Lido Partners with Axelar and Neutron to Revolutionize Liquid Staking in Cosmos Ecosystem
Lido's Journey into Cosmos with Axelar and Neutron. Dive deep into the first-of-its-kind partnership that's set to transform liquid staking protocols and cross-chain swaps within the Cosmos ecosystem
In an exciting development for the blockchain and cryptocurrency world, Lido, the renowned liquid staking protocol, is set to make a significant entrance into the Cosmos ecosystem through a groundbreaking partnership with Axelar and Neutron.
This collaboration aims to bring wrapped liquid-staked ETH (wstETH) to Cosmos, introducing a new dimension of liquidity and flexibility to the network. This article explores the implications of this partnership and its potential to transform the Cosmos ecosystem.
The Squid Protocol: A Catalyst for Cross-Chain Expansion
At the heart of this collaboration lies the Squid Protocol, a cross-chain liquidity routing and swap protocol integrated into the Axelar network. Sergey Gorbunov, co-founder of Axelar, believes that this partnership will pioneer one of the most substantial cross-chain expansions for liquid staking tokens, particularly wstETH. Squid Protocol has recently announced its capability to facilitate one-click cross-chain swaps within the Cosmos network.
Gorbunov explained, "Through Squid's cross-chain liquidity router, we can optimize asset bridging, significantly speeding secure deposits, presenting a different experience from the lengthy delays required for current bridged deployments." This innovation will mark a departure from Lido's previous approach, which relied on native chain bridges for asset transfer.
Historical Challenges and Emerging Solutions
Traditionally, Lido has employed canonical bridges to move assets across various blockchain ecosystems. Avril Dutheil, co-founder of Neutron, highlighted the reasons behind this choice, stating, "Canonical bridges have interesting properties from a perspective of trustlessness, but when bridging to ecosystems such as Cosmos, it's a lot trickier to get the same properties because most of these emerging technologies introduce additional trust assumptions."
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One of the key challenges was the diversity of denominations within the Cosmos network. To address this issue, Neutron has developed a wrapper contract designed to unify bridging components and standardize the denomination of wrapped assets. Dutheil emphasized, "The goal is to basically lock in the denomination so that the ecosystem has a unified token to represent the wrapped assets." The intention is to continually improve and upgrade this implementation, ultimately creating a bridge-agnostic solution that enhances security.
The Governance Handover
Once the initial bridging of wstETH onto Cosmos is complete, Axelar and Neutron will transfer the administration and management of the bridge to the Lido DAO (Decentralized Autonomous Organization). The Lido DAO will be responsible for overseeing the bridge contracts on the Neutron network and making decisions regarding security upgrades and additional bridging solutions.
Canonicalization of wstETH with Axelar Satellite
To simplify the process for users, a guide has been provided for those who have previously bridged wstETH manually via Satellite to transfer their tokens to Neutron and obtain the canonical denomination. The steps involve visiting the "Wrap & Unwrap" page on the Neutron website, specifying the amount of axl-wstETH to be wrapped, reviewing and signing the transaction, and confirming the pop-up in the wallet extension. This straightforward process ensures that bridge-specific axl-wstETH is transformed into the canonical wstETH denomination in Cosmos, ready to be used in the vibrant Cosmos DeFi ecosystem.
The partnership between Lido, Axelar, and Neutron represents a significant milestone in the world of liquid staking and cross-chain interoperability. By leveraging the innovative Squid Protocol and addressing the challenges of denomination standardization, this collaboration promises to enhance the accessibility and efficiency of liquid staking in the Cosmos ecosystem. As governance is handed over to the Lido DAO, the future of this bridge agnostic solution holds great promise for the broader cryptocurrency community.