Why You Should Keep An Eye On The Cosmos Ecosystem This Year (2022)
Over the past ten days, the entire crypto market has been going through hard times, experiencing high volatility and uncertainty due to a variety of factors. Although it is difficult to predict how much longer this situation will last, what is certain is that even when the market bleeds, builders gonna build.
Right now, the Iconium team is in Prague attending the Gateway Cosmos Conference along with some of the most exciting projects in the scene. There’s a tremendous amount of activity happening on Cosmos, and what better opportunity to explore this flourishing ecosystem than these days?
Since its launch in march 2019, Cosmos has experienced a non-stop massive growth, being now one of the largest and most active ecosystems in the crypto market.
With more than 260 applications and services hosted in the network and over $70 billion in digital assets managed at press time, in the past few months not a day went by without a new project being announced in this ever-growing network.
Get ready for the ride, cause today we’re diving into the most interesting project in space.
What is Cosmos
Cosmos is a rapidly expanding ecosystem of independent, interconnected blockchains which can scale and interoperate with each other.
By opening the door to a multichain future, Cosmos introduced the so-called Blockchain 3.0, allowing for 3 major achievements:
- making blockchains powerful and easy to develop
- enabling blockchains to transfer value between each other while letting them retain their sovereignty
- allowing blockchain applications to scale to millions of users
In other words, Cosmos manages to effectively align the needs of the 3 main actors of the market (validators, developers and users) through a network of what we can think of as independent servers.
This is all made possible by the use of the following set of open source tools:
Let’s see how they actually work.
Any blockchain is composed of 3 essential overlaid layers: networking, consensus and application.
- Networking is the heart of a blockchain and enables the propagation of transactions and consensus.
- Consensus makes it possible to confirm transactions and ensure their veracity by allowing nodes to align on the state of the system.
- Above these two layers, there’s the world of applications.
Created by Jae Kwon in 2014, Tendermint BFT (with BFT standing for Byzantine Fault Tolerant) targets the first two layers of the blockchain structure described above. The networking and consensus layers are indeed packaged in one general engine, which is the Tendermint BFT. Developers can therefore leverage this pre-set solution and focus on building only the application layer, literally saving hundreds of hours of work. In addition, thanks to Tendermint’s connection with the Application BlockChain Interface (ABCI) , they can do it by using the coding language they prefer.
It is easy to see the benefits arising from this innovative solution, but that’s not all. Here’s a summary of Tendermint BFT’s properties that make it a real revolutionary tool:
If Tendermint BFT acts on the networking and consensus levels, Cosmos SDK is the solution aimed at simplifying the third one: application.
Keeping it simple, thanks to Cosmos SDK’s modular structure, developers can use this generalized framework to easily build dApps on top of Tendermint BFT (or any other consensus engine implementing the ABCI), with anyone being able to both create a new module or use and customize the ever-new created ones.
From what we have seen so far, using the first two tools allow developers to build blockchains in a simple, secure and flexible way.
But how to connect these different blockchains together? Here comes the Inter-Blockchain Communication protocol (IBC), launched in March 2021.
By leveraging the instant finality property of Tendermint consensus or any other Proof-of-Stake consensus mechanism, IBC allows heterogeneous chains (both public or private ones) to transfer data or tokens from one to another, making them interoperable with each other while maintaining their own set of validators and therefore their own sovereignty (unlike on the Ethereum network).
Let’s take an example.
Suppose we want to send 10 $ATOM from the Cosmos network to the Osmosis network. The transaction will be implemented through 4 steps:
All of the above happens extremely quickly, as Cosmos can process more than 10,000 transactions per second, with the confirmation time being around 1 second.
The internet of blockchains
In short, the concept behind Cosmos is quite simple: instead of having one blockchain managing all the various projects, each dApp will have its own and it will be able to communicate with the entire network, hence the name “internet of blockchains”.
Cosmos’ structural design also enables superior performance in terms of scalability, security, and interoperability. Since the number of connections in the network would grow quadratically with the number of blockchains, the network implements a modular architecture to limit the connection number and prevent double spending. This architecture includes two classes of blockchains: zones, the heterogeneous blockchains we’ve discussed so far, and hubs, blockchains specifically designed to connect zones together.
The Cosmos Hub was the first hub launched in the Cosmos Network, a public Proof-of-Stake blockchain whose native token is called $ATOM, and where transaction fees will be payable in multiple tokens.
$ATOM and the Cosmos Hub
$ATOM is the primary token of the Cosmos Hub. At press time, $ATOM has a $3.4 billion market capitalization and a circulating supply amounting to 292 million tokens.
