Crescent Network is a Cosmos appchain that aims to serve as public infrastructure and maximize capital efficiency with a hybrid AMM / order book approach.
Crescent does not charge any trading fees to their users, instead its LPs and market makers are incentivized with CRE token emissions.
In 2023, Crescent DEX has facilitated over $120 million in total volume while averaging 2,700 active users per month.
Maximum extractable value (MEV) attacks are prevented using Crescent’s batch execution technology, which treats all orders within a batch equally.
Crescent V2 is on the horizon. It will bring major changes like the introduction of Crescent Flip and the Bootstrap Module, a combined product of lending, hedging, and leveraging.
Introduction
Crescent Network is the result of the convergence of a number of teams working to bring neutrality to DeFi within the Cosmos ecosystem. Its development was initiated by a small group of Cosmos developers from B-Harvest, working in conjunction with the Ignite team, formerly known as Tendermint. Together, they brought to life Gravity DEX and Emeris, a liquidity module and web UI, respectively.
Born out of an evolution of the Gravity DEX, which was built on the Cosmos Hub, Crescent emerged to address concerns about credible neutrality within the Cosmos community. At the time, there was a growing belief that a single, dominant DEX governed by ATOM tokenholders could potentially hamper the evolution of DeFi in Cosmos. By establishing Crescent as a distinct Cosmos chain, these concerns were addressed as the development of Crescent was no longer defined by ATOM governance.
Crescent also introduced DeFi-tailored network parameters and novel features, enhancing the user experience. Through its native token CRE, Crescent enabled the implementation of independent liquidity incentives and airdrops, detached from ATOM inflation. Currently, the Crescent team is comprised of the original B-Harvest developers and several industry experts. The project received initial investment backing from Ignite Ventures, formerly known as Tendermint Ventures.
Crescent’s Unique Features
Crescent Network introduces a suite of innovative features designed to improve user experience, enhance capital efficiency, and foster marketplace fairness.
Hybrid DEX
At its core, Crescent features a hybrid DEX. Crescent innovatively combines an order book approach with an automated market maker (AMM) model to create its hybrid DEX. In traditional finance, users trade with an order book — a list of buy and sell orders for a specific financial instrument with liquidity usually coming from market makers. But in DeFi, users gather their funds into liquidity pools called an automated market maker (AMM), which utilizes a predefined formula like the constant product model (CPM) to manage the liquidity. To combine the two approaches, Crescent automatically converts liquidity into orders once users have provided the liquidity to a pool. In addition, Crescent allows vetted market makers to place buy and sell orders on the order book without depositing into a liquidity pool.
Crescent’s hybrid DEX lets it cater to less sophisticated users who want to make markets. Users can simply deposit their funds into an AMM and have those funds automatically spread across ticks on the order book. More sophisticated market makers can still use their traditional strategies by providing order book liquidity without depositing into an AMM. For the end trader, they receive more liquidity and more transparency about where said liquidity is for a specific coin.
Market Makers
In the Crescent Network, any address can apply to be a market maker for selected market pairs. These market makers receive CRE incentives for providing liquidity, fostering an environment that encourages market makers to reduce spreads and provide even liquidity for both bids and asks. The scoring system evaluates the performance of market makers off-chain, and those who maintain stable liquidity within the valid range receive higher scores.
Lastly, the market maker scoring system sets the rules for the application process for any Crescent address to become a market maker for selected pairs. Market makers are evaluated and rewarded based on the consistency of their liquidity provision.
Additional Features
Traditional exchanges and AMMs suffer from some issues regarding fairness. They allow market exploitation such as value extraction (MEV) and preferential treatment in the form of gas paid. Crescent DEX addresses these shortcomings by introducing a concept called batch execution. This approach minimizes value extraction and enhances marketplace fairness by treating orders within a batch equally, prioritizing order price rather than the gas paid. Batch execution fosters healthy competition among arbitrageurs and traders, helping lead to more efficient price discovery on the order book.
Crescent Network also uses auto-rebalancing ranged pools, which allow users to provide liquidity within a predefined price range for a token pair. Ranged pools increase capital efficiency and enable more sophisticated liquidity provisioning. They are particularly beneficial for pairs with stable prices, whose predetermined price allows liquidity to be best used within a specific range.
