Partnered With:

Paradigm: Reunderstanding the value of Cosmos

Read this article in 14 Minutes

IBC cross-chain function was officially launched on March 29th.

Paradigm: Reunderstanding the Value of Cosmos with the Launch of IBC

Original source: chain smell

On the Ethereum blockchain, all applications run on a shared state machine. In Cosmos, a number of application-specific blockchains pass assets and other messages between each other. If Ethereum is a mainframe computer, Cosmos is a protocol that connects independent servers into a network.

The mainframe approach works fine while the application is still platform native. However, each of these blockchains can support a limited number of applications, and these applications were not designed to communicate with each other.

Today, congestion on the Ethereum mainchain is driving applications to switch back to alternative Layer 1 (L1) and Layer 2 (L2) solutions because these projects can't afford the "metropolitan premium" in Ethereum. Each new L1 and L2 requires awkward middleware (bridging) to communicate with other L2s and L2s.

Cosmos has a different vision for the interconnected future of blockchains: build on interoperability as the first principle. Cosmos believes that providing a shared communication standard for the sovereign chain is a natural step in the evolution of protocol design. This vision is inclusive, not competitive. Ethereum and other platforms will also be able to integrate this interoperability pattern.

What is Cosmos?

Cosmos itself isn't a blockchain -- it's a blueprint for an application-specific blockchain called the Zone. If each blockchain had to implement all networking and consensus code from scratch, it would not be realistic to build a world made up of many blockchains, so Cosmos provides the Cosmos SDK template software to handle these functions.

Cosmos's years of work on the SDK have made starting the Zone as easy as deploying a smart contract. But this approach is not unique to Cosmos; other projects that incorporate the idea of applying proprietary blockchains also offer developers "blockchains in a box," such as Polkadot's Substrate Framework, which is similar to Cosmos's SDK.

Cosmos is unique in that it achieves practical interoperability without a shared security layer. These features are interpreted in the opposite architecture to Ethereum.

Safe mode

Ethereum's security model is uniform. Every application deployed on Ethereum has the same level of security: broadly speaking, the Ethereum Ledger's level of security. Because all Ethereum applications exist in a shared runtime, they are tightly linked and interoperable by default.

In contrast, the Cosmos security model is not uniform. Each Zone (in short, each application) must choose a level of security sufficient for its purpose and incentivize a rational market of validators to provide that security. Each Zone exists in its own runtime, so by default they are not interoperable, and communication requires a shared messaging protocol.

interoperability

Cosmos addresses the inconsistency of cross-zone security assumptions by making interoperability an optional market process: the level of other remote Zone security risks to which zones and their users choose to be subject.

Unhooked zones don't even pass assets. Completely linked zones may be shards of a common process. In the Zone ecosystem, the totality of these pairwise relationships is an emerging security topology -- cross-chain.

The Cross-Chain Communication (IBC) protocol is a universal communication standard designed to achieve all the necessary interoperability. IBC can be applied to a broad range of use cases, from simple asset migration to cross-zone data availability proof, to forfeiting assets of remote Zone validators (for example, fully shared security), and more.

In addition, any blockchain that uses a Finapty consensus mechanism can use the IBC protocol and can join the Cosmos Network. For example, Eth2's Gasper, Polkadot's Grandpa, and PBRA's Hotstuff are all IBC compatible.

In theory, everything is a Cosmos Zone.

IBC is now in production. The first standardization application, asset transfer across zones, recently came online. This assemblable mode is sufficient for most Decentralized Finance (DEFI) applications. Take a look at the arguments made by Ethereum founder Vitapk Buterin, which cover a number of compelling use cases (AMM for automated market makers, loans, etc.).

Note: Vitapk Buterin's"Cross-shard DeFi composabipty"

The bright spot of Cosmos

In summary, in Cosmos, each application is encouraged to deploy as a separate Cosmos Zone. Cosmos provides the core software infrastructure (SDK, IBC, etc.) needed to develop these blockchains and make them interoperable. Cosmos treats the different levels of interoperability as a pedigree and allows each blockchain in the network to choose how it interacts with the others. Together, these relationships make up the cross-chain.

