Comparison of Minting Mechanisms Across the Cosmos Ecosystem

Minting is the creation of new coins on the blockchain. It might seem like an easy and not so technical mechanism but in the long run, minting helps to improve a token's adoption, helps to validate transactions on the blockchain, and in some cases bolster a network's security.

Token minting is the process of creating new tokens and/or coins on a blockchain through a computational processes to validate information, create new blocks, and record information to the blockchain.

The Cosmos Network is steadily growing as an ecosystem of interconnected apps and services, with one of the key mechanisms being the minting of tokens. The Cosmos Network comes together through its apps and services, connected using IBC - the Inter-Blockchain Communication protocol.

Often referred to as the 'internet of blockchains,' the Cosmos Ecosystem's goal is to be a network of sovereign, interoperable blockchains, united by open-source tools facilitating transactions and interoperability in the industry. With multiple independent projects being built with the Cosmos SDK or connected via IBC, Cosmos is slowly making its name as the go-to token minting hub. Token minting is made possible on the Cosmos Hub network thanks to its three layers:

• Application layer - Focuses on transaction processing and updating the network state.
• Networking layer - Simplifies communication between blockchains and transactions
• Consensus layer - Through it nodes can agree on the system's state.By leveraging IBC’s underlying tech, users can freely exchange assets and data across sovereign, decentralized blockchains.

This interconnectivity is an added bonus to users that might want to place a specific token type as collateral that might not be accepted in other token minting platforms outside Cosmos.

Cryptocurrency minting creates new tokens by using the existing-and-owned tokens on the network as collateral, in accordance with the project’s minting mechanisms.

Comparing Different Token Minting Mechanisms on Cosmos

Token minting adds new coins through staking existing tokens under different minting mechanisms. Within the Cosmos ecosystem, a number of decentralized applications exist that aid in this minting process. Four of the leading token minting protocols on the Cosmos ecosystem include Comdex, Juno, Shade, and Inter Protocol.These protocols stand out in their underlying infrastructure, security, and novel minting technologies. Let’s compare their token minting mechanisms in no particular order.

Comdex

Comdex is a DeFi infrastructure layer for the Cosmos ecosystem that developers can use to build bleeding-edge DeFi applications.

Among the apps coming up on Comdex is cAsset, a decentralized synthetics app that facilitates the creation of synthetic assets by collateralizing crypto assets. They also have the Harbor dApp, another upcoming application that will enable safelisted assets to be locked in Vaults and mint $CMST against them with various fees and interest rates.

The protocol's token minting mechanism utilizes modules such as Asset and Vault to tokenize an asset on the chain and then collateralize them to help generate liquidity or debt through minting synthetic assets such as stablecoins. Take the example of cAsset, the protocol's synthetics exchange facilitating the creation and trading of synthetic assets on-chain. Minted synthetics on the chain can be traded on Comdex’s AMM module in development, the cSwap.

Juno

Juno Network is a decentralized, public, permission-less network for cross-chain smart contracts. Developers can use Juno to create interoperable applications and deploy secure & robust inter-chain smart contracts in Rust.

Token minting on Juno Network is facilitated by Juno Mint, an easy and fast way for users to create their own CW20 tokens. CW20 tokens are a set of standards in the Cosmos ecosystem for tokens which are created by the CosmWasm (Cosmos Web Assembly) smart contracting platform. The seamless manner in which Juno Mint lets users mint CW20 tokens is similar to the simplicity presented by the Inter Protocol (discussed later in the article). At Juno Mint, users bypass the need for coding skills and only need to fill a checklist and confirm the details before their CW20 tokens get minted. The checklist consists of details like Token Type, Network, Token Symbol, and so on.

Being part of the Cosmos Web Assembly smart contracting platform puts the Juno Network in a great position as the network can access DeFi building blocks that promote its growth and development in this highly competitive space. That being said, the Juno Network makes use of the JunoKit as their development framework for building Juno contracts. This tool makes the Juno contracts development process simple, efficient, and scalable.

Inter Protocol

The Inter Protocol project, through the Inter Stable Token (IST), brings a stable token into the Cosmos IBC designed to maintain parity with the US dollar (USD) for broad accessibility. IST is an overcollateralized, cryptocurrency-backed decentralized stable token on the Agoric chain.

The protocol’s token minting mechanism for users to mint IST occurs through one of three steps: creating a Vault, using the Parity Stability Module (PSM), or engaging with BLD Boost. Note: The Reserve can also mint IST, but it isn't accessible to users. These three concurrent mechanisms use different assets, work at different speeds, and track from a wide to a narrow band of parity to maximize the opportunities for arbitrage to bring IST back to parity in the case of a divergence from USD.

Example: IST minting process via the Parity Stability Module.

Shade

Shade Protocol bolsters privacy on the DeFi realm by coming up with an array of connected privacy-preserving DeFi applications built on Secret Network - a layer-one solution built with the Cosmos SDK. Secret Contracts on Secret Network achieve data privacy for Shade Protocol using on-chain encrypted data with Trusted Execution Environments (TEEs).

To mint on the Shade protocol, users deposit Secret Tokens into the ShadeLend platform to mint Silk. Silk is an overcollateralized privacy-preserving stablecoin pegged to several global currencies and commodities that can be minted on Shade Protocol using Secret Tokens on ShadeLend. Minting Silk is straightforward as anyone can start off the process without having to sign up or deal with restrictions. All one needs is a wallet compatible with Secret Network and SCRT - the native token of Secret Network.

Comparison of the 4 Token Minting Mechanisms

The table below presents a comparison of the 4 token minting mechanisms explained above:

Summing it Up

To conclude, token minting in DeFi is not as easy as coin minting in centralized finance and it should be encouraged since in the long run, it helps to improve a token's adoption and in some cases such as staking tokens, like BLD bolster a network's security. The minting of tokens should present a sophisticated ecosystem with multiple players that ensure the effective functioning of the platform without compromising on security. Each player has defined roles that contribute to securing the platform, user assets, and smooth running of all functions on the protocol.

One cannot really pinpoint a particular protocol as the best token minting platform since there are different minting procedures available. It is all dependent on a user’s preference - the token type one wants to work with, their coding skills when minting (or lack of the skills), the network they are working with, and much more.