Author: LianGuaiul Veradittakit, Partner at LianGuaintera Capital; Translation: LianGuai0xxz
Traditional blockchain systems face a series of challenges that hinder their widespread adoption and scalability. One of the challenges is the lack of interoperability between different blockchain networks, resulting in complex and inefficient communication and data transfer. In addition, scalability has always been a major obstacle because blockchain design choices prioritize security over scalability, resulting in slower communication and increased costs during network congestion.
Cosmos, as a solution to these challenges, introduces the paradigm of interconnected blockchains. It utilizes the Inter-Blockchain Communication (IBC) protocol to achieve seamless communication and secure asset transfers between different blockchains. Through a standardized framework for interchain interoperability, Cosmos facilitates efficient cross-chain interactions, expanding the possibilities and practicality of blockchain technology. Additionally, Cosmos addresses scalability issues through its modular architecture and consensus algorithm. Developers can use the Cosmos Software Development Kit (SDK) to create application-specific blockchains called “zones” that cater to specific needs and goals. These zones can adopt different consensus mechanisms to achieve horizontal scalability and optimized performance. By implementing parallel processing between multiple zones, Cosmos significantly increases the network’s transaction capacity and scalability. The network also utilizes the Comet consensus algorithm, providing fast block confirmation times, enhanced security, and robust resistance to malicious attacks. This consensus algorithm provides a reliable foundation for interconnected blockchain networks, combining efficiency, determinism, and resilience.
Core: Cosmos SDK, IBC, and Comet
The Cosmos SDK provides developers with the ability to create custom blockchains or zones to meet specific needs and goals. Leveraging Cosmos’ interoperability capabilities, these custom zones push the boundaries of interchain interactions. The powerful Comet consensus algorithm enhances this notable feature, ensuring the secure and efficient operation of the Cosmos network. Additionally, IBC enables seamless communication between different chains.
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Reasons for the Promising Future of Cosmos
1. Interoperability: Cosmos’ advantage lies in its commitment to interoperability, enabling easy connectivity between independent blockchains within the Cosmos network. This interoperability promotes groundbreaking cross-chain applications and collaborations, driving innovation and enhancing the practicality of decentralized systems.
2. Scalability and Performance: Cosmos addresses scalability challenges by empowering individual blockchains or “zones” to customize their consensus mechanisms and scalability features. This approach allows for horizontal scalability by adding zones to accommodate increased transaction volumes. As a result, the Cosmos ecosystem boasts exceptional performance and scalability.
3. Autonomy: The Cosmos ecosystem provides an ideal platform for the creation of self-sovereign chains that prioritize individual autonomy. By leveraging foundational elements provided by Cosmos, such as the Cosmos SDK, IBC (Inter-Blockchain Communication), and Comet BFT consensus algorithm, developers can flexibly customize various aspects of the technology stack to enhance key aspects of a chain, such as performance, throughput, and security. For example, EVM chains like Evmos have already been built using the existing technology stack. Additionally, support for chains running different virtual machines (VMs), such as Move or SVM, can be achieved through the development of dedicated application layers.
4. Friendly Development Environment: Cosmos provides a friendly environment for developers who want to enter the blockchain field. The Cosmos SDK (Software Development Kit) is a feature-rich platform for building decentralized applications (DApps). Developers can create their own unique blockchain on the SDK using its modular framework, simplifying the development process. This simplified approach allows developers to create custom chains from the Cosmos SDK, promoting the adoption and growth of the blockchain ecosystem.
Cosmos App Chain
The App Chain is an important component of the Cosmos ecosystem, representing specialized and application-specific blockchains that serve different use cases. Unlike traditional single blockchains, Cosmos adopts a modular approach, allowing developers to customize consensus, storage, and networking mechanisms through the Cosmos SDK to meet the specific requirements of their decentralized applications (DApps). This gives the App Chain a certain degree of autonomy, allowing developers to have better control over their applications and enhance their ability to shape the user experience. Additionally, the Cosmos App Chain model provides attractive opportunities for revenue capture, enabling DApp creators to explore unique profit strategies and promote sustainable growth on their respective chains.
In addition, the flexibility of the Cosmos App Chain includes handling Miner Extractable Value (MEV). By providing developers with tools to design MEV strategies that suit their personalized needs, Cosmos encourages fair and transparent MEV extraction, promoting a more fair and efficient ecosystem. Furthermore, the interoperability facilitated by the Inter-Blockchain Communication (IBC) protocol is a major advantage of the Cosmos App Chain model. This protocol enables seamless communication and asset transfer between different App Chains, making it possible to develop advanced cross-chain DeFi applications and expanding possibilities for developers and users. In summary, within the Cosmos ecosystem, the App Chain provides a promising path for the development of decentralized applications, supporting autonomy, revenue opportunities, flexibility in MEV, and seamless interoperability to cultivate a vibrant and prosperous blockchain ecosystem.
Interchain Security is an innovative approach in the blockchain field aimed at enhancing the security of new Cosmos chains and facilitating their smooth launch. It involves “renting” economic security from established and secure Cosmos ecosystems such as the Cosmos Hub.
