Nomic, a layer-1 bridging solution for Bitcoin, is set to bring Bitcoin liquidity to the Cosmos ecosystem through a Bitcoin-backed token. With the implementation of the nBTC Interchain Upgrade on the Nomic blockchain, users will be able to transfer nBTC, a native token in the Cosmos ecosystem, using the Interchain Blockchain Communication (IBC) protocol. This upgrade is scheduled to take place by the end of October.
The Nomic app, as well as other Cosmos apps like Osmosis, a decentralized exchange, will facilitate the issuance and redemption of nBTC for Bitcoin. By enabling this functionality, Nomic aims to unlock the exciting DeFi capabilities of the Cosmos ecosystem for Bitcoin holders.
One of the key benefits of Nomic’s approach is its fully decentralized and non-custodial nature, making it the first Bitcoin bridge of its kind. Unlike other bridging protocols, Bitcoin BTC is not “locked” on Nomic. Instead, it is held in a “reserve output” on the Bitcoin blockchain, and the funds are released when transactions are signed by Nomic validators. This unique feature allows for “Emergency Disbursals,” reducing the risk of losing Bitcoin in case of any issues with the protocol.
The launch of nBTC on Cosmos is seen as a significant step towards addressing the liquidity problem in the Cosmos ecosystem. Sunny Aggarwal, co-founder of Osmosis, highlights the need for a base money asset that can serve as the primary store of value in the Cosmos ecosystem. Nomic’s solution offers the potential to fulfill this need and bring together the Bitcoin-centric Cosmos community.
However, concerns have been raised about the security of cross-chain bridges. According to DeFiLlama data, cross-chain bridges account for a significant portion of the cumulative amount of crypto hacks since 2016. Nevertheless, Nomic’s decentralized and non-custodial approach provides a level of security and mitigates the risk associated with traditional bridging protocols.
The launch of native USDC by other blockchain teams like Noble and Celesta further adds to the DeFi liquidity of the Cosmos ecosystem. These initiatives collectively represent a growing effort to expand the capabilities and liquidity of the Cosmos network.
In summary, the upcoming nBTC Interchain Upgrade by Nomic will bring Bitcoin liquidity to the Cosmos ecosystem. This development holds great potential for unlocking DeFi capabilities and addressing the liquidity needs of the community. With its decentralized and non-custodial approach, Nomic aims to mitigate the risks associated with cross-chain bridges, offering a secure and innovative solution for the Bitcoin-centric Cosmos ecosystem.