Saga (SAGA)
Imagine launching your own blockchain as easily as deploying a smart contract—custom-built, scalable, and ready to tap into shared liquidity from day one. That’s the vision behind Saga, a new Layer-1 chain built on the Cosmos ecosystem.
Join us in this article as we take you through Saga from its foundational days, features, and see the role it plays in sectors such as gaming, AI, and DeFi.
Saga is a Layer-1 blockchain that provides an integrated stack of all the necessary components to launch application-specific blockchains called ‘chainlets’.
It is built on the Cosmos environment, which offers features such as shared security, virtual machine (VM)-agnostic capabilities, parallelization, and automatic deployment. We will discuss these features later, but first, let’s examine its origins.
In 2021, a team of Web3 enthusiasts came up with a project incubated by Ignite (formerly Tendermint) with the goal to bring blockchain ideas to life. This project was none other than Saga. The project quickly grew in popularity, and through its Innovator Program, it attracted a large number of projects, which, at the time of writing, stands at over 450.
https://x.com/Sagaxyz__/status/1900301711971147810
The Saga mainnet went live in April 2024, and the team behind it consists of Rebecca Liao as CEO, Jin Kwon as CSO, Jacob Mcdorman as CTO, and Bogdan Alexandrescu as VP of engineering.
Saga has undergone three funding rounds with support from several investors. The first one was a $2 million pre-seed funding from Ignite in late 2021 as part of its incubation program.
The second came in May 2022, where it raised $6.5 million in a seed round. Investors in this round included Maven 11, Longhash Ventures, Samsung NEXT, and several other angels.
The third and most recent was a $5 million seed extension funding round in November 2023 led by Placeholder. The round also saw participation from other notable investors such as Longhash Ventures, Com2uS, Tykhe Ventures among others, which brings the total funding to $13.5 million.
This review of Saga (SAGA) was created for informational purposes. This article is not intended for promotion.
In Saga a chainlet acts as a sovereign blockchain running a single smart contract. To launch it, a developer requests to deploy their smart contract binary onto the Saga mainnet which must be approved by the network’s validator.
Since Saga is built on the Cosmos ecosystem, it uses the Cosmos SDK to be VM agnostic (meaning it can work with any VMs). This allows developers to integrate their own VM module into their chainlet, such as EVM, Cosmwasm, SolanaVM, and MoveVM.
Saga’s Liquidity Integration Layer (LIL) is a protocol-level solution that aims to solve the liquidity fragmentation. It does this by ensuring that liquidity isn’t siloed to one app but instead spread across the Saga ecosystem.
This means that each new chainlet directly gets access to liquidity, DeFi apps gain volume from day one.
With the introduction of LIL and the shift to a liquidity-centric model as described above, Saga recently upgraded its reward mechanism which previously had only stakers to also include liquidity providers. This has been achieved through Vault 2.0 which now includes two different types of vaults for rewards:
At Saga, their ecosystem is spread across several sectors, but the main ones are: Web3 gaming, AI agents, and DeFi.
From its early days, gaming has been a key focus on Saga. As a matter of fact, around 80% of its ecosystem is made up of Web3 gaming projects.
This can be attributed to ‘Saga Origins,’ the protocol’s gaming publishing arm that helps developers bring their games to market with additional support like marketing and community building.
Examples of these Web3 games are:
With the recent growth of AI agents in Web3, Saga has also seized the opportunity to facilitate their operation on chainlets. It provides them with a stack of integrations and tools to manage tasks and interactions in decentralized systems.
An Example of these agents is Metropolis, a specialized protocol that allows AI agents from multiple agent protocols like ai16z, Wayfinder and Virtuals to speak to one another on the same chain like Saga.
Financial services from decentralized lending and borrowing to trading also have a great place at Saga due to its support for several DeFi protocols. Examples include Astrovault, a hybrid automated market maker, and Catalyst, an open-source liquidity protocol for modular blockchains.
Unlike the norm in most smart contract platforms today, where end-users interact with the network to pay fees, Saga takes a different approach. Instead, developers are left to interact with users and establish their desired monetization models. They can:
To deploy a chainlet, a developer must subscribe to a fee deposit and post it for the chainlet to be provisioned by validators. The fees are paid on an epoch-by-epoch basis (i.e. daily) using $SAGA tokens.
The fee generated from developers is intended to pay for the validators’ infrastructure cost of maintaining chainlets. Saga incentivizes validators to offer the most competitive rates to developers through a validator selection mechanism called ‘Musical Chairs’.
It is carried out on a daily basis (epoch), where the validators with the top stake and lowest fee they are willing to offer developers to provision a new chainlet are selected as the active set. The active set gets rewards, while the losing set may face penalties like reduced inflation for their delegators or being kicked out of validating.
Summary of Saga token economics
Saga depends on stakers for the economic security of the mainnet and, by extension, the security of each chainlet through delegation. Since back-end fees are distributed directly to validators, the token stakers are compensated by inflation.
The inflation rate is determined by the total percent of staked $SAGA where if more than 66% of $SAGA is staked, the inflation rewards go down, and if the stake rate is less than 66%, rewards go up. You can check the current inflation-based staking rate on an explorer that integrates Saga, such as Mintscan.
With that in mind, let’s now guide you on how you can also stake your $SAGA tokens.
For this guide we will use Keplr wallet browser extension. First go to your Keplr extension and click on ‘Manage Portfolio in Keplr Dashboard’.
There you should see all the information about: Total SAGA amount, staking amount, available balance and claimable rewards. Click the Stake button.
Then you will see a list of validators. To choose you can either type the name of your desired validator into the search bar or scroll down the list.
Once you have chosen your validator, fill out the amount of SAGA you would like to stake, select ‘Stake’ once again and then approve the transaction.
If everything is done well, you should see your staked amount in the ‘Staking Amount section’.
The total supply of SAGA token is capped at 1 billion and is distributed in the following manner:
For investors and core contributors, their allocations were subject to a 1 year cliff, and will subsequently unlock over the next 2 years. For the remaining allocations, the tokens will continue to vest (released gradually) over time, with the supply being fully unlocked after 7 years from the token generation event (TGE) which took place on April 9, 2024.
Monolithic blockchains like Solana handle all core components (Consensus, Execution, Data Availability, Settlement) but face congestion and centralization issues. Modular blockchains such as Celestia separate these components for scalability, though at the cost of composability and added complexity.
Multi-chain ecosystems like Cosmos enable sovereignty by giving each application its own chain, offering resilience but requiring significant effort for security and community-building.
Saga builds on Cosmos’ multi-chain vision, offering automated deployment of single-tenant VM chains (“chainlets”) with shared security, dedicated blockspace, and sovereignty, while remaining adaptable to modular frameworks, positioning it as an innovative solution for scaling Web3 applications.
With an integrated stack of all the necessary components to launch chainlets, Saga stands as a formidable contender to the previous blockchain designs. Built with an aim to scale the multi-chain vision of Cosmos and integrate the next 1000 chains in the multiverse, it seems that developers like to build on it.
That it will be successful in this innovative area of out niche will be for the future to determine.
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