Centauri as a KSM<>DOT transfer protocol
With the Alpha test of Centauri currently underway for the KSM<>DOT connection, parachain teams will soon have the ability to leverage assets from both the Polkadot and Kusama ecosystems. Shortly after our internal Alpha tests are completed and the UI is ready for deployment, we will commence with our closed Beta test to allow community members that applied to begin testing Centauri’s KSM<>DOT transfer functionalities first hand. In this article we will explore the importance of this transfer protocol for developers and users within the DotSama ecosystem.
Exploring cross-chain communication in DotSama and Cosmos
DotSama and Cosmos share a similar thesis regarding the future of blockchain technology but took different approaches in building their infrastructure. In simple terms DotSama focused first on a robust shared security model which has confined their messaging format (XCM) to communication with only parachains which share the same relay chain. This means that a parachain on Polkadot and a parachain on Kusama currently have no method of communication.
In contrast, IBC is extensible to any ecosystem that is capable of housing the necessary light client implementations. Our parachains fit this mold as we were already working on such an implementation for communication with the Cosmos ecosystem. We realized that the same pieces we have been developing for the connection to Cosmos could also be used to facilitate communication between Kusama and Polkadot through our parachains. We outlined the architecture of our KSM<>DOT transfer protocol in IBC Beyond the Cosmos, but an image can be found below which details the protocol’s composition.
What Centauri as a KSM<>DOT transfer protocol means for DotSama
Our core mission is to connect the currently disparate ecosystems of DeFi to enable a future where users and liquidity can flow freely between applications on any chain or layer. As there are currently no other options available for bridging between the 2 relay chains, our primary focus has shifted to providing this infrastructure for parachain teams, the benefits of which will be outlined below.
Canonical cross-chain tokens
Centauri utilizes canonical tokens as opposed to the wrapped tokens which are common with other bridging protocols. Canonical tokens ensure greater liquidity and can be thought of as native tokens. The easiest way to explain this relationship is with an example.
Wrapped tokens effectively fragment liquidity and while this is not ideal to begin with, their effectiveness dwindles with every hop to a new chain. In order to build seamless cross-chain experience, native tokens are the only answer. XCM and IBC both offer access to native tokens. Through Centauri, users can transfer native assets between DotSama ecosystems which facilitates deeper liquidity than relying on wrapped tokens.
New liquidity, users, and opportunities
Centauri, as the first KSM<>DOT transfer protocol, opens up the floodgates and allows the flow of liquidity between parachains on Polkadot and Kusama. The most obvious being token transfers, which will allow for increased liquidity across protocols on both chains. For example, we will see the first instance of a DOT/KSM pool on the Pablo DEX on Picasso.
Other parachains can also utilize Centauri as a KSM<>DOT transfer protocol to bring new tokens into their own ecosystems simply by opening HRMP channels to allow XCM messages to be passed to the Composable/Picasso parachains. This in-turn opens the door for new users to be introduced to the ecosystem as there will be additional opportunities generated and developed.
For example, the Moonbeam team could open a channel between Composable/Moonbeam and between Picasso/Moonriver. Users will then be able to transfer their tokens through Centauri’s UI which guides them through all of the steps required to get to their destination.
Additionally, the benefits of Centauri as a KSM<>DOT transfer protocol are not exclusive to parachain developers. This unification of Polkadot and Kusama through an IBC transfer protocol such as Centauri will allow for dApp developers on any parachain to begin constructing new strategies which utilize assets previously unavailable to them.
What does the KSM<>DOT connection via Centauri mean for Picasso users?
Initially, the most obvious benefit will be the ability to transfer assets between Polkadot and Kusama without the need for any hops through a centralized exchange. For Picasso users, the launch of the KSM<>DOT connection means that new asset pairs will be available on Pablo and we can begin to launch initiatives enabling new PICA utility.
We anticipate new strategies and use cases to begin being ideated, developed, and deployed as more teams open channels with Composable/Picasso to access DOT and KSM. If you are a member of a parachain team and are interested in opening channels to Picasso/Composable you can reach out to our community managers via Discord or Telegram.
About Composable & Picasso:
Composable Finance (“Composable”) is dedicated to improving the accessibility, quality, transparency, efficiency, and security of decentralized finance (DeFi). We aim to do this by pioneering innovative Web3 user experiences in a trustless, non-custodial, and decentralized manner. Composable’s technology stack enables and combines key services across different DeFi ecosystems and protocols, such as Ethereum, Polkadot, Kusama, Cosmos, and the NEAR Protocol.
Picasso is our layer 1 blockchain acting as an infrastructure layer to pioneer interoperable DeFi solutions, with a native token named $PICA which is available at the Pablo DEX. Picasso is equipped with a robust set of novel DeFi primitives that are built as modular pallets. These pallets are designed to attract liquidity from the broader DeFi landscape whilst promoting interoperability between various ecosystems.