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Nomic, a layer-1 Bitcoin bridging solution, is bringing Bitcoin to Cosmos.
It's dropping a new token, nBTC, that aims to pump liquidity into the Cosmos ecosystem.
Cosmos fans are losing their minds over this. Surely, there’s a reason for the excitement.
But hang on — could this be a risk?
Let's dive in.
The nBTC token is set to become a native Cosmos asset.
It will be transferable via the Interchain Blockchain Communication (IBC) protocol.
IBC is a universal interoperability protocol that allows two different blockchains to communicate with one another. IBC guarantees reliable, ordered, and authenticated communication.
Nomic plans to roll out the nBTC Interchain Upgrade by October's end.
After that, Nomic-integrated apps like Osmosis will handle nBTC issuance and Bitcoin redemption.
The activation window? October 27 to October 30.
Sunny Aggarwal, co-founder of Osmosis, underlined the need for a "base money asset" in Cosmos.
That's where nBTC comes in.
Note that ATOM is not meant to be the money-accruing token for the Cosmos ecosystem, unlike Ether which is the money-accruing token for the Ethereum network.
We're talking about more liquidity, more flexibility.
Cosmos ecosystem believes in BTC and thus having nBTC as their ecosystem’s token will give a boost to BTC liquidity.
DeFiLlama says 37% of all crypto hacks since 2016 involved cross-chain bridges. That’s alarming.
But Nomic reassures us it's "fully decentralized and non-custodial."
Nomic's bridge is unique because Bitcoin isn't "locked" but is held in a "reserve output" on Bitcoin’s blockchain.
Also, IBC is the most secure bridging protocol thanks to its trust-minimization property.
Nomic has a feature called "Emergency Disbursals," designed to mitigate risks of losing Bitcoin.
If stuff hits the fan, the system releases funds when signed by Nomic validators.
It's not just Bitcoin. Noble and Celesta are also working on launching native USDC in Cosmos.
Liquidity is shaping up to be less of an issue moving forward.
This move could be a liquidity game-changer for Cosmos.
But like anything crypto, it comes with its own set of risks.
The Nomic team seems to have thought this through, but only time will tell.
Community-governed L1 blockchain and dApp ecosystem AirDAO raised $7.50M funding round led by DWF Labs.
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