The Interconnected Cosmos-Hub Ecosystem

With a variety of new digital currencies and decentralized finances emerging across different platforms, interoperability between networks has become a major narrative in the blockchain space. It is now imperative that blockchains can communicate with one another. The Cosmos Network and the native ATOM token have made this possible. Just as defined by it’s team, the Cosmos ecosystem is “an Internet of blockchains”.

To put it another way, this ecosystem enables developers to create and deploy custom interoperable blockchains. Cosmos was released in 2014 as a Tendermint Company product. The concept was similar to many other new initiatives at the time, in that it sought to address some of the issues with Bitcoin’s proof-of-work mechanism, limited scripting language, and lack of flexibility.

With an ICO in 2017, the project raised $17 million, and in 2019 the Cosmos main-net went live.

What is the Cosmos Network?

Cosmos is a network for interoperability between blockchains. By using a web of “hubs” and “zones”, each “zone” is effectively an independent blockchain with a unique cryptocurrency design and each “hub” is a multi-asset cryptocurrency that facilitates interoperability between some set of zones.

To date, more than 240 applications have been built using the CosmosSDK. The main categories of applications include infrastructure, privacy, finance, and social interactions.

Structurally, the network consists of interconnected blockchains running on the Tendermint Core — known as “zones”. In order to secure zones, a high-performance, PBFT-like consensus engine is employed wherein strict fork-accountability guarantees hold over the behavior of malicious actors. Created with stability in mind, the Cosmos Network allows developers to create their own interoperable blockchain in a simple and easy-to-follow format.

3 Layers of a Cosmos Blockchain

From an architecture standpoint, each Cosmos blockchain is divided into three conceptual layers:

• Application layer: Responsible for updating the state of transactions. (D-apps)
• Networking layer: Responsible for the movement of transactions and consensus-related messages. (Connects the application layer to the consensus layer)
• Consensus layer: A medium for nodes to agree on the current state of the system. (Confirms & creates new blocks in a blockchain)

Bottom Layer: Cosmos Blockchain & Tendermint BFT Consensus

The first or the bottom-most layer of the Cosmos Network is the consensus engine. It powers the Proof of Stake algorithm and is known as Tendermint BFT (Byzantine Fault Tolerance). This layer holds responsibility for all the transactions and consensus-related messages within the network.

In Tendermint, nodes go through a multi-round voting process first before coming to a consensus on the contents of a block. If two-thirds of those nodes decide on a block, then the state transition logic is run which gives instant finality.

Tendermint BFT is capable of handling thousands of transactions per second (depending on the number of validators). However, just using Tendermint consensus doesn’t mean the developers can connect to other chains to the cosmos ecosystem. They would need to fork their code to implement Inter-Blockchain Communication (IBC) protocol to allow interoperability.

Tendermint BFT is a ‘generic consensus mechanism’ which signifies that any developer building within the Cosmos blockchain ecosystem can use it. This removes the need for developers to add protocol layers to run their application and gives them more time to focus on building the application itself.

Inter-Blockchain Communication (IBC)

IBC is the main breakthrough innovation of the Cosmos Ecosystem, brought in by the Stargate upgrade. It is the one tool that fulfills the vision behind the entire Cosmos Ecosystem — connecting blockchains with each other.

IBC is a reliable and secure protocol that handles reliable transport, authentication and ordering of data across different sovereign blockchains. It can be utilized by any app that builds upon reliable and secure inter-module communication. For example, cross-chain transfer, atomic swaps, multi-chain smart contracts, data and code sharing.

Just like the simplicity and flexibility of TCP/IP allowed standard internet communication, the unique aspect of IBC is separating the application layer from the transport layer. The IBC protocol defines how data is sent and acknowledged across blockchains, however, it doesn’t define what that data is or how it is structured.

IBC is one step apart from any other interoperability solution as it does not require any other standardization in the application layer. Adding new layers will ultimately add a layer of politics which would decrease the diversity of blockchain architecture in the interoperable network. Any distributed ledger that supports IBC can independently initiate a connection to another IBC supporting ledger. Once the connection is complete, a channel of communication gets created between the two ledgers, through which IBC packets containing arbitrary data can travel back and forth.

Second Layer: Cosmos SDK (Software Development Kit)

The second, and the most active layer, is the application layer. Cosmos has its own SDK for developers, for the effortless development of new blockchains within the Cosmos ecosystem.

Cosmos SDK enables developers to deploy interoperable blockchains in 3 simple steps:

• Writing custom blockchain using prebuilt templates and/or custom modules.
• Launching blockchain on the test-net to collect feedback, adding the opportunity to enhance the application before launch.
• Connect the blockchain via IBC (inter-blockchain communication) protocol within the Cosmos Network to increase liquidity and adoption of the application

The Cosmos SDK makes it easy for developers to translate popular programming languages like C++ and Java into a Cosmos-friendly language. This lowers the barriers for developers and allows them to use a modular framework to quickly deploy new custom blockchains.

