ChainTools: first-ever no-staking liquidity rewards protocol
Liquidity provision in DeFi often determines participation and most DeFi protocols require user staking to gain full access to their varying functionalities. This limits participation, as minimum stake amounts can be expensive. To address this, a Cosmos-based DeFi service provider known as ChainTools has emerged as a platform championing staking democratization.
What is ChainTools?
Best described as a DeFi service provider, ChainTools does not specialize in one thing but offers traders an extensive range of functionalities that enhance liquidity provision and make trading cheaper and more accessible.
ChainTools Cross-Chain Swap
This feature enables users to exchange trading pairs of cryptocurrencies across varying blockchain networks. Users trading on a single network could miss price slippage between assets across multiple blockchain networks.
For those seeking to take advantage of price discrepancies between blockchains, the ChainTools Cross-Chain Swap feature provides great arbitrage opportunities.
Token Locker
Traditional staking mechanisms often come with a minimum lockup period, meaning that when assets are staked, they cannot be unstaked for a specific duration. The protocol determines the length of this period. ChainTools Token Locker enables users to customize their lockup periods, giving them direct access to their assets if they need to unstake for immediate liquidity.
Contract Builder
This feature enables users to design smart contracts around their specific order types for more fluid trading, without the need for coding skills.
Zap System
The ChainTools Zap System provides on-demand liquidity for individual transactions, whenever needed, by leveraging flash loans.
Flash loans are a DeFi collateral type loaned and paid back within the same transaction, enabling access to fast liquidity with low risk of default. Flash loan smart contracts are automated, however, they will only execute if the loan recipient can return the funds in the same transaction they were borrowed.
Yield Vault
When users deposit their assets through ChainTools, they are aggregated into the Yield Vault. The Yield Vault allocates its deposited funds into yield-generating positions and strategies across multiple DeFi protocols. This strategic activity optimizes liquidity returns.
What sets ChainTools apart?
No-Staking Liquidity Provision
At the core of ChainTool's approach to furthering cheap liquidity provision is its utilization of “no-staking liquidity.” This refers to users being able to provide liquidity to the protocol directly without staking or locking up their assets.
Most participation in DeFi activity is enabled by users staking their assets as collateral in exchange for a yield-based reward. However, with the concept of no-staking liquidity, users are not required to lock up their assets. No-staking liquidity incentivizes reward distribution based on network participation over amounts staked.
Traditionally, the more you stake, the more rewards you earn back, regardless of how much you participate in the protocol. Now, a user can contribute a little to the network (in terms of assets staked) and participate a lot to earn back rewards. ChainTools’ no-staking liquidity essentially gamifies network participation; rewards earned are no longer determined by the amount of collateral staked, but through competitive network participation.
Benefits of No-Staking Liquidity
ChainTools’ no-staking liquidity provision reduces the price of participation in DeFi for users who may not want to lock up their assets, who may prefer to retain the flexibility of withdrawing their assets at any time, and those who just may not be able to afford the minimum staking fee requirements. Additionally, no-staking liquidity enhances accessibility, allowing a wider range of participants to engage in liquidity provision activities.
CTLS Token
The native utility token of the ChainTools protocol is CTLS. Principally used as a medium of exchange, CTLS facilitates liquidity provision and participation in ecosystem governance. Users who contribute liquidity with the CTLS token can earn lucrative rewards as incentives for direct liquidity provision. In typical staking mechanisms, such rewards could only be earned through staking; ChainTools transforms that.
Rewards that users can earn by providing liquidity through CTLS tokens include a share of trading fees generated through swaps on ChainTools and exclusive access to liquidity mining pools, where additional, non-yield-based rewards can be attained.
In addition to incentivizing liquidity provision, CTLS also serves as a tool for facilitating governance participation within the ChainTools ecosystem. CTLS token holders are granted voting rights proportional to their token holdings, enabling them to participate in governance proposals, vote on protocol upgrades, and voice their opinions on key decisions affecting the platform.
CTLS Tokenomics
Launched in September 2023, CTLS is less than a year old. Its maximum supply is nearly in full circulation. CTLS has a maximum supply (the total number of tokens that can ever be minted) of 11 million, with a current circulating supply (the number of tokens being publicly transacted with or held in wallets) of 10.4 million, determining CTLS as a highly deflationary asset.
A deflationary asset gains value over time as its supply decreases. With a fixed supply of only 11 million, the value of CTLS should grow over time, as there won’t be any new tokens released into the market to dilute its value.
Speculatively, if ChainTools achieves mass adoption, it may need to expand the supply of CTLS, as there won’t be enough tokens in the protocol’s current circulating supply to sustain a constant demand for liquidity provision, voting, and asset exchanges. Additionally, being deflationary, CTLS incentivizes saving. This is because its value should increase over time due to its fixed supply. That may cause the need for new tokens to be minted, ensuring CTLS’ utility doesn’t solely serve as a store of value.
Integration with Cosmos: ChainTool Infrastructure
ChainTools provides infrastructure for the Cosmos ecosystem, deploying Remote Procedure Calls (RPC), Representational State Transfers (REST), gRPC, Seed Nodes, Peer Nodes, and Snapshot Nodes across multiple networks. These mechanisms facilitate transaction data exchanges between Cosmos and other blockchain networks. Here’s a closer look at each of these innovations.
Remote Procedure Calls
A Remote Procedure Call is a tool that enables applications and computer programs to execute procedures on a remote server. It serves as a mechanism for communication between different network components, allowing them to interact seamlessly.
Representational State Transfers
Representational State Transfers breakdown computations between a client and a server. A client manages the user interface and experience, while the server stores and manages data.
gRPC
gRPC is a high-performance, open-source RPC framework developed by Google. It allows developers to analyze block data through Protocol Buffers, a blockchain-agnostic protocol for parsing structured datasets. gRPC facilitates efficient communication between distributed systems, making it ideal for building microservice architecture.
Seed Nodes
Seed Nodes are network nodes that validate new nodes joining a network. They act as the first point of contact for new nodes and assist in jumpstarting network activity by retrieving, storing, and sending data about other nodes.
Peer Nodes
Peer nodes exchange transaction data to maintain up-to-date blockchain records. They communicate directly with one another without the need for a central server, enabling decentralized communication and coordination.
Snapshot Nodes
Snapshot Nodes are nodes that maintain a snapshot of the blockchain state at specific intervals, usually after the production of a specific number of block epochs. They preserve aggregated records of blockchain state data to enable efficient network synchronization without nodes having to download the entire blockchain state.
Final thoughts on ChainTools
As a DeFi service provider built on Cosmos, ChainTools greatly democratizes liquidity provision in DeFi by decentralizing network participation through its innovative no-staking liquidity mechanism. Other features, such as the Cross-Chain Swap, Token Locker, Contract Builder, Zap System, and Yield Vault, aim to make trading much more cost-effective for users.
No-staking liquidity incentivizes network engagement based on activity rather than the volume of assets staked. Playing into this incentive is the CTLS token, a ChainTools utility cryptocurrency that facilitates liquidity provision and governance involvement.
ChainTools' integration with Cosmos infrastructure further accentuates its capabilities to enhance Cosmos interoperability. By leveraging Remote Procedure Calls, Representational State Transfers, gRPC, Seed Nodes, Peer Nodes, and Snapshot Nodes, ChainTools ensures efficient communication and coordination, laying the groundwork for a scalable and interconnected DeFi ecosystem.
Overall, this is a solid project with a bright future, and one to pay close attention to for Cosmos (ATOM) enthusiasts.
