Cubic: Composable’s modular DeFi vault pallet

Creating interoperable solutions has been our vision at Composable Finance from the start, the pinnacle of this vision being true composability across all DeFi ecosystems. We do this by providing an interoperable infrastructure for modular DeFi functionality. This is a follow-up to the intro to our Unchained Series. In this post, we share more on Cubic, our vault pallet, the first of its kind within the DotSama ecosystem. By leveraging Cubic along with our other primaries in the application layer, developers are equipped with a strong foundation to build upon. Below we will compare Cubic to the Ethereum equivalent vault standard and detail the important role Cubic plays within our own ecosystem.

Cubic vault vs ERC-4626 standard

Before comparing Cubic to the ERC-4626 standard, a reminder of the core functionality of a vault, in essence, the main goal of a vault is to pool user funds to participate in various DeFi strategies. By pooling funds together, vaults significantly reduce gas fees paid by the user.

Previously there was no vault standard on Ethereum, which caused countless headaches for developers who needed to implement their own adapters for each protocol. Ultimately the lack of a tokenized vault standard led to security risks for users due to the error-prone nature of these adapters. The ERC-4626 remedied these issues by introducing the first tokenized vault standard for ERC-20 tokens. By introducing a standard, ERC-4626 increases interoperability and security while drastically reducing development complexity. Ultimately the standard allows for increased innovation across EVM-compatible chains and layers.

As the first vault pallet in the DotSama ecosystem, Cubic serves as the core infrastructure for protocols utilizing vaults such as automated market makers (AMMs), lending protocols, and other cross-chain DeFi solutions. Similarly to the ERC-4626, Cubic aims to usher in a new era of innovation grounded in interoperability. However, our goals differ: while the ERC-4626 enables increased interoperability within the EVM — Cubic will unify EVM compatible chains through Mosaic, IBC enabled chains through Centauri, and Substrate-based chains as it is built on our Kusama parachain, Picasso. More on how Cubic achieves this below.

Modular vault functionality within the Composable Ecosystem

By design Cubic’s core infrastructure aids projects utilizing vault strategies such as AMMs, lending protocols (including Angular Finance) and other money legos. While functioning as a modular vault within the Composable ecosystem, Cubic will provide specific features, including;

• Vaults for deposit and withdrawal
• Governance
• Liquidity provider (LP) token share management

These functions are pliable and can be leveraged in ways that best fit the particular project built on Cubic’s infrastructure. Generally, vaults enable users to pool funds into a single pool that can be managed to perform many additional yield functions. The primary purpose of vaults is to aggregate these funds, which reduces the gas fees that users must pay. Within the Composable ecosystem, users are not only able to deposit liquidity provisioning (LP) tokens into vaults, but these funds are routed to various strategies within the ecosystem. Cubic’s modular nature is highlighted by the core functionality it provides for other pallets and applications such as:

• Angular Finance — cross-chain money market
• Instrumental Finance — a cross-chain yield strategy hub
• Pablo — the next-gen cross-chain DEX
• Whirlpool — a suite of novel privacy-preserving solutions
• Mosaic — transfer availability layer

Cubic’s utility is further extended by the Composable cross-chain virtual machine (XCVM), which orchestrates modularity in execution ensuring that each dApp built using its framework can operate separately yet interdependently. Hence, different ‘modules’ of each application can be separated yet communicate and execute necessary functions between ecosystems like DotSama, EVM, and Cosmos. Funds can be sent to and from a number of ecosystems, including Polkadot, its canary network Kusama, Ethereum, and Cosmos. This relationship is depicted below:

The XCVM utilizes the CosmWasm smart contract framework and Inter Blockchain Protocol (IBC) to enable developers to build cross-chain native dApps. By writing contracts that interface with Cubic’s vaults, new possibilities are being introduced into the standard for cross-chain vault communication. This new standard is not only relevant within the DotSama ecosystem but extends to include IBC-enabled chains and EVM-compatible ecosystems as well.

What’s next for Cubic?

Composable is already initiating cross-chain smart contracts solutions. With the XCVM as an orchestration layer for modular composability, developers can broaden the scope of intuitive user experiences by building upon the critical infrastructure provided by Cubic. Cubic is poised to facilitate the creation of seamless cross-chain applications capable of reaching all of the dominant EVM, Substrate, and IBC-enabled ecosystems.

To shine more light on how the XCVM will bridge the gap by allowing developers to create dApps that are modular in nature and able to carry out natively interoperable functions across DeFi ecosystems, Composable is holding its inaugural conference in Berlin. At the Unchained conference slated for the 1st of July 2022, Composable Finance will unveil the XCVM and how developers can maximize the benefits of Cubic to aid the construction of modular cross-chain applications.

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