The Intersection of Blockchain: Rosen Bridge and New Liquidity Pools
January 25, 2024
Decentralized blockchain infrastructure has received a significant boost with the launch of Rosen Bridge. As of this moment, participants of the Ergo and Cardano ecosystems can swap native assets between both blockchains, and the bridge will soon expand to include native asset swaps for Bitcoin, Ethereum, Binance Smart Chain, and Dogecoin.
With the emergence of Rosen Bridge, there is new opportunity for token holders of both the Ergo and Cardano blockchains. Now that Ergo native tokens are on Cardano, and vice versa for Cardano tokens on Ergo, there are new liquidity pools (LP) available.
Liquidity pools are a store of funds (held in a smart contract), holding two assets that comprise a trading pair. For example, if someone held ADA in their wallet and wanted to acquire rsERG (the ERG ticker symbol on Cardano), they would access an ADA/rsERG liquidity pool on a Cardano DEX (decentralized exchange). Through that pool, they would then be able to swap their ADA for rsERG (similarly, they could swap rsERG for ADA in the same pool).
One of the goals of decentralized finance is to allow anyone to serve as a banking entity without any intermediary. This can be as a lender or liquidity provider. As such, users who hold tokens for a trading pair on a DEX can use those assets to provide liquidity and earn rewards (a return on their investment in the pool). Trading activity between two assets is only as healthy as the amount of liquidity available for that pool. Larger liquidity pools ensure that there is enough liquidity to support high volume trading between respective assets.
With new native tokens from Cardano and Ergo flowing between the two respective blockchains, let’s take a look at some of the new liquidity pools that are available to investors.
Cardano Liquidity Pools
Spectrum DEX Liquidity Pools
rsERG/ADA - At present, there is a TVL (total value locked) of 287.12k ADA in this liquidity pool, and it offers liquidity providers an APR of 8.64%.
rsRSN/ADA - At present, there is a TVL of 56.49k ADA in this liquidity pool, and it offers liquidity providers an APR of 25.83%.
Minswap DEX Liquidity Pools
rsERG/ADA - At present, there is a TVL of 44.23k ADA in this liquidity pool, and it offers liquidity providers an APR of 9.47%.
rsRSN/ADA - At present, there is a TVL (total value locked) of 17.63k ADA in this liquidity pool, and it offers liquidity providers an APR of 41.84%.
HOSKY/rsCOMET - At present, there is a TVL (total value locked) of 7.69k ADA in this liquidity pool, and it offers liquidity providers an APR of 3.98%.
Ergo Liquidity Pools
Spectrum DEX Liquidity Pools
ERG/rsADA - At present, there is a TVL of $26.47k in this liquidity pool, and it offers liquidity providers an APR of 2.5%.
RSN/rsADA - At present, there is a TVL of $7.44k in this liquidity pool, and it offers liquidity providers an APR of 1.32%.
Opportunity for Cryptocurrency Investors
In the early stages of Rosen Bridge’s launch, not only is there investment potential through these pools on Spectrum Finance and Minswap, but there is also opportunity for providers to create new pools for other native assets, such as SigUSD, SigRSV, HOSKY, and COMET. For example, new investors might invest their tokens to create SigUSD/rsADA (on Ergo) or ADA/rsSigUSD (on Cardano) trading pairs.
Ergo’s innovative crypto-backed algorithmic stablecoin (SigUSD) would be a very interesting addition to the Cardano blockchain. Many within the crypto industry argue that blockchain’s success depends on the usage of a successfully deployed stablecoin protocol. With SigUSD, investors gain access to a stablecoin that is not only decentralized, but has also maintained its peg to USD during extreme ERG price fluctuations.
Rosen Bridge developers are currently working to add more native assets to the bridge, and it appears that Ethereum will be the next blockchain to be added to Rosen Bridge’s watcher and guard system. It is just a matter of time before native assets from all three ecosystems will be tradable on their respective blockchain DEXs.
Bridging Blockchains: Providing Decentralized Infrastructure
In much the same way that the Proof of Work consensus on Bitcoin or Ergo secures the network and approves transactions, Rosen Bridge is designed such that anyone can be a Watcher and help secure the bridge. In exchange for providing this vital infrastructure, watchers are rewarded in bridge transaction fees (paid in RSN tokens). Each blockchain that is part of the Rosen Bridge network requires watchers to observe transactions. As the bridge expands to more blockchains, there will be a need for people to run Watcher software and help secure bridge transactions. This may seem like a complicated task if you are not a coder, but it is actually quite easy to deploy a Watcher using the Rosen Bridge Github.
Setting Up a Watcher
If you are interested in operating a watcher and earning passive RSN income, you will need to access the following links:
- Ergo Rosen Watcher Setup (Windows) Youtube Video
- Git for Windows (64-bit Git for Windows Setup)
- Docker Desktop for Windows
- Rosen Bridge Watcher Instructions from Github
Before you can set up the Watcher, you will need to install 64-bit Git and Docker Desktop. Once those are installed, you can use the Ergo Rosen Watcher Setup Youtube Video and Github instructions to deploy your own watcher. The setup video is quite helpful and guides the viewer through the entire process from start to finish. This writer is not a coder and was able to successfully set up a Cardano watcher while following the step-by-step process in the video.
Please note, that in order to operate a Watcher, you will need an initial investment of 30k RSN and 800 ERG. These funds will be locked in the bridge as collateral. Additionally, you will need another 3000 RSN for each permit that operates on your Watcher. The more permits you have for your Watcher, the more bridge events you can witness to earn a portion of the transaction fees.
The Future of Blockchain Interoperability
As a decentralized tool, Rosen Bridge has the potential to jump start an era of blockchain interoperability. As more and more blockchains are added to the bridge infrastructure, developers will be able to look at dApp design in a new and revolutionary way. Rosen Bridge’s pre-existing cross-chain infrastructure opens doors for their dApps to take full advantage of the various strengths of differing blockchains.
If you are an investor, developer, or ecosystem participant, there are various ways you can interact with Rosen Bridge. New liquidity pools are now available on Cardano and Ergo through Minswap and Spectrum Finance. Developers can explore and research ways to power their dApps with both Ergo’s Proof of Work and Cardano’s Proof of Stake consensus models. Additionally, anyone with a computer can help to secure the bridge as a Watcher and earn passive income.
To learn more and access the bridge, please visit the Rosen Bridge website. If you have any other questions or need help setting up a Watcher, interested parties can access the Rosen Bridge Telegram and/or Discord. There you can access a knowledgeable community that is ready to help with any questions.
Share post