The main advantages of Interchain Security include:
1. Economic Security Lease: To launch a new Cosmos chain, developers can utilize the security of the Cosmos Hub or other secure chains by locking a certain amount of the new chain’s native tokens as collateral. This collateral process helps establish financial connections between the new chain and the secure chain.
2. Cross-chain Security: The economic security obtained through interchain security mechanisms makes the new Cosmos chain more resistant to attacks. It can rely on large and diverse validators from secure chains to protect its transactions and assets, mitigating the risks of 51% attacks and other security threats.
3. Decoupled Blockchain: Each Cosmos chain operates independently with its own governance, token economics, and use cases. However, through inter-blockchain communication protocols like IBC, they can securely exchange data and value, promoting interoperability and synergies within the Cosmos ecosystem.
By adopting interchain security mechanisms and collaborating within the Cosmos ecosystem, new blockchains can significantly lower entry barriers and immediately gain access to a thoroughly tested security infrastructure. This fosters innovation and accelerates the development of blockchain, ushering in a new era of secure and interconnected decentralized applications.
The Cosmos SDK is a flexible framework that simplifies the process of building application-specific blockchains by seamlessly integrating pre-built modules into applications. The modularity of the Cosmos SDK provides unprecedented flexibility, allowing developers to precisely customize these modules according to application requirements, offering a wide range of possibilities for blockchain applications. As the Cosmos network evolves, the SDK module ecosystem will flourish, providing developers with expanding options and functionalities. In this dynamic environment, complex and highly specialized blockchain applications can be nurtured, fostering innovation and driving the growth of the Cosmos ecosystem.
The Cosmos SDK also prioritizes security through its security concept capabilities. These capabilities act as vigilant guardians, defining clear boundaries between modules and mitigating risks arising from malicious or accidental interactions. Through protective creation, the Cosmos SDK is firmly committed to uncompromising security measures.
Inter-Blockchain Communication (IBC) is a protocol within the Cosmos ecosystem that facilitates secure decentralized communication across blockchains. It serves as a bridge, enabling the transfer of data across blockchains within the Cosmos network. By utilizing cryptographic proofs and consensus algorithms, IBC promotes the integrity and trustworthiness of cross-chain transactions, maintains data confidentiality, and prevents tampering or unauthorized access. This protocol not only enhances blockchain interoperability but also enables collaboration and innovation by allowing the use of project-specific systems on the network. With IBC, Cosmos has the potential to pioneer a new era of blockchain connectivity, offering new possibilities for decentralized applications, cross-chain asset transfers, and the creation of interconnected blockchain networks.
1. Tracking: Chain B constantly receives block headers from Chain A, and vice versa. This allows each chain to track the validator set of the other chain. Essentially, each chain operates a light client of the other chain.
2. Staking: When an IBC transfer is initiated, tokens are locked (staked).
3. Relay Proof: Then, a proof is relayed from Chain A to Chain B, proving that these 10 tokens were staked.
4. Validation: The proof from Chain A’s block header is validated on Chain B, and if valid, 10 vouchers are created on Chain B.
The active Cosmos ecosystem has attracted diverse projects and influential partner relationships. By leveraging the solid foundation of Cosmos, these projects enter a vast field full of interoperability, potentially unleashing powerful network effects. This seamless collaboration and integration greatly enhance the overall ecosystem, drive the adoption of Cosmos as an excellent blockchain solution, and open up new possibilities for the future.
Here are some projects built on Cosmos:
Osmosis is an innovative cryptocurrency project built in the Cosmos ecosystem, providing a DEX platform for liquidity. Powered by the Inter-Blockchain Communication (IBC) protocol, Osmosis achieves seamless token swaps within the Cosmos network. This unique feature empowers users with access to a variety of assets and liquidity pools, facilitating efficient and secure trading experiences. By leveraging Cosmos’ interoperability and scalability features, Osmosis creates an inclusive and interconnected ecosystem, enhancing liquidity and enabling cross-chain collaboration. With its user-centric approach and focus on optimizing liquidity management, Osmosis brings new opportunities to decentralized finance (DeFi) participants, allowing them to explore a wider range of asset domains and maximize trading potential.
DyDx is a decentralized cryptocurrency trading platform that stands out with its user-centric approach to digital asset trading. By empowering users with full control over their private keys and funds, DyDx eliminates the need for reliance on centralized institutions, promoting a more secure and transparent trading experience. As a platform based on the Cosmos chain, Cosmos is known for its scalability and modular architecture, and DyDx leverages the Cosmos SDK to achieve fast and efficient transactions, as well as seamless interoperability with other Cosmos-based applications. In addition to basic cryptocurrency-to-cryptocurrency trading, DyDx also offers margin trading and lending services, catering to both experienced traders seeking strategic leverage and lenders looking to earn interest on idle assets. Through multiple auditing measures, DyDx presents a promising prospect on the Cosmos chain, sparking a revolution in the decentralized trading space, changing the way traders interact with cryptocurrencies, and driving growth in the decentralized finance ecosystem.