So why is the Cosmos model attractive?

The advantage of the chain of sovereignty

1. Scalability: A network composed of application-specific chains is more scalable than a blockchain where everything must be protected by all validators; Even sharding platforms have a ceiling. Cosmos Zone expands "horizontally" through dynamic anchor points, based on acceptable counterparty security assumptions.

2. Withholding miner extractable value (MEV) : The application of exclusive sovereign chains can have strong MEV mitigation measures and can control the incentives they receive with high granulence.

The transaction sorting mechanism can be tailored to a specific use case (for example, Cosmos Hub's AMM forces all transactions to be batch processed in a block).

Each Cosmos Zone secures only one application, so they are less likely to accumulate MEVs over time than platforms that provide arbitrary programmability. In this sense, Cosmos Zone is closer to the Bitcoin blockchain than to Ethereum.

In addition, zones can choose with whom they interoperate, so they are not externally motivated by arbitrary applications as they are on shared platforms.

Please refer to the"MEV and Me", which has a more in-depth discussion.

3. Developer Experience: Cosmos Zone can optimize the runtime of specific applications rather than general optimizations (e.g., EVM for the Ethereum virtual machine). Developers can use any language and tools they want, many of which already have SDK bindings available.

4. Defensiveness: Given that the Zone is responsible for its own security, its tokens and value capture are harder to fork, making a race to the bottom less likely.

Weakness of the chain of sovereignty

1. Security: Smart contracts on Ethereum can rely on the platform to protect them from security failures such as rollbacks or invalid state transitions. In Cosmos, each chain is responsible for its own security, so the application is more likely to fail.

Counter-defense 1: Essentially, each Ethereum application is either overpaying for security or not giving it its due share of resources, and all applications share the risk of catastrophic associated security failures (Mev's death-by-a-thousand-cuts). It's actually healthier for apps that can't afford their own security costs to fail quickly.

Counter 2: In fact, many applications on Ethereum (such as Maker and Compound, but not Uniswap) already have governance tokens for security. These apps can also use tokens to reach consensus. Defining the scope of governance token permissions is similar to the problem of designing an application-specific shared security layer.

Defense 3: Cosmos will enable multiple shared security options in the future. IBC can be used to hook a consensus set of multiple zones. A Zone like Lazyledger would enable sovereign execution environments to share security through Rollup (very similar to the Rollup-centric Ethereum design).

2. Synchronous interoperability: While Cosmos blockchains can transfer assets to each other and interact in other asynchronous ways, there is no way to make synchronous calls from one Cosmos chain to another.

Defense: Synchronous interactions are still possible within a single Cosmos blockchain. Large-scale synchronous interaction with all other applications remains ultimately impossible. Scalability can be achieved through synchronous communication via Ethereum 2.0 and shard platforms such as Polkadot, as well as rollup and other L2 architectures.

3. Psychological Impact: App developers must understand the unknown details of the design of blockchain protocols like MEV.

Defend: This is probably inevitable. App developers cannot be insulated from the "jump start" on Ethereum. They will be forced to take these dynamics into account whether they deploy to a shared platform or their own blockchain, which will often embrace more effective improvements. Both architectures can use advanced tools and middleware to abstract some of the complexity.

summary

Blockchain protocol design is ambiguous. There is no "right" level of scalability or security. A quality such as "credible neutrality" cannot be reliably defined.

Today, application platforms feature "static setpoints" in these design decisions. Cosmos is the first project to allow developers to explore the full trade-off space without giving up simple assemblability.

For complex problems, the free market can often find better solutions than anything we manually recommend. Cosmos is testing this hypothesis in the context of blockchain application design.

With the launch of IBC, cross-chain really took off.