Michaël van de Poppe - 20 April 2022
The Impact of Evmos on the Cosmos Ecosystem
Evmos is the first IBC-enabled EVM (Ethereum Virtual Machine) compatible blockchain built with the Cosmos-SDK. Its launch will introduce decentralized interoperability between Ethereum-based applications and the Cosmos ecosystem, which was previously not possible. In this article, we will explain what Evmos is, how it fits into the existing ecosystem, and what implications it could have.
What are IBC and Cosmos?
Cosmos is a layer-0 ecosystem with a framework for sovereign, independent PoS blockchains that can communicate and exchange information with each other in a permissionless way using the IBC (Inter-Blockchain Communication) protocol. IBC binds together many popular Cosmos ecosystem chains such as Terra (LUNA), Osmosis (OSMO), and the Cosmos Hub (ATOM), and allows for transactions between IBC-enabled chains. If you would like to find out more about Cosmos, you can read our project review here.
What is an EVM?
Ethereum Virtual Machine (EVM) is the runtime environment for transaction execution on Ethereum. Essentially, it is the software platform where all the accounts and smart contracts are. There are multiple types of VMs for different blockchains that have their own rules, but EVM is the most widely used.
One big advantage is that smart contracts created for the EVM can be run on any EVM-compatible blockchain, making it easy for developers to write a single piece of code for their project that will be able to run on different EVM blockchains. This also makes it easy for existing Ethereum projects to easily be launched on new chains. You can read this article to learn more about the EVM.
Evmos: EVM + IBC
Evmos will thus be able to run ‘Ethereum’ as a Cosmos application-specific blockchain, allowing for the benefits of EVM architecture coupled with the benefits that Cosmos ecosystem chains have to offer. Since Evmos is built on top of the Cosmos-SDK, transactions with the rest of the Cosmos ecosystem are possible through IBC.
A bridge between mainnet Ethereum and Evmos will make the two blockchains interoperable, in turn connecting mainnet Ethereum to all IBC-enabled Cosmos ecosystem chains. Evmos will have very low transaction costs, coupled with fast transaction times thanks to Tendermint (the Cosmos consensus mechanism), something which is much appreciated by both users and developers.
The EVMOS token and the ‘Rektdrop’ Airdrop
The native token of the Evmos chain is called EVMOS and is the fuel to the blockchain in the same way as ETH is the fuel for Ethereum. EVMOS is used to pay for transactions and for securing the PoS network through staking.
Most layer 1 blockchains distribute a large amount of the token supply to various entities, including the team, early backers, private sale participants, and public sale participants, but Evmos decided to ‘airdrop’ an unprecedented 50% of the initial token supply to the community! This has later been updated to 60% of the total supply, more on this later.
This airdrop is called the ‘Rektdrop’ and many people are eligible for this airdrop, including Ethereum dApp users who have spent a lot of ETH on gas, ATOM stakers, OSMO stakers and liquidity providers, and even people who got ‘rug pulled’ and scammed by a protocol or token in the past. Here are more details on the Evmos Rektdrop and the EVMOS token model.
The community got very excited about this airdrop, as many people are eligible for the airdrop, which will bring a lot of users to the ecosystem as they will have to claim the airdrop and therefore will have to use the chain. If they end up liking the chain they can become more frequent users and perhaps bridge some liquidity over to use Evmos Dapps.
The failed and postponed launch of Evmos
Evmos was initially set to launch on the 28th of February of this year, but the launch date was moved to the 2nd of March to “Guarantee a smooth launch for the network” according to the team’s Twitter.
The project was then launched on the 2nd of March, but the launch was full of bugs, with many users reporting problems due to a large number of wallet interactions (which the chain should’ve been able to support). Two days later, the Evmos team tweeted that the chain had a critical security vulnerability and had to be paused.
The Evmos launch had greatly excited the community, partly because of how many people would receive free Evmos tokens from the Rektdrop. The unsuccessful launch attempts have upset many in the community, and rightly so.
The Evmos team hosted a Twitter ‘spaces’ on the 19th of April regarding ‘mainnet readiness’. Multiple Twitter accounts subsequently posted that Evmos will relaunch next Tuesday, the 26th of April. The Evmos Twitter account also retweeted one of these tweets, suggesting the launch is indeed happening next week.
