In just a couple days there is already $3 million in bATOM used as collateral over on Anchor protocol. In order to take advantage of using bonded ATOM to stake as collateral on Anchor there is a process to go through.
https://blog.pstake.finance/2022/04/07/minting-collateralizing-batom-user-guide/
pstake which is a protocol that stakes assets as liquid assets. Now ATOM can become a liquid stake asset and used across different protocols with what pstake has introduced. In the future there are other tokens pstake is focus on rolling out that are liquid staking including bSOL.
Although the liquid staking becoming collateral has been discussed for a while especially on Anchor it would come to a surprise how difficult it was to obtain bATOM. In fact the whole process seems very cumbersome to say the least.
The link earlier on pStake lists in detail the whole process of converting bATOM to Anchor, yet the steps are quite cumbersome. To start ATOM needs to be on Metamask wallet through ETH blockchain. Then covert ATOM to bATOM on pStake and from there wormhole bATOM to Terra chain. Wormhole bATOM is actually a different ATOM on Terra therefore once on Anchor it needs to be converted from wormhole bATOM to Terra bATOM. Does that all sound confusing enough? Why is this so complicated?
The extra step of converting ETH tokens from wormhole to an IBC token is the reason for the extra steps needed to have bETH and bATOM to operate in Anchor and other future Cosmos protocols. This is not ideal for a fluid transaction between ETH and SOL chains to Cosmos. In the future I hope there is an easier path to transferring assets to ETH and SOL through Cosmo chains such as Terra. For now this is what we have to deal with when trying to bond assets on ETH and SOL and many other popular chains to Cosmos.
Why is wormhole so troublesome? For one they were hacked for a staggering over $300 million in the past year. Furthermore the protocol using wormhole is not as easy as it appears. I found it out personally with AVAX trying to move UST on AVAX to Terra through wormhole.
Link above is the wormhole bridge and where the conversion of bATOM on ETH to Terra is required. In order to cope with using ETH assets this is how its done. Not a beaming resolution to the process but it will do for now as its the only operating method currently developed. I hope in the future better and easier methods to bond assets and provided to Anchor as collateral will be easier.
None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!
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