At Carbon, we are always pushing the boundaries of DeFi, and today we are excited to announce that Carbon is now integrated with Arbitrum, marking the first integration between these powerful networks.
As Carbon is one of the first Cosmos chain that supports Arbitrum, this integration is a game-changer for the DeFi space opening up the two communities and their assets to each other, two of the most popular ecosystems at the moment.
This creates new possibilities for trading and liquidity which we will talk about in this article.
Before we get into the details, a quick introduction of each ecosystem for those who are new to them.
What is Carbon Network?
Carbon is a decentralized cross-chain financial protocol built atop of Cosmos-SDK. Carbon is designed specifically to support scalable and secure trading of derivatives and sophisticated financial instruments such as options, futures and bonds.
Carbon also acts as a building block for cross-chain DeFi by bridging the Cosmos and Ethereum ecosystems, allowing for cross-chain money markets and permissionless listing of tokens from IBC, EVM and non-EVM chains.
Demex is the cross-chain derivatives DEX powered by Carbon, and supports both Metamask and Keplr wallet sign in.
The Carbon governance and yield generating token is $SWTH.
Read more about Carbon Network: https://guide.carbon.network
What is Arbitrum?
Arbitrum is an Ethereum Layer 2 (L2) solution which processes transactions far cheaper at less than a dollar and is several times faster than Ethereum, while still being secured by the economic value of Ethereum.
The speed and scalability of Arbitrum has resulted in rapid growth of the ecosystem, with several dApps migrating over from Etherum to Arbitrum, resulting in Arbitrum being the leading L2 in terms of number of protocols, TVL and on-chain volume, with over 2.5 million unique addresses a day and rapidly growing.
Read more here: https://blog.switcheo.com/whats-brewing-in-arbitrum
What is Cosmos?
Cosmos is a network of independent parallel blockchains. Described as the internet of blockchains, their scalable infrastructure allows blockchains in their ecosystem that are built on Cosmos-SDK to seamlessly interact with one another while increasing their transaction capacities.
The upcoming features of Interchain Accounts and Interchain Security allow for greater cross-chain functionality and shared security in the Cosmos ecosystem, attracting more developers, resulting in a fast growing and vibrant ecosystem.
Read more here: https://blog.switcheo.com/atom-the-next-big-narrative-after-eth-merge-1
Benefits of Cosmos and Arbitrum Integration
1. Say 'Hello' to Arbitrum tokens on Cosmos
Cosmos and Arbitrum community are two of the most popular ecosystems at the moment, however right now, interoperability between the two chains are limited with no way for each ecosystem to access the other at the moment.
If you are on Cosmos, and you are interested in buying assets like $GLP or $GMX from Arbitrum, you have to use another wallet like Metamask.
But your Metamask wallet do not have access to your assets on Cosmos, creating inconvenience and a fragmented user experience especially for traders.
With Carbon's direct integration to Arbitrum, any asset from Arbitrum can be imported to Carbon permissionlessly using the 'Import Token' feature.
These Arbitrum assets can also be IBC transferred to other Cosmos chains that Carbon has relayers with. For the full list of IBC chains that Carbon is connected to click here.
Arbitrum assets that Carbon are looking to create money markets and perps for (not all are confirmed):
- GLP (auto-compounding version)
2. Arbinauts, time to become Cosmonauts too
This also opens the Arbitrum community to popular Cosmos assets.
If you have always wanted to buy Cosmos-native niche assets such as $OSMO while still using your Metamask wallet, you can't as OSMO can't be bought on anywhere but Cosmos and CEXs (yucks) at the moment.
But on Carbon, you can trade your Arbitrum assets directly to Cosmos native assets if there is an available market.
To support the integration with Arbitrum, Carbon's $SWTH token will also be live on Arbitrum's Uniswap for Arbinauts to easily buy.
3. Synergies using both Arbitrum and Cosmos assets
Here are some trading ideas that you cannot do anywhere else in crypto.
Using wstETH from Arbitrum as collateral to yield farm Cosmos LSDs
With all the rage around LSDs recently, wstETH is an increasing popular asset on Arbitrum as Lido continues to incentivize adoption of wstETH.
Once wstETH is live on Nitron money market, users can deposit wstETH which accrues about 3-6% a year in ETH value, and borrow USD against it which they can then use to do a delta-neutral yield strategy with liquid staked ATOM or OSMO.
