Taking A Look At Composite: A Collateralized Stablecoin for IBC Build On Comdex
With the world looking at stablecoins, especially after the epic melt down of Terra's algorithmically driven stablecoin, UST, another option is on the horizon! Comdex is getting ready to launch their Composite stablecoin, which is collateralized stablecoin built on their Comdex blockchain!
What is Comdex?
For those that do not know, Comdex is built on the Cosmos SDK and is interconnected with that ecosystem through the Cosmos IBC system. This allows Comdex's blockchain to interact with all the other IBC chains. You can see more about their mission at https://comdex.one. They are building a decentralized solution to democratizing the global financial markets for all using synthetic assets like gold, silver, and oil.
Their platform is currently in development and being tested and we are proud to be active validators for both the mainnet and testnet chains.
Today, we are focusing on the new addition to the Comdex family! The team introduced the Composite stablecoin in their post that you can find in this Medium post, which is where the featured image of this post is from: https://blog.comdex.one/introducing-composite-a-collateralized-stablecoin-for-ibc-bc76e15fa2ec. You can check out that article for all the full details, but we will break it down for you here.
What Is Composite?
Composite, or $CMST, is basically Comdex's answer to Maker's $DAI stablecoin build on Ethereum. A collateralized stablecoin is where you take a base asset, in this case ATOM, and you will lock it up into a collateralized debt position, or a CDP for short. This is essentially a personal credit line. You can lock up the assets then mint the $CMST tokens to use in DEFI, or for any other purpose you need.
$CMST can be minted permissionless-ly as a debt against over-collateralized CDPs. Users can mint $CMST by locking-up Cosmos ecosystem assets as collateral for $1. The minting of $CMST will be achieved by creating over-collateralized CDPs (typically >200% collateralization) of IBC-enabled assets. Users minting $CMST must ensure that their CDPs maintain a minimum collateralization ratio (usually 150%).
When markets turn volatile, these over collateralized positions need to be adjusted to ensure that the funds are not liquidated, or in other words used to pay back your loan. Eventually, Composite will be backed by many of the different IBC assets, so you will need to make sure you pay attention to your CDPs and make sure you don't lose!
When you use the protocol and pay back your loan, there will be some interest that you will have to pay as well as your balance to get your collateral back. This fee helps in keeping the peg balanced by buy back and burning mechanisms with the $HARBOR token.
What is $HARBOR
The $HARBOR token will be the governance token for the Composite ecosystem and act as a backdrop to help keep $CMST stable. Think of it as the equivalent to the MKR token from the Maker ecosystem, again, if you are familiar.
The goal of the protocol governance will be to ensure that $CMST maintains its peg while sustainably accumulating interest APR from $CMST creation. The protocol earns revenues from interest apr fees, CDP fees, and liquidation fees, the surplus from which will be used to buy-and-burn $HARBOR.
When $CMST trades above peg for extended periods of time, the protocol automatically mints $CMST to buy-and-burn $HARBOR. When it is below the peg, the protocol then automatically mints $HARBOR to buy-and-burn $CMST. This model ensures that $HARBOR holders accrue value from growing $CMST adoption but at the same time helps to absorb some of the market volatility.
A New Time For The Cosmos
It's a fact that the Terra Luna debacle has shaken crypto, especially stablecoins to their core. We are seeing what type of protocols work and which do not. With the ever expanding opportunities in the Cosmos ecosystem, $CMST is poised to fill that much needed hole in what is otherwise an amazingly robust ecosystem! Comdex has plans on expanding $CMST beyond the Cosmos and integrating it with different NFT protocols, payment rails, etc.
Make sure to get all the full details as the are now on the new Composite $CMST stablecoin on the introduction post from the Comdex team!
https://blog.comdex.one/introducing-composite-a-collateralized-stablecoin-for-ibc-bc76e15fa2ec
You can stake your Comdex tokens $CMDX with the carbonZERO node directly on our Restake App!
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