The Casper Association has introduced a new initiative to drive the growth of DeFi on Casper: the DeFi Working Group. The inaugural call on October 15th, 2024 brought together leaders from across the ecosystem to assess the current state of DeFi, address existing gaps, and explore opportunities for further development. Here's a detailed recap of the first session.
The DeFi Working Group was formed with a clear mission: to identify areas of improvement in Casper's DeFi ecosystem, encourage collaboration on solutions, and eliminate inefficiencies as the ecosystem grows.
Michael Steuer, the CTO of the Casper Association, began the meeting with a review of critical protocol updates and recent structural changes within the Casper Association.
The Casper Association has fully consolidated all core development responsibilities under its umbrella which was previously shared with Casper Labs. By doing so, the Casper Association can ensure the team is focused and working on the public network, the core protocol, and the CSPR token.
The restructuring ensures that Casper’s core developers are solely working on what matters most to the ecosystem.
2.0 release– also known as Condor, is on the horizon. Condor brings major updates to the network, including the new Zug Consensus Protocol with enhanced efficiency, resiliency, and overall performance. Also included in Condor is a native CSPR burn mechanism, which introduces a way to reduce the overall CSPR supply.
The release will also bring future-ready block structures, laying the groundwork for Casper’s evolution as more features roll out in the future.
Although features like fee elimination and a new virtual machine are coming in the 2.1 update or beyond, the initial 2.0 release will ensure that the migration from the previous version is smooth with minimal disruption for users, developers and exchanges.
Following the general updates, the group zoomed in on DeFi; what Casper’s DeFi ecosystem currently offers, and the components that are already in place.
Key data providers like Mobula, Fluidefi, and RedStone are either integrated or close to launching on Casper, bringing crucial on-chain data services to the network. Also, as a major infrastructure piece, CSPR Cloud is now freely available to anyone who wants to build on Casper. The Casper Association has made it easy for developers to use this service without concern for prohibitive costs, ensuring broad access to the necessary resources for developing the network.
On the bridges side, Paradiso is heavily used on the network, while Router Protocol is expected to bring new cross-chain functionality to Casper soon. Router Protocol’s Router Intents will allow for one-click actions across chains. Users will be able to bridge assets like USDC from other networks to Casper and instantly interact with DeFi protocols, like staking or liquidity pools, without any complex steps.
Stablecoins are critical for any DeFi ecosystem, and csprUSD, Casper’s native stablecoin, is already live. “Conversations with Circle are ongoing to integrate USDC directly into Casper ecosystem. The smart contracts needed for this integration are already prepared, and Circle is actively reviewing them, bringing this closer to reality,” stated Michael.
Casper has established token standards, including the CEP-18 fungible token standard (similar to ERC-20). stCSPR by Paradiso is a liquid staking token that allows users to stake their CSPR tokens while retaining liquidity to participate in DeFi activities.
The Odra framework supports these tokens and allows developers to quickly create composable smart contracts.
The DeFi ecosystem on Casper has seen notable growth in smart contract activity, surpassing native token transfers, signifying that DeFi is starting to take root on the network. With all that said, Michael emphasized there are areas that need improvement, and the session’s focus shifted to “What is next?”
Several gaps were identified during the call. “Addressing these will be crucial for Casper to become a more competitive player in the DeFi space,” said Michael.
- Casper doesn’t have the volume and TVL seen on more mature DeFi platforms. Therefore, Growing liquidity on the network is essential, and the working group identified this as a top priority.
- csprUSD has faced challenges maintaining its peg. Sarson Funds, the issuer of csprUSD, explained that they are now looking for partners who can help with the liquidity and stability issues, especially market makers who could ensure that the stablecoin stays properly pegged to its value.
- The current liquid staking token, stCSPR, has not been fully leveraged across the ecosystem. A more universally adopted, open liquid staking token is needed, one that has the full support of the community and can be integrated across various DeFi projects.
- Casper’s DeFi projects need to be more easily discoverable on platforms like DappRadar, DexScreener, and GeckoTerminal. Increased visibility will drive more traffic to the network and encourage participation in Casper’s DeFi ecosystem.
- A critical component missing from Casper’s DeFi ecosystem is a lending protocol. Lending protocols would be an essential part of a more mature ecosystem as they enable users to borrow stablecoins and reinvest in other assets like CSPR.
- The group discussed the need to make improvements to Casper’s token standards, particularly around their interfaces and interoperability with other chains.
Following the identification of gaps, several key solutions were discussed to address them.
- Router Protocol is bringing its Router Intents feature to Casper, which allows for one-click cross-chain actions, so that users can easily bridge assets from other networks to Casper and immediately engage with DeFi applications on the network. A major boost to liquidity and user adoption is expected. Router Protocol is already integrated with 35+ chains and is wrapping up its integration with Casper.
- Sarson Funds’ Stablecoin Management: John Sarson from Sarson Funds mentioned that although they had built csprUSD, they lacked the resources to manage it effectively. Sarson Funds is now actively looking for partners within the Casper ecosystem who can help maintain the peg of the stablecoin by providing market-making capabilities. John expressed openness to collaboration, stating that Sarson Funds would be happy to hand over management control to ensure that the stablecoin remains stable and functional. Several participants on the call expressed an interest to collaborate with Sarso Funds on csprUSD.
- Liquidity Providers: CSPR holders and ecosystem supporters have clearly indicated their willingness to provide liquidity for promising DeFi projects. This could be a major boost to the TVL on the network and ensure that new projects have the liquidity needed to succeed.
Several action items were agreed upon during the call:
1. The Casper Association will set up a dashboard to track ongoing projects, prioritizing tasks and ensuring there is no overlap between projects. This dashboard will be regularly updated to keep participants informed.
2. The DeFi Working Group will convene monthly. The next session is currently scheduled for November 5th, 2024. These calls will be used to review progress, address challenges, and discuss new ideas for growing the ecosystem.
3. A Telegram group will be set up for participants to continue discussions between meetings, providing an ongoing forum for collaboration and updates.
The first DeFi Working Group call was a productive and collaborative session. With key gaps identified and solutions proposed, Casper is on track to enhance the DeFi offerings and create a more vibrant and liquid ecosystem for developers, users, and investors.
You can watch the recording of the inaugural DeFi Working Group call on our YouTube channel here.
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