Recently, cNETA is rapidly gaining momentum within the Cardano blockchain. I am new; however, I see the Indigo Protocol as offering much more in terms of options and practical functionality. Thoughts?
Is cNeta is similar to Indigo?
I believe that they are very different. AnetaBtc is about wrapping Bitcoin which I believe means there is a mechanism (SmartContract) for which represents 1BTC for 1 wBTC. (My knowledge of wrapped assets is a little shoddy). In regards to Indigo, it is a derivative platform, meaning that iAssets can be created to represent anything, Crypto, stocks, commodities like coffee soybeans etc. In Indigo you do not need to have possession of a real world asset in order to create the representation of one on the platform. In my opinion from what I know of the two platforms Indigo will offer far more flexibility and the creation of more assets. If I’m wrong about any of this please correct me.
I don’t really have a great grasp of the difference between wrapped assets and synthetics. However, the similarity that I see is having the ability to create an asset (wrapped Bitcoin in the case of cNETA and any type of synthetic imagined via Indigo) that is linked to the value of another asset.
I believe cNETA has a much different business plan than Indigo. From their staking pools, cNETA buy’s about four different crypto’s and puts them into a fund. From this fund, shareholders will earn tokens. With cNETA giving cross-chain capabilities ( Ergo) I believe this will give them a nice market share. “In my opinion, not market advice”. When talking about indigo, it’s a much much deeper subject. In my opinion I believe that both will be successful in this very young community.
See the link to know how they are different.
anetaBTC is creating a different type of asset than the synthetic assets Indigo creates. anetaBTC locks up real BTC and then creates an asset on the Cardano blockchain. This is a real representation of the BTC. If you’re familiar with Ren for the Ethereum blockchain then it’s like that, but for Cardano.
Indigo’s iBTC is different than anetaBTC in that it’s not a real representation. It’s merely an asset that mimics the price action of BTC. Owning iBTC isn’t be equivalent to owning BTC, whereas anetaBTC is equivalent.
anetaBTC is made possible because BTC is a crypto asset. Indigo can create synthetics of crypto assets, but a core power and appeal comes from creating synthetics of real world assets in a completely decentralized manner. This isn’t possible using anetaBTC.
There’s a difference in terms of capabilities and risk to reward when it comes to trading. Synthetics are building pieces and can be used in other derivative contracts. You can make trades without requiring the underlying supply. For example, more iBTC could exist than there are anetaBTC in existence. This allows for leveraged trades that wouldn’t be possible to be settled using anetaBTC.
This is the same case as to why iADA may be useful in addition to ADA. The synthetic and the real asset serve different purposes. The synthetic asset isn’t real, and it’s because of this non-realness that you can start to do more cool things with it that’s not possible with the real asset itself.
One use case for synthetics is being able to gain price exposure to assets that you otherwise wouldn’t be able to get exposure to. This is the use case where anetaBTC and iBTC compete.
Another use case is using synthetics to build new financial products (derivatives) and make trades that otherwise wouldn’t be possible. It doesn’t replace the underlying assets, it enhances their capabilities. That’s why iBTC and anetaBTC can co-exist and complement each other. In fact, it could be possible to take anetaBTC as collateral and use it to mint iBTC.
Thanks @defiroose for that great explanation. So anetaBTC locks up the real asset on the blockchain which limits what they are able to do while Indigo has no such limitations. The more time I spend learning about the Indigo project the more I am excited to see what it can accomplish. Happy to be part of the community!
Thank you so much for the detailed explanation. I am really intrigued by the seemingly endless possibilities in the realm of synthetics. I am happy to be a part of the Indigo community. On the other hand, locking up the value of bitcoin and shifting the transactional piece to the Cardano blockchain, in the case of anetaBTC is also quite promising for many reasons, not the least of which is the environment. I am in awe and trying to just take as much in as I can. Thank you again!
Thank you for the detail explanation. Understand it clearly now.
Very interesting that these two types of tokens complement each other, meaning there is no friction that makes them compete
cNETA is wrapped bitcoin while Indigo is collateralized synthetic bitcoin. One you own, the other you do not.
Short say, they are not eachothers competition, Indigo is unique of its kind on cardano as of now
Price action is based on MinSwap YF … nothing else
Something that hasn’t been talked about but is important would be say an investor had Bitcoin. He uses anetaBTC to get wrapped Bitcoin wBTC to use on Cardano. If through governance we voted to accept wBTC as a collateral option you could mint iBTC. Why is this important? Your collateral ratio will remain constant so you cannot get liquidated. You could also pair iBTC/wBTC in a DEX like Minswap so you will not be opening yourself up to impermenant loss.
cNETA is a cross chain bridge for Bitcoin and connects Bitcoin blockchain to ERGO and Cardano. You can lock your BTC in the protocol and mint wrapped BTC on Cardano or ERGO.
Indigo is just tracking the price of the asset, say BTC, and there will be mechanism like stability pools to maintain the peg of 1 iBTC to 1 BTC.
Thank you for the brief explanation, diwalost.
Very clear explanation…its easy for newbie like me to understand about this project … and i think this project very good and can be huge in the future…Good job Team
An interesting comparison/distinction. I’m currently staking in a pool to earn cNETA and also very excited about what Indigo will be offering so I’m hoping that both will grow and prosper! There are so many projects around now that there are bound to be significant areas of overlap between many of them. Only time will tell how much duplication of services/assets will last. I’m sure that many projects won’t last as their utility is duplicated or improved upon elsewhere.
A wrapped asset holds the underlying asset, a synthetic is just a placeholder that follows the price of the said asset.