CRE Tokenomics
Crescent Network’s token, CRE, serves a multifaceted role within the network. It underpins staking rewards, facilitates voting on governance proposals, and serves as a key incentive for liquidity providers and validators. Beyond these functions, CRE is also used to pay for gas on the network. Upon its launch on April 14, 2022, 200 million CRE was distributed from a total maximum supply of 1 billion CRE. Half of this initial distribution was earmarked for ATOM delegators as an airdrop, and the other half was deposited into a strategic reserve.
The long-term distribution strategy for CRE supply includes 53% for ecosystem incentives, 20% for the team, 10% for both the strategic reserve and the ecosystem airdrop, 5% for staking rewards, and 2% for the community fund. The expectation is that the full emission of CRE will be completed within 10 years.
As a Cosmos appchain, Crescent Network's security rests with its specific set of validators. The current validator group maintains a significant share of voting power despite the failed governance proposal to increase the validator count from 50 to 65 was not passed. Specifically, the top five validators control 33% of the voting power, and the top ten validators collectively hold 65%. This level of voting power held by the top validators contrasts with another Cosmos application chain, Osmosis, where the top five validators hold 29% of voting power and the top ten hold 39%.
Crescent's validator set features a low entry barrier — no minimum stake is required, which is designed to encourage wider participation. Currently, 70.8 million of the total 333.7 million circulating CRE are staked with a validator.
Crescent Network's economic dynamics are defined by CRE's inflation and staking rates. The inflation rate currently stands at 70%, while CRE validators can expect an APR of 19%. Initially, the network operated with zero gas fees. However, to counter spam attacks, Crescent implemented a minimum fee of 0.002 CRE.
As of April 2023, Crescent DEX supported 27 whitelisted tokens and had a total value locked exceeding $8.5 million. Furthermore, the platform has seen relatively strong activity since the start of 2023, with an average of 2,700 active users per month and a trading volume exceeding $120 million. There are several promising upcoming features such as a Crescent-built perpetual futures DEX, a launchpad named Bootstrap, and the introduction of a Cosmos-native USDC. These features bode well for the future, potentially increasing trading volume and the total value locked on Crescent.
Crescent’s Liquid Offerings
Crescent Network offers users access to liquid staking, liquid farming, and liquid governance. Each of these features leverages the power of composability to optimize the user experience and efficiency of the protocol.
Liquid Staking
Liquid staking is an evolution of traditional staking mechanisms in delegated Proof-of-Stake (dPoS) blockchains. Ordinarily, native staking tokens (in this case, CRE) are locked by users to enter the validator set or to delegate tokens to existing validators. The advent of liquid staking changes this system by allowing users to stake their CRE tokens while retaining liquidity. This is accomplished through the minting of a receipt token, bCRE, which mirrors the staked CRE tokens. These bCRE tokens can then be swapped, transferred, or deposited, while their underlying assets are staked. Offering bCRE reduces the opportunity cost associated with traditional staking and enables secondary investment opportunities. Furthermore, the delegation and voting power of staked tokens are retained, contributing to a more secure and diversified network.
Liquid Farming
The liquid farming (LF) feature optimizes the utilization of liquidity in DeFi. Traditional farming positions often lock liquidity in farming pools, rendering it unusable for other DeFi products. Crescent Network’s liquid farming feature tokenizes these farming positions into LF coins, liberating the locked liquidity. The process is similar to liquid staking, wherein a user will deposit their assets to farm rewards and receive a receipt token, which mirrors the locked farming tokens. The LF tokens can then be utilized across the DeFi ecosystem for various purposes, including serving as collateral in lending protocols or supporting stablecoin vaults. This interoperability, also known as composability, is a cornerstone of DeFi because it allows for seamless integration and operation across various protocols.
Liquid Governance
Liquid governance is Crescent Network's liquid approach to token governance. In traditional models, staking tokens often forfeit their liquidity and sometimes their voting power. In contrast, Crescent’s liquid governance ensures that when CRE tokens are staked, the newly minted bCRE tokens retain full voting power. As such, liquidity can be maintained without sacrificing the voting power of a user's tokens.
In summary, the Crescent Network's suite of features — liquid staking, liquid farming, and liquid governance — synergistically work to address the limitations of traditional DeFi models. By enhancing liquidity, optimizing reward mechanisms, and encouraging governance participation, the Crescent Network is well on its way to creating a robust and inclusive DeFi ecosystem.
