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🤝 Overview

Alliance is an open-source Cosmos SDK module that leverages interchain staking to form economic alliances among blockchains. By boosting the economic activity across Cosmos chains through creating bilateral, mutually beneficial alliances, Alliance aims to give rise to a new wave of innovation, user adoption, and cross-chain collaboration.

Alliance allows blockchains to trade yield with each other- think of it like yield farming for L1s.

Here’s how it works:​

  • Two chains integrate the Alliance module and decide through governance which assets can be staked on their chain. These are known as Alliance assets.
  • Each Alliance asset is assigned a Take Rate (the percentage of staked Alliance assets the chain redistributes to native chain stakers) and a Reward Weight (the percentage of native staking rewards the chain distributes to Alliance asset stakers).
  • Users of each chain can then bridge their assets via IBC to the other chain and stake them to earn the Reward Weight.

Use Cases​

The Alliance module presents users and decentralized economies alike with several use cases, including:

1. Diversifying and Augmenting Staking Yield​

Any asset can be used with the Alliance module, including IBC assets, stablecoins, LP tokens, or liquid staking derivatives (LSDs). Newer, lower liquidity chains can augment their native staking yield with uncorrelated, less volatile, and more liquid Alliance assets by setting the Take Rate above 0%.

Conversely, suppose an Alliance LSD asset has a Take Rate of 0% and a Reward Weight above 0%. In that case, users can diversify and boost their yield by staking on one chain, bridging their LSD to the allied chain, and staking it – thereby earning a second yield in the form of that chain’s native token.

2. Attracting Users, Liquidity, and Developers​

By setting the Take Rate of an Alliance asset to 0%, a blockchain can attract new users and liquidity from allied chain participants who bridge and stake their assets within their ecosystem. Alliance staking translates to positive reflexivity: Higher usage -> higher liquidity -> more developers building useful dApps -> higher usage -> higher liquidity, and so on.

3. Incentivizing Application Developers​

Alliance can offer L1 staking yield to app token stakers in the ecosystem – thereby allowing users of the most promising apps to be rewarded directly from fees and inflation of the underlying L1.