The token can be staked to earn more $ATOM (with a 17.46% annual yield), vote for on-chain governance proposals, and contribute to the security of the Cosmos Hub.
$ATOM is also used for transaction fees in the Cosmos Hub. Another benefit of holding $ATOM are the several airdrops from the new chains building on the network, which often distribute their tokens to the $ATOM stakers as a way to earn awareness and diversify the token ownership among the people who helped running the network (as happened with $OSMOS, $JUNO, and many others).
To this extent, Cosmos Airdrop Tracker is a useful tool to keep up with the newly announced airdrops in the Cosmos ecosystem.
Current state of the Cosmos Ecosystem
Now that we’ve covered how Cosmos works, it is worth dwelling on its ecosystem.
As previously mentioned, there are currently 265 applications and services hosted in the network, with 28 blockchains including Binance Chain (BNB), Crypto.com’s Cronos chain, Secret Network, just to name a few.
Map of zones is currently one of the best tools to keep track of the insane growth of IBC-enabled chains and monitor metrics like the number of transfers, the volumes and the daily active users.
As of today, there are 43 active zones mapped with the total IBC volume in the past 30 days standing at $6 billion.
We have Osmosis, the main DEX and Automated Market Maker (AMM) on Cosmos launched in july 2021; Juno Network, the IBC-enabled blockchain for facilitating the development of interoperable smart contracts; Secret Network, the first blockchain with privacy-by-default smart contracts; most recently there’s been the launch of the highly awaited Evmos, the blockchain bringing the world of Ethereum to Cosmos; and many others.
The Cosmos Ecosystem hosts an extremely wide variety of dApps, blockchains, explorers and wallets. With respect to this latter category, Keplr Wallet is undoubtedly the one thing you can’t do without, while exploring this incredible world. By using this mobile and web extension non-custodial wallet, users can store their multi-chain assets securely and be able to transfer and manage assets via IBC from a simple and user-friendly interface.
The total value of the entire network is approximately $71 billion at press time. Numbers were certainly affected by the recent tragic crash of the Terra blockchain and more generally by the capitulation of the entire crypto market.
This is also the case of Cosmos’ Total Value Locked. Only 3 months ago the Ecosystem had surged to $17 billion in TVL, becoming the second ranked in TVL after Ethereum.
Just to provide updated figures on some of the blockchains we’ve mentioned, according to DefiLlama (which still lists only a few of the IBC-enabled chains), today Cronos has $1.85b in TVL, Osmosis’ TVL stands at $312 million, Secret Network’s is $23 million.
Cosmos has big plans for 2022. There’s a major upgrade planned at least once a quarter, the first one being the Theta Upgrade, which was successfully launched last April.
This upgrade represents the first big step toward interchain accounts, a long-awaited feature enabling the Cosmos Hub to act as a host chain and allowing blockchains to:
- Create and control accounts on the Cosmos Hub, and
- Perform Cosmos Hub native transactions
Major updates will also cover interchain security, allowing validators and delegators to earn rewards on multiple chains in multiple tokens just by staking $ATOM on the Cosmos Hub.
Among the most anticipated and discussed news is definitely GNO Land, the upcoming network created by Jae Kwon (founder of Cosmos) which aims at revolutionizing the entire ecosystem by taking full advantage of the multi-core processors, making it possible to process thousands of contracts in parallel by optimizing the consensus process between validators.
In December, Tendermint CEO Peng Zhong announced that by the end of 2022, 200 chains will be hosted in the ecosystem.
In addition to that, it is possible that some of the projects built on Terra will find a new home in the Cosmos ecosystem. Just 2 days ago, Juno released proposal 23 — already passed — which aims at providing incentives for projects migrating from Terra to Juno by allocating 1 million $JUNO to a Terra Developer Fund Multi-sig for project migration and continued development in the Juno ecosystem.
To sum up, Cosmos has been the first to work on a modular network of blockchains, forever revolutionizing the “one-chain-to-rule-them-all” thesis.
Cosmos keeps the protocol entirely open and independent from the Cosmos Hub and its native token $ATOM, offering zones to anchor to the Hub on an opt-in basis. Like Polkadot’s Relay Chain, or Ethereum’s Beacon Chain, but 100% optional.
This revolutionary multi-chain structure, the high performance achieved in terms of flexibility, security and scalability, combined with the vast number of innovative projects built in the network make Cosmos one of the projects with the highest potential.
Cosmos is the perfect place for both developers and users and it’s definitely ready to take off!