If they manage to launch the chain again successfully without any bugs or issues, faith in the project will likely be restored, as things are quickly forgotten in crypto. Hype can also quickly fade away, however, and if the new release date is pushed too far in the future, another EVM-compatible chain could take the lead and launch before Evmos.
Why Evmos is bullish for the Cosmos Ecosystem
Evmos will be the first EVM-compatible blockchain within the Cosmos ecosystem and is therefore adding a lot of new and exciting features to the ecosystem. Existing Ethereum developers can build on Evmos in the same way as they would on Ethereum, but with the possibility to add new features only possible within the Cosmos ecosystem.
Existing EVM-compatible projects can also be launched on Evmos, this can include blue-chip DeFi protocols such as Uniswap, and money markets protocol Aave. This will bring liquidity over to the chain, which might make its way further into the Cosmos ecosystem.
Evmos could bring a lot of liquidity from other EVM blockchains over to the Cosmos ecosystem, which was previously more difficult to achieve without a direct EVM <-> IBC bridge.
Dapps to look forward to on Evmos
Aave is arguably the most popular decentralized lending and borrowing platform, with a current TVL of around $14 billion across multiple chains. An Aave governance vote was passed to launch Aave V3 on the Evmos blockchain, allowing users to lend and borrow native Cosmos tokens as well as existing EVM-compatible tokens. Initial supported assets would include USDC, USDT, DAI, FRAZ, AAVE, WBTC, WETH, OSMO, EVMOS, and ATOM. Aave V3 on Evmos will likely become the most used money markets platform on the chain, as well as in the wider Cosmos ecosystem.
Kinesis Labs aims to be the first stableswap project on Evmos, allowing users to swap between different stablecoins at low fees and slippage. The project will be compatible with existing Ethereum-native stablecoins such as USDT and USDC, whilst also being compatible with native Cosmos ecosystem stablecoins, UST for example.
Currently, the Evmos testnet version of their Dapp supports DAI, USDC, USDT, and FRAX. The team has partnered with Celer Network to help bridge large amounts of stablecoins over to Evmos, with Celer Network’s cBridge being one of the leading multichain bridges with over $400,000,000 in TVL. Through Kinesis, Celer’s bridged stablecoins will be easily swappable for other bridged stablecoins in the Evmos ecosystem.
The team has experience with building DeFi projects, having worked at protocols like Risk harbor and Yeti Finance, as well as experience at traditional tech companies NVIDIA and Microsoft.
The launch is expected to coincide with the launch of the Evmos mainnet, meaning Kinesis could establish itself as the go-to stableswap protocol on Evmos from the beginning.
Chronus Finance is an AMM DEX built on AMM. The DEX will be similar to Uniswap, allowing users to swap between different assets within the Evmos ecosystem. Users can add their own liquidity, stake, and farm. The platform will have its own $CRN token, with ATOM, OSMO, and JUNO stakers being eligible for an airdrop. Exact details on the tokenomics are not released yet but will likely come out closer to the launch date.
The project is live on the Evmos testnet, where users can try out the DEX with testnet tokens. It will be interesting to see whether Chronus can attract more liquidity and users than other DEX’s launching on Evmos such as Diffusion Finance and EvmoSwap. A risk is that existing ‘blue-chip’ multichain DEX’s launch on Evmos, as this will make it more difficult for new DEX’s like Chronos to compete.
Overall, Evmos is a promising innovative blockchain project which natively bridges the gap between the EVM and Cosmos ecosystems. Their rektdrop airdrop program with both Ethereum and Cosmos users being eligible for free tokens will surely attract many users, although a large number of these initial users may just sell their airdrop tokens and leave the ecosystem whilst others may choose to provide liquidity and interact with dapps on Evmos.
The disastrous initial launch did affect the community’s view of the project, but it could still become a success if the Evmos team could relaunch the chain without any hiccups. The long-term success of Evmos will come down to how many people end up actively using the ecosystem, as this is something that attracts new projects, in turn leading to more users. There are currently many layer 1 blockchains, but Evmos currently differentiates itself by becoming the first EVM-compatible blockchain within the Cosmos Ecosystem.
Another Comsos ecosystem project, Kava, is launching a co-chain architecture for the Cosmos and Ethereum network including a $750 million developer incentive program. It will be interesting to see how Kava’s Co-Chain will compete with Evmos.