Modular Cosmos Hub

The Modular Cosmos Hub is the key behind the interoperability of blockchains. It helps connect PoS and PoW blockchains. The peg-zone is where all transactional information and swaps are performed. These act as a middle blockchain between the two connecting chains and help in monitoring the state of other blockchains.

To transfer assets between two different chains IBC is used. It is a reliable, inter-module communication protocol that helps establish finality between two chains.

Cosmos ATOM Token

The native crypto token of the Cosmos ecosystem is ATOM. It is worth noting that ATOM is not used across the entire blockchain ecosystem. The ATOM token’s use case is specific only to the Cosmos Hub. The several other hubs and zones (chains) within the network use their individual tokens and tokenomic formats.

ATOM is used to pay fees in the Cosmos Hub for cross-chain swaps. This fee depends on the amount of computational power required to complete the transaction. The fees need not be paid in ATOM necessarily as users may choose to pay with other tokens.

The price of ATOM token increases rapidly, meaning it is hyper-inflationary with incentives for staking to secure the Cosmos Hub. Stakers receive a fraction of fees in the various currencies proportionate to the number of ATOM tokens staked.

Cosmos Ecosystem Projects

Terra / Luna Protocol

The Terra protocol is the leading decentralized and open-source public blockchain protocol for algorithmic stablecoins. Using a combination of open market arbitrage incentives and decentralized Oracle voting, the Terra protocol creates stablecoins that consistently track the price of any fiat currency. Users can spend, save, trade, or exchange Terra stablecoins instantly, all on the Terra blockchain. Luna provides its holders with staking rewards and governance power. The Terra ecosystem is a quickly expanding network of decentralized application.

Akash Network

Akash Network envisions a world where cloud computing is permissionless, sovereign, and open, where builders of the internet have greater freedom to expand the human experience. Akash Network is building this future. Known as the “Airbnb for Cloud Compute”, Akash Network provides a fast, efficient and low-cost application deployment solution. Developers leveraging Akash’s platform can access cloud computing at up to three times less than the cost of centralized cloud providers like Amazon Web Services, Google Cloud and Microsoft Azure. Utilizing containerization and open-source technology, Akash Network leverages 85% of underutilized cloud capacity in 8.4 million global data centers, enabling anyone to buy and sell cloud computing.

Umee

Umee is a cross chain DeFi hub; a universal, permissionless platform meant to serve all types of users and projects throughout their DeFi journeys. Umee provides users with the ability to easily lend and borrow across different blockchains. As a base layer DeFi protocol, Umee will provide the necessary infrastructure for users and builders to access cross chain leverage and liquidity.

Secret Network

Secret Network is a decentralized network of secret nodes that make use of trusted execution environments (TEEs). These enable secure, private computation over encrypted data. TEEs can be utilized in all types of everyday platforms such as smartphones and video game consoles.Secret Network can be used to deploy Secret Apps, governed by privacy-preserving smart contracts and written in Rust programming language.

The Secret Network blockchain is based on the Cosmos SDK. This means that the network has its own independent consensus, and slashing and delegation features. The network is secured by the coin Secret (SCRT). It must be staked by network validators and can be used for transaction fees as well as governance.

Oasis Network

The Oasis Network is a privacy-focused smart contract platform. It is used for open finance and built using the Cosmos SDK. This project focuses on applications and use-cases that promote data privacy and user confidentiality. To achieve this, it separates the consensus layer from its contract execution layer and provides a built-in interface for connecting the two for privacy-preserving computation. The consensus layer forms a hub that utilizes a Proof-of-Stake (PoS) mechanism to secure the network and reach a consensus on transaction validity. The execution layer consists of multiple, parallel runtimes (called ParaTimes) and provides specialized computation needs that each plug into the consensus layer.

Other networks built with CosmosSDk & Tendermint include, Chronic Chain, Binance Smart Chain, Chronos Network , Sifchain , Bitsong, Desmos, Lum network , Comdex, Mediblox, Sentinel, Stargaze + more!

Why Choose The Cosmos Blockchain Ecosystem?

The Cosmos Network has quite a few unique selling points when it comes to development –

Scalability

With the Tendermint consensus mechanism, the Cosmos blockchain ecosystem can process thousands of transactions per second. This makes PayPal’s 193 transactions per second look modest.

Interoperability

The main USP of Cosmos blockchain ecosystem is that it’s vast and diverse, with the option for developers to operate with any blockchain they wish to.

Developer-friendly

A developer with a new idea for a feature may take a while to deploy it if it was built on Ethereum. This is due to the restriction around building on another blockchain. But Cosmos doesn’t have any such restrictions, so it bypasses this issue, allowing developers to create their blockchains with an individual governance structure.

In turn, developers have the opportunity to introduce innovative features to applications in a much shorter space of time than with Ethereum.

Sources https://itsblockchain.com/a-beginners-guide-to-the-cosmos-ecosystem/ https://github.com/cosmos/cosmos https://scrt.network/ https://oasisprotocol.org/ https://docs.umee.cc/umee/ https://akash.network/ https://docs.terra.money/docs/learn/protocol.html https://ibcprotocol.org/ https://cosmos.network/