need to worry about whether the merchant accepts crypto.

Stables is particularly focused on making stablecoins practical for people in markets where banking systems are slow, expensive or unreliable. In these regions, having access to a dollar-pegged digital currency — and being able to spend it freely — is transformative.

By eliminating the complexity of crypto wallets and integrating seamlessly with existing payment systems, Stables is closing the gap between what stablecoins are capable of and how people actually use money day-to-day.

Stablecoin wallets allow DeFi and TradFi to coexist so that users can enjoy the stability and familiarity of traditional currencies alongside the innovative features of cryptocurrencies.

These wallets provide several benefits, described below.

Although DeFi offers various financial services without intermediaries, its complexity can deter newcomers from exploring its benefits. Stablecoin wallets simplify this landscape by providing user-friendly interfaces that make DeFi services more approachable. Users can engage in activities like lending, borrowing and 

 without needing extensive technical knowledge, thereby gaining access to innovative financial services.​

Traditional financial transactions — especially cross-border payments — often involve multiple intermediaries, leading to high fees and extended processing times. In contrast, stablecoin wallets leverage blockchain technology to facilitate direct 

 transactions, effectively bypassing traditional banking intermediaries. This significantly lowers transaction costs, making domestic and international payments more affordable.

Conventional international money transfers can take several days to process. Stablecoin wallets that operate via blockchain networks enable nearly instantaneous cross-border transactions. This speed is particularly beneficial for remittances and global business operations, for which timely payments are crucial.

Security is a paramount concern in financial transactions. Stablecoin wallets utilize blockchain technology that offers inherent security features, such as encryption and decentralization. Each transaction is recorded on a transparent and immutable ledger, reducing the risk of fraud and unauthorized alterations. Users can have greater confidence in the safety of their digital assets, knowing that robust security measures are protecting their funds.​

Much of the world’s population remains unbanked or underbanked, lacking access to essential financial services. Stablecoin wallets can bridge this gap by providing a digital means of storing and transferring value without the need for a traditional bank account. In this way, individuals in regions with limited banking infrastructure can participate in the global economy, send and receive payments and access financial services directly from their mobile devices. This inclusion fosters economic empowerment and creates new opportunities for underserved populations.

Stablecoin wallets represent a significant advancement in the fusion of digital and traditional finance. By offering seamless integration with existing financial systems, reducing costs, enhancing transaction speeds and providing robust security, they address many of the limitations inherent in conventional banking. Moreover, their role in promoting financial inclusion underscores their potential to transform the global financial landscape, making economic participation more accessible to all.

Beginner

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The future of stablecoin wallets: Bridging traditional finance and blockchain

Bybit Learn

Altcoins

ATOM 2.0 has been gaining traction in the crypto space recently thanks to its ambitious road map, read on to find out what their new whitepaper is all about.

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The recent Cosmosverse event announced a highly anticipated Cosmos Hub white paper. Known as 

, the new road map goes through several key details on changes to the Cosmos Hub and how this would impact the 

This overall vision is known as the 'Internet of blockchains' and is coming to fruition with the implementation of this road map. Today, multiple sovereign blockchains are able to communicate with each other and improve the 

 is one prime example of a blockchain that has a 

 that allows you to swap various Cosmos assets that were sent in from other Cosmos chains and can eventually be integrated with other protocols. Another example would be 

 for the entire Cosmos ecosystem that leverages the interoperability and composability provided by Cosmos.

Now that you have some context, let's compare the difference between ATOM 1.0 and ATOM 2.0, and take a look at the future of Cosmos.

Building The Foundation Of Cosmos Hub — ATOM 1.0

The Cosmos Hub's initial role was to create the technologies and frameworks needed to kickstart the internet of blockchains, and thus it created the Cosmos SDK, IBC, 

, various interchain modules, etc, which are core open-source primitives for the blockchains that are now part of the Cosmos ecosystem. 

Note: ‘Cosmos Hub’ refers to the Layer 1 blockchain in the ‘Cosmos’ ecosystem, with 

as its governance token. 'Cosmos' refers to the ecosystem of various app chains with their own governance token.

Cosmos is also known as a Layer 0 blockchain that allowed other blockchains to be built on it. These blockchains are Cosmos chains and are built with the Cosmos SDK, which is a toolkit that helps developers make it easier to create customized 

 tailored to their needs without reinventing everything from scratch. 

The Cosmos SDK caught on and many developers went to build on it to create their own customized blockchain. For example, there are chains that are tailored for 

and Osmosis, or other chains that focus on specific features such as 

These are also known as app chains which as similar to 

. What makes them interesting is that because they are their own modular chain, activities that happen on each chain won't congest other chains unlike in 

, which is a monolithic chain. This means if a hyped NFT mint is happening on Stargaze, users can still do other transactions such as trading and yield farming on another chain such as Carbon, without having to pay insane gas fees like on Ethereum.

Now that the foundations of the internet of blockchains have been built with multiple blockchains live for quite some time and working together, and billions of capital locked across multiple chains, the Cosmos Hub is now moving on to a new role - helping a growing ecosystem of 

blockchains to flourish while maintaining relevance. 

