Sommelier is built using the Cosmos Stargate SDK and a decentralized, bi-directional Ethereum bridge, managed by a global network of validators. Liquidity Providers can use Sommelier to deploy complex and automated financial transactions. With Sommelier, liquidity providers can use tools such as portfolio rebalancing, limit orders, batched orders, as well as a host of other features.
At its core, Sommelier is a tool to offer the best yield to DeFi users, and the best place to passively deploy liquidity. Strategists and Data Science teams will use Sommelier’s tools such as portfolio rebalancing, limit orders, batched orders, and more.
Liquidity providers in the DeFi ecosystem are challenged with finding and selecting the highest yield liquidity pools for their assets. This challenge, along with increasing Ethereum gas fees, makes the move to layer two pools inevitable. Sommelier is designed to identify the best yield opportunities on any EVM compatible chain or sidechain. Sommelier Cellars are community engineered strategies that Sommelier validators execute to move assets across blockchains.
“Sommelier Liquidity Providers are seeking to capture alpha from the data models and strategies that are running on the Sommelier blockchain.” - Taariq Lewis
Liquidity providers using Sommelier can take advantage of the platform’s bi-directional ethereum bridge, allowing easy movement of assets across chains. Sommelier also provides important loss protection to liquidity providers, allowing automatic portfolio rebalancing when pool performance changes.
“The key feature is that Sommelier provides an infrastructure for fault tolerant execution and a marketplace in which new strategies can be offered over time.” - Zaki Manian
Another key feature for liquidity providers on Sommelier is automated portfolio rebalancing, allowing users to focus on high yield opportunities while existing lower performing yield opportunities. Sommelier also will aim to lower Ethereum gas transaction fees through aggregating and batching translations.
“Sommelier is also IBC enabled at Genesis so that Liquidity Providers can enjoy unique strategies that cross both the EVM and Cosmos ecosystems, today.” - Taariq Lewis
The Sommelier Token $SOMM is used for staking, fees, and governance. The $SOMM token allows stakeholders to actively start participating in governance, along with allowing the SOMM token to be liquid and transferable. On Sommelier, there is no inflation, and no staking rewards on the current chain as of today.
Instead of starting with a high inflationary model, Sommelier is taking a different approach, focusing on generating fee revenue from cellars. The Sommelier team would ideally get to a point where there are enough fees being through Cellars to pass back to the SOMM token holders.
“Staked somm tokens will be able to participate in ensuring the right data feeds are driving cellars, the most effective operators are running validators and earning them the most fees.” - Zaki Manian
When a forum or chat goes from discussion to proposal, contributors will need to create and post this proposal on Sommelier’s Governance Forum. These proposals are called SIPS.
SIPS are proposals to update standards or functions within the Sommelier Ecosystem. SIPS can vary widely from proposing new community initiatives, to requesting funds from the community pool, to changing consensus parameters, and more. If you are interested in participating in Sommelier governance, check out this guide on how to submit your proposal.
Sommelier is currently live on mainnet, and users can now delegate $SOMM tokens on https://sommscan.io/.
Community is very important to Sommelier. If you are interested in participating in the Sommelier community, visit: https://community.sommelier.finance/. The Sommelier team is asking the community to continue making proposals so they can resume unlocking the Community Fund and continue to build winning strategies for Liquidity Providers.
Special thanks to Zaki, Taariq, and Mario from Sommelier for spending some time in Staking Hub to answer all of our questions!
Thank you to Chris Wilson for co-hosting. Feel free to join our Staking Hub Telegram group if you haven’t already.