Akash Network is a decentralized cloud computing marketplace. By harnessing the capabilities of Cosmos, Akash Network provides a secure platform where users can send data to each other and develop new ideas. The network operates on a Proof-of-Stake (PoS) consensus mechanism, promoting transaction security. The native cryptocurrency of Akash Network is AKT, which serves as a utility tool within the ecosystem. Through integration with Cosmos, Akash Network benefits from the larger network, achieving seamless communication with other blockchain platforms. As a result, Akash Network empowers developers and organizations with access to affordable and decentralized cloud computing resources.
Sei Network is a high-performance blockchain platform in the Cosmos ecosystem. As the Layer1 operation of the Cosmos SDK blockchain, it provides users with access to financial services and facilitates the deployment of a thriving DeFi ecosystem. The network is the brainchild of founders who recognized the need for a decentralized financial system that prioritizes transaction speed and security while offering innovative financial tools. Powered by its proprietary PoS consensus algorithm, Sei provides secure transaction confirmation through token staking and ownership verification. The platform’s three-tier architecture, consisting of the client layer, service layer, and blockchain platform layer, enables high throughput, processing up to 20,000 transactions per second. With built-in support for Rust and Solidity programming languages in smart contract development, Sei empowers developers to easily build customized blockchain projects and DeFi applications. The native token of the network, SEI, is used for commission, staking, and project management, promoting a sustainable and prosperous ecosystem. Additionally, integration with Cosmos gives Sei interoperability and scalability, allowing seamless communication with other blockchain platforms and enabling widespread adoption and broader decentralized financial services. Ultimately, Sei Network is an affordable and powerful blockchain platform that drives financial inclusion and supports innovative applications in different blockchain domains.
Neutron is a DeFi platform within the Cosmos ecosystem that is leading the transformation of cross-chain communication. As the first consumer chain on Cosmos, Neutron adopts an open policy and fully supports Inter-Blockchain Communication (IBC) functionality, facilitating seamless interaction between different blockchains. This revolutionary approach, implemented through CosmWasm in multiple programming languages, provides flexibility and scalability. Its outstanding interoperability allows developers to access a set of features from other blockchains, opening up new possibilities and unleashing the true potential of blockchain technology. By adopting Replicated Security from the Cosmos Hub, Neutron promotes a secure and reliable infrastructure, laying the foundation for mutually beneficial relationships within the economic zone. The characteristics and strategic positioning of Neutron herald the arrival of a transformative era within the Cosmos ecosystem, with profound implications for DeFi and cross-chain collaboration.
Celestia is a project within the Cosmos ecosystem that offers on-demand consensus and security. It aims to significantly reduce expenses by eliminating the need to launch new consensus networks. Unlike traditional blockchains, Celestia’s throughput scales with an increase in the number of users, thanks to the unique property of data availability sampling. Celestia’s blockchain does not rely on the honest majority assumption for state validity, ensuring the highest security standards. Furthermore, Celestia’s flexible design allows developers to define their own execution environment, granting them freedom and creativity. By providing support for various types of rollups, including a focus on the Ethereum Virtual Machine (EVM) and Cosmos SDK, Celestia offers a solution for building secure and scalable interconnected blockchain networks.
Stride is a liquid staking platform built on the Cosmos blockchain that aims to revolutionize token staking and DeFi. By allowing users to stake any IBC-compatible token and earn corresponding stTokens, Stride unlocks liquidity and enables users to compound their earnings through DeFi activities. This innovative approach empowers users to maintain flexibility while earning returns, fostering a more vibrant and productive ecosystem. The platform implements robust security measures to ensure the safety of user assets. The significance of Stride lies in its potential to reshape the staking landscape, bringing enhanced liquidity and earning opportunities to the Cosmos ecosystem and driving growth in the DeFi space through seamless integration and user-centric governance.
Leap Wallet introduces an innovative mobile browser extension and application dedicated to optimizing Web3 interactions with a focus on simplicity and security. Emphasizing user autonomy, Leap adheres to decentralized principles, ensuring that all digital assets remain under the user’s control. Fast and cost-effective asset swaps facilitate DeFi investments and seamless NFT exploration. Leap creates a harmonious and immersive Web3 experience through extensive collaboration with dApps, aggregators, DEXs, and marketplaces. With rigorous audits, the platform provides a secure environment for users, enhancing trust and confidence. Offering multi-platform support across various devices, including mobile devices, tablets, laptops, and desktops, Leap Wallet is a versatile tool that enables individuals to effortlessly navigate the unlimited potential of Web3 while simplifying protection.
Cosmos is a flexible framework that enables secure asset transfers between different blockchains, unlocking the full potential of blockchain technology. Notably, key projects like Terra, Polygon, and Cronos have achieved significant success on early versions of Cosmos, highlighting its versatility in supporting diverse ecosystems. The collaboration between Noble and Circle is exciting as it seamlessly brings the US dollar stablecoin USDC into the Cosmos ecosystem, opening up new perspectives for DeFi. The launch of the USDT stablecoin by Tether on Kava, a Layer 1 blockchain on Cosmos, further enhances the multi-chain presence of Cosmos, signaling a dynamic and interconnected future for the entire cryptocurrency community.