This will be done using four new technology called Interchain Security (ICS), Liquid Staking, Interchain Scheduler, and Interchain Allocator that sits on top of the 

Interchain Security will transform the Cosmos Hub into a secure platform for others to build the next generation of interchain-native infrastructure and 

, paving the way for new cross-chain opportunities and innovation.

To explain what ICS is, we first need to briefly understand how blockchain security for Cosmos chains works. 

Cosmos blockchains are PoS blockchains, and thus their security is determined by the economic value of the staked assets from the chain validators. Basically, the higher the 

 of the token, the more validators there are, and the harder it is to attack the chain. An attacker would require more capital to take over or attack the network.

However, the issue is that maintaining a high market cap to prevent an attack is not easy for all blockchains, especially newer blockchains. When a new chain is created, it may still be finding its product-market fit and may also struggle to get validators as they may not see value in the chain and would not

their capital to buy the chain's PoS asset and stake it to secure it.

To counteract this, many new Cosmos chains initially offer high inflationary rewards to incentivize validators to buy and stake. But this creates high selling pressure on the token price over time, and it may repel investors from buying the token knowing that there is a lot of 

pressure. And over time, if the token market cap drops too much from dumping, it again faces an increased risk of attack, and the blockchain is back to round one again.

This is where Interchain Security comes in. Interchain Security allows the validator set of a bigger chain, known as a 

, to provide security to the smaller chain, known as a 

, in exchange, the provider chain receives some of the gas fees and staking rewards from the consumer chain.

For example, an established chain such as the Cosmos Hub can secure a newer chain like 

with the interchain security mechanism. This would allow the validator set on Cosmos to produce blocks on the Quicksilver chain. It also uses ATOM as a 

, so if a user misbehaves on the Quicksilver chain, their ATOM would automatically be slashed on the Hub.

The provider chain may also have its core functionality to be built on a consumer chain and receive financing for its infrastructure build-out, allowing it to cut down on its own development cost and time. 

Therefore, Quicksilver would be able to import the entire economic security of the Cosmos Hub, currently secured by billions worth of staked ATOM and one of the most secure validator sets in the Cosmos ecosystem, in exchange for 

 and staking rewards. These rewards would then be given to ATOM stakers, increasing the value accrual for ATOM as well as allowing the Cosmos Hub to use and integrate with Quicksilver's liquid staking functionality.

Additionally, ICS is purely optional and can be opted out of even after using it. This mechanism can be used for the early stages of a protocol to provide stakeholders with 

Just like how there are thousands of apps that people all over the world are using right now, in the future, if there are thousands of app chains that appear that are being secured by the Cosmos Hub validator set, it could generate a lot of value back to the ATOM token. 

Interchain Security also reduces the barriers and costs of entry for consumer chains and enables a number of potential applications, including: 

In summary, Interchain Security gives smaller chains a faster, easier, and cheaper path to market, helping to foster innovation and allowing more integrations and collaborative opportunities with other chains in Cosmos. 

The other technology layer is called Liquid Staking which will also help to provide secure economic scaling.

In PoS blockchains like Cosmos Hub, its staked assets are not able to be used, which affects cross-chain composability. Liquid staking would allow users to use their staked collateral, such as staked ATOM, as a liquid token that can be traded with and sent across other Cosmos chains.

This increases the user's capital efficiency by unlocking additional capital, while still securing the network as their ATOM remains staked. The concept is similar to liquid staked ETH from 

 (stETH), which was hugely popular and successful and was accepted as collateral by multiple 

It would be easy to imagine a liquid staked ATOM achieving a similar level of success in the cosmos ecosystem as well, allowing users to earn ATOM staking rewards while interacting with other DeFi protocols. Liquid staking would extend not only to ATOM but other PoS cosmos assets as well. 

While Interchain Security enables the reuse of the same validator set and staked collateral to secure additional state machines. Liquid Staking would enable the reuse of the same staked collateral for other purposes. 

Together, Interchain Security and Liquid Staking create a secure base layer for projects to build on, furthering the growth of Cosmos app chains and activities.

The Cosmos ecosystem is made up of various 

that list the same assets. ATOM can be on multiple chains, and as they trade in the market, their prices can vary from one chain to another, similar to how ATOM's price varies slightly across different exchanges. This introduces a lot of arbitrage opportunities, where arbitrageurs will find 

offering the same token but at different prices, and will arbitrage the token prices so that they average out and earn a profit in exchange. This is a type of maximal extractable value (MEV) opportunity. 

There are two other common forms of MEV apart from arbitrage:

This MEV market can be made more efficient, more secure, and more lucrative for Cosmos chains and their users. The interchain needs a secure block space market to avoid off-chain cartelization and more options for chains seeking to optimize the use of block space. 

Existing MEV solutions on Ethereum like Flashbots’ are off-chain markets, however, it lacks 

 transparency. Interchain Scheduler brings MEV markets on-chain, facilitating a fairer and more transparent system. 

Cosmos ATOM 2.0 White Paper: The All-New Road Map Explained

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards