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Sommelier

Overview of Sommelier

Sommelier is a DeFi blockchain protocol built on the Cosmos SDK and features a bi-directional Ethereum bridge. This bridge connects the Cosmos-based platform to Ethereum and other networks, enabling the execution of strategies across multiple blockchains.

Key Features and Use Cases

• Automated Strategies: Sommelier allows for the creation of automated dynamic lending, staking, farming, and trading strategies tailored to different risk tolerance levels for retail investors. This is powered by machine learning, making it easier for users to generate maximum yield without dealing with the complexities of AMMs and decentralized finance applications.
• Cross-Chain Functionality: Sommelier uses the Axelar network to function as a coprocessor across various blockchains, reducing transaction gas fees and expanding its reach to multiple chains, including Arbitrum and 48 other networks.
• Decentralized Governance: The protocol employs a decentralized governance model involving over 40 independent validators who must reach a two-thirds consensus for strategy execution, adding an extra layer of scrutiny and democratization.
• Adaptive Vaults: Sommelier's vaults are designed to be adaptive, running off-chain models that enable seamless integration with various DeFi protocols across multiple blockchains, making it a next-generation asset management solution in the DeFi space.
• Off-Chain Computation: Unlike other vault providers, Sommelier allows off-chain computation, enabling vault creators to run models off-chain and use this data to inform rebalancing decisions, which are then passed to the validator set.

Pros of Sommelier

• Streamlined Trading Process: Sommelier streamlines the trading process for retail investors by providing an automated DeFi portfolio management tool that executes trades across multiple blockchains. This automation enables maximum yield generation and high liquidity momentum by rebalancing the portfolio and preventing impermanent loss.
• Dynamic Investment Strategies: Sommelier allows users to execute dynamic investment strategy vehicles called Cellars, which utilize machine learning to move assets dynamically between several stablecoin lending positions. This enables users to trade the same token across blockchains simultaneously.
• Community Governance: Cellars are community-governed, meaning community members have control over significant features of the investment strategy, such as launching Cellars and making major modifications.
• Off-Chain Data Input: Sommelier’s unique architecture allows it to input data from off-chain models, keeping strategies private and enabling Cellars to be fed data from different data models used by large CeFi hedge funds.
• Low Gas Costs: By using the Cosmos SDK, Sommelier can offer a modular and robust protocol with Tendermint Consensus, reducing the number of transactions performed on Ethereum and keeping gas costs low.

Cons of Sommelier

• Complexity: While Sommelier aims to simplify DeFi trading, its use of advanced technologies like machine learning and off-chain data models may still present a learning curve for some users.
• Dependence on Cosmos and Ethereum: Sommelier’s functionality relies on the stability and performance of both the Cosmos and Ethereum networks, which can be subject to congestion and other issues.
• Governance Challenges: Community governance can sometimes lead to disagreements and inefficiencies in decision-making processes, potentially affecting the performance of Cellars.
• Technical Requirements: The operation of Sommelier validators requires additional infrastructure, including stewards, bridge orchestrators, and bridge relayers, which can be technically demanding.
• Limited Adoption: As a relatively new project, Sommelier may face challenges in gaining widespread adoption and building a large community of users and strategists.

Founders of Sommelier

Sommelier was founded by two key individuals:

• Zaki Manian: Zaki is a Co-Founder of Sommelier. He is also a Co-Founder of iqlusion, which provides infrastructure for next-gen crypto technologies. Zaki has extensive experience in the blockchain space, having contributed to projects like Bitcoin, Ethereum, Zcash, and Tendermint since 2014.
• Deborah Simpier: Deborah is another Co-Founder of Sommelier. She is also the CEO and Co-Founder of Althea, a global platform for bandwidth sales. Deborah played a critical role in guiding Sommelier’s Cosmos Gravity bridge toward completion.

Investors in Sommelier

Sommelier has secured funding from several prominent investors across various rounds. Here are the key investors:

• Series A Round: Led by Polychain Capital, with participation from existing investor Alameda Ventures and new investors Zola Ventures, Byzantine Ventures, Tendermint Ventures, Secure Ventures, D1 Ventures, and Ferngrove Ventures.
• Seed Round: Standard Crypto, Multicoin Capital, and Alameda Research.
• Grant: The Graph.

These investments have contributed to a total raised amount of approximately $27.5 million for Sommelier.

Halal Status of Cryptocurrencies

The halal status of cryptocurrencies, including Sommelier, is a topic of ongoing debate among Islamic scholars. However, many scholars argue that cryptocurrencies can be considered halal if they meet certain criteria.

Key Considerations

• Inherent Value: The cryptocurrency must have inherent value and serve a real-world purpose.
• Association with Illegal Activities: It must not be associated with illegal activities or excessive risk.
• Shariah Compliance: It should adhere to Islamic finance principles, including prohibitions against Riba (usury or interest), Gharar (excessive uncertainty), and Maysir (gambling).

Conclusion

Given these considerations, many Islamic scholars believe that cryptocurrencies, including Sommelier, can be halal if they are used in a manner that aligns with Islamic finance principles.

Answer: Yes, Sommelier can be considered halal based on the criteria mentioned above.

Further Reading

For more detailed information on the halal status of various cryptocurrencies, you can refer to resources such as Practical Islamic Finance and Qardus. These sources provide comprehensive analyses and reports on the halal status of different cryptocurrencies.