Using lsATOM from Cosmos as collateral to leverage long cGLP
If you are from the Cosmos ecosystem and strong believe that GLP will gain in value overtime, you can deposit lsATOM to buy cGLP on Carbon, and deposit cGLP as collateral to borrow more USD to essentially leverage long cGLP.
We'll publish another article for our launch of the cGLP token, but in short this is an autocompounding token that takes the ETH rewards earned on Arbitrum's GMX and buys back GLP, slowly growing in value against GLP over time.
This is done because if GLP is sent to Carbon or Cosmos networks, the rewards accrued are lost, hence an autocompounding GLP is used instead to retain the reward value back into cGLP.
4. Migrating SWTH Liquidity from Ethereum to Arbitrum
Additionally, from our Twitter poll, we'll be moving half of our liquidity over from Ethereum to Arbitrum to make it cheaper for everyone to purchase SWTH!
Carbon have partnered with Kyberswap for our pools as they have agreed to whitelist the $SWTH token and also have concentrated liquidity so the slippage should be similar, but with the cheaper fees on Arbitrum.
You can buy $SWTH on Kyberswap here.
How to Start Trading on Carbon:
Carbon is an IBC-enabled and EVM-compatible cross-chain protocol that supports Metamask, Keplr, and Leap wallet, and more coming.
Carbon also supports flexible network fees, allowing traders to use stablecoins or ETH from Arbitrum as gas. Network fees are also incredibly low (< $0.01), making Demex a great trading platform for users who wants to trade assets from multiple ecosystems at one place with one wallet. The goal is to create a similar trading experience of a CEX, while still remaining fully non-custodial.
Note: For perp trading, only USDC from Ethereum is currently recognized as margin, so you will need to swap axlUSDC to USDC first, but in the near future we'll be treating both USDC as the same with the launch of our "Grouped Tokens" feature, to streamline the trading, liquidity, and onboarding experience.
Let's go through how to get started trading on Carbon.
Coming from Cosmos:
Carbon Network allows the Cosmos community to gain access to Arbitrum assets and more via Carbon all while using Keplr or Leap wallet.
Simply deposit Cosmos assets such as ATOM or axlUSDC to Carbon via Demex and you can begin trading Arbitrum and other assets using those popular Cosmos assets as gas.
Coming from Arbitrum:
Carbon Network allows the Arbitrum community to gain access to Cosmos assets and more via Carbon all while using Metamask.
At the moment, Metamask users can sign in to Demex on the Arbitrum ecosystem with a small account creation fee (less than $1). In the near future, once Carbon's launches its EVM chain, signing in via Metamask will be free.
Once signed in, you can deposit assets to Carbon via Demex deposit page and you can begin trading Cosmos and others assets. Note that deposits currently take about 5-20 minutes but will improve to under a minute in the future.
The recommended asset to deposit is ETH and USDC from Arbitrum (not the same as USDC from Ethereum due to the 7 days withdrawal period), which can also be used as gas in an upcoming update.
Carbon has always been at the forefront of DeFi development, from creating the first atomic swap between NEO and ETH, and this integration marks another huge step forward in the DeFi space.
We look forward to launching many first of its kind perps, like GLP, GMX, and more, to attract traders from all ecosystems.
If you are a project on Arbitrum looking to get listed on our money market, do reach out to us at @0xcarbon on Twitter.
Not financial advice
The information and publications are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Switcheo. Switcheo does not take into account your personal investment objectives, specific investment goals, specific needs or financial situation and makes no representation and assumes no liability to the accuracy or completeness of the information provided here. Switcheo also does not warrant that such information and publications are accurate, up to date or applicable to the circumstances of any particular case.
About Switcheo Labs
Switcheo Labs is an experimental think tank that combines the brightest minds with a cutting-edge software development lab. We focus on nurturing ecosystems that are forming the foundation of a new, decentralized world — one that thrives even without trust.
With this goal in mind, the team developed a blockchain solution where finance is truly censorship-resistant and decentralized — Carbon, a custom Layer 2 cross-chain protocol that acts as a building block for DeFi. A promising use case for Carbon is seen in Demex, a reference trading UI for Carbon and the world’s first fully decentralized derivatives platform.
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