⚛️Cosmos Core - The interchain index
Introduction
Cosmos Core is the first cryptocurrency Index launched on Atlas. The index offers exposure to the leading projects of the Cosmos ecosystem.
For a long time the Cosmos ecosystem was represented by $ATOM, the native governance token of the Cosmos Hub. However the rapid growth that the ecosystem has witnessed, as more and more projects adopt the App-Chain thesis, calls for a more integral way to gain exposure to the entire ecosystem:
Cosmos Core introduces $COSC, an index token fully backed by a basket of assets that represents the blue chips of the Cosmos ecosystem. In addition, Cosmos Core leverages staking rewards to offer an automated strategy that unlocks:
A recurrent yield in $USDC & $XKI
An ever-increasing exposure to index assets (via auto-compounding)
| With COSC | VS | Idle Holding |
|---|---|---|
Benefit from stable weekly yield all while increasing your exposure to Index assets. | Yield/ Dividends | Miss out on a near risk-free yield from inflationary rewards. |
1 token that captures the value of an entire ecosystem. | Diversification | Limited exposure to specific Cosmos projects. |
Carefully curated and vetted assets with regular rebalancing to stay ahead of the market. | Convenience | Constant research and due diligence for every portfolio adjustment. |
Portfolio Allocation
The careful selection of portfolio assets is the foundation of an optimal Index. Therefore, in order to be included in Cosmos Core’s portfolio, any potential asset has to pass a screening framework assessing its riskiness.
The risk parameters include asset category, market cap, on-chain liquidity depth, token distribution as well as other parameters. The full documentation of the Framework could be found here (Link).
The initial portfolio allocation of $CORE is the following:
| Asset | Category | Portfolio Allocation |
|---|---|---|
Cosmos Hub - $ATOM | The 1st interoperable App-Chain | 24% |
Osmosis - $OSMO | AMM | 24% |
Stargaze - $STARS | NFT Marketplace | 13% |
Akash Network - $AKT | Decentralized Computing Marketplace | 10.5% |
Kujira - $KUJI | Smart-contract platform | 9% |
Agoric - $BUILD | Smart-contract platform | 9.5% |
Ki Chain - $XKI | Smart-contract platform | 10% |
Portfolio Rebalancing
Cryptocurrency assets are relatively volatile. This could cause a temporary imbalanced portfolio allocation. For ex. if the value of $ATOM appreciates against the dollar while the value of $OSMO depreciates, this would create a disproportion in portfolio allocations.
To maintain a perfectly balanced allocation between portfolio assets, regular adjustments will be conducted where assets with an increased allocation will be swapped for assets that are below the initial allocation criteria. In the example given above, $ATOM will be swapped for $OSMO.
Technical Architecture
I. $COSC tokens minting flowchart
Cosmos Core index token, $CORE, is a CW20 token natively issued on the Ki Chain. $CORE is only minted via collateral deposit, and the number of $COSC shares minted represents the depositors ownership percentage from all collateral assets locked with Cosmos Core.
Cosmos Core currently accepts a single asset as collateral, Axelar $USDC, however additional types of collateral will be included in the future:
II. $COSC tokens value accrual flowchart
By tapping into the inflationary rewards of its portfolio assets, Cosmos Core accrues value in two ways:
Recurring compounding of staking rewards:
This benefits all $COSC holders. By simply holding, $COSC tokens appreciate in value as 30% of all generated rewards are compounded (re-staked). This means that $COSC is worth more and more in its underlying collateral.
Recurring yield in $axlUSDC & $XKI
While 30% is compounded, Cosmos Core liquidates the remaining 70% of rewards to $USDC & $XKI to be distributed to $COSC stakers on a daily basis. Users simply have to stake their $COSC to start earning recurring yield with Cosmos Core.
What happens to all rewards foregone by un-staked $COSC? The plan is to deploy it to $COSC liquidity pool as Protocol-Owned liquidity. This will increase $COSC's capital efficiency for future DeFi use cases by building deep & sustainable liquidity.
Note: Un-staking $COSC requires a cooling-off period of 14 days, during which users continue to earn yield from their staked $COSC.
Note: Rewards are distributed 50:50 in $USDC & $XKI. It's important to mention that the $XKI rewards are not inflationary but bought back from the market. After step 4. in the chart below, half of the $USDC is swapped to $XKI on Atlas before rewards are distributed.
III. Cosmos Core fees
Cosmos Core applies a management fee. Every time staking rewards are claimed, Cosmos Core charges a 20% fee.
Note: These fees only apply to future rewards and do not affect initial collateral deposited by users.
IV. $COSC Tokens Redemption
$COSC shares can be redeemed at any moment by their holders in return for its underlying collateral. As all IBC-enabled staked assets, the Cosmos Core portfolio assets require a cooling-off period ranging from 2 to 4 weeks before they are liquid. Which is why $COSC redemption takes up to 32 days.
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