The Interstellar Roadmap
Crescent Network’s roadmap for 2023 emphasizes five key areas: user experience, user interface, horizontal expansion, token economy, and security, while also introducing new products under the Crescent brand.
User Experience Improvements
Crescent Network plans to offer users a custom LP range, which would enable liquidity providers to set their own liquidity provision ranges. Currently, the ranged pools Crescent offers are predefined and do not allow for customization at the user level. Furthermore, the platform has plans for a multi-hop feature, which will allow users to trade across multiple liquidity pools, thus optimizing price and reducing slippage. Crescent DEX also intends to integrate and incentivize market makers on the order book, a move that will likely attract more liquidity and enhance price stability. Crescent is also developing a fiat on-ramp to simplify the conversion process from fiat currencies to tokens. Lastly, the team plans to integrate with lending protocols to boost returns for liquidity providers. The integrations will allow users to potentially earn additional yields and further engage with external DeFi.
User Interface Improvements
Crescent DEX is also focusing on UI improvements to enhance usability and aesthetics. Its plans include a fluid LP position change, which will allow liquidity providers to easily adjust their positions in response to market fluctuations. The featured pools UI will undergo a revamp, improving the discoverability of top-performing and popular pools. Additionally, the team plans to develop a personalized asset management system to provide users with a tailored view of their holdings and activities. Users will also have access to the Crescent Complete Info Page, a one-stop-shop for all relevant exchange information, including trading volumes and pool data.
Horizontal Expansion
To expand the platform's functionality and compatibility, Crescent DEX plans to integrate with CosmWasm, a smart contract module for Cosmos. The team is also developing the Crescent Bootstrap Module. The module is designed to facilitate the listing and growth of new projects within the Cosmos ecosystem by offering projects both token launch services and liquidity management services.
The key difference between Crescent Bootstrap and other launchpads is the full-scope liquidity advisory services. Normally, a launchpad only helps a project raise funds, but it does not offer any services on how to properly deploy those funds into liquidity pools to support their long-term success. Additionally, by conducting their time-based token allocation through the Bootstrap Module, projects are more likely to attract a strong pool of investors from the Crescent community. Ultimately, Crescent Network views the Bootstrap Module as a public good to help projects increase their reach within the Cosmos ecosystem at a reasonable cost.
Token Economy and Security
As part of its strategy to support a fair and sustainable token economy, Crescent DEX will implement a swap fee module. This module will be designed to maintain a balanced token economy within the platform through swap fees.
Security is a top priority for Crescent DEX. The team is planning to launch a bug bounty program to incentivize the identification and reporting of potential vulnerabilities. This initiative underscores the team's commitment to providing a secure platform for all users.
New Product Launches
Crescent is also planning to extend its product offerings. The development and launch of Crescent FLIP, a perpetual futures DEX, is in the pipeline. It will cater to the growing demand for trading decentralized derivatives in the DeFi space. This coupled with the Crescent Bootstrap Module should allow newly launched projects to more effectively navigate the complexities of DeFi by accessing the necessary liquidity.
Closing Summary
Crescent DEX is gearing up for significant advancements in 2023, particularly within the Cosmos ecosystem. Its roadmap underscores a focus on enhancing user experience, user interface, horizontal expansion, token economy, and overall security. The design combines the benefits of traditional order books with AMMs in DeFi to create a truly unique decentralized exchange. This distinctive approach provides a familiar trading environment for traditional investors while optimizing capital efficiency and liquidity. The planned developments — including custom liquidity provision ranges, a fiat on-ramp, integration with lending protocols, and more — all aim to streamline user experience and bolster liquidity. The introduction of new products such as Crescent FLIP and the Crescent Bootstrap Module signals Crescent's dedication to broadening its service suite. Given these innovative plans, Crescent DEX is well-positioned to significantly influence the future trajectory of DeFi within the Cosmos ecosystem.
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Ryan is a research analyst in the protocol reporting division with a focus on DeFi. He graduated from Clark University with his MBA and previously worked in Real Estate. Ryan's true passion has been in crypto and he now focuses on understanding DeFi protocol design, governance and tokenomics.
Ryan is a research analyst in the protocol reporting division with a focus on DeFi. He graduated from Clark University with his MBA and previously worked in Real Estate. Ryan's true passion has been in crypto and he now focuses on understanding DeFi protocol design, governance and tokenomics.
