LianGuaintera Capital Partner The Core Advantages and Ecological Status of Cosmos

LianGuaintera Capital Partner - Cosmos Core Advantages and Ecological Status

Author: LianGuaiul Veradittakit, Managing Partner of LianGuaintera Capital; Translation: Leo, BlockBeats

Recently, LianGuaintera Capital’s Managing Partner, LianGuaiul Veradittakit, wrote an article about “Cosmos’ current core technology and ecosystem projects,” interpreting Cosmos’ core technical advantages, innovative mechanisms on application chains, and several important projects on Cosmos. The translation by BlockBeats is as follows:

One of the major challenges faced by traditional blockchains today is their widespread adoption and scalability. One of the problems is the lack of interoperability between different chains, which leads to complex and inefficient communication and data transfer. Additionally, because the focus is on security rather than scalability, scalability has always been a major challenge, resulting in slower communication speeds, more congested networks, and increased costs.

By introducing an interconnected blockchain paradigm, Cosmos has introduced a solution to these challenges. It uses the Inter-Blockchain Communication (IBC) protocol to achieve seamless communication and secure asset transfers between different chains. With a standardized framework for cross-chain interoperability, Cosmos facilitates efficient cross-chain interaction and expands the possibilities and practicality of blockchain technology. Additionally, Cosmos addresses scalability issues through its modular architecture and consensus algorithm. Developers can use the Cosmos SDK to create application-specific blockchains called “zones.” Zones (independent blockchains, also known as regions) can use different consensus mechanisms, allowing for horizontal scalability and optimized performance. By supporting parallel processing across multiple zones, Cosmos significantly improves the network’s transaction capacity and scalability. It also utilizes the Comet consensus algorithm to provide fast block confirmation times, increased security, and resistance to malicious attacks. These consensus algorithms serve as a reliable foundation for interconnected blockchain networks, combining efficiency, finality, and robustness.

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Core: Cosmos SDK, IBC, and Comet

The Cosmos SDK provides developers with the ability to create custom blockchains or zones that meet specific needs and goals. Leveraging the interoperability features of Cosmos, these custom zones expand the boundaries of interchain interaction. The Comet consensus algorithm enhances this functionality, ensuring the secure and efficient operation of the Cosmos network. Additionally, IBC supports seamless communication across different chains.

Cosmos Highlights

Interoperability: Cosmos’ strength lies in its guarantee of interoperability, enabling easy connection between independent blockchains within the Cosmos network. This interoperability promotes breakthroughs in cross-chain applications and collaborations, driving innovation and enhancing the practicality of decentralization.

Scalability and Performance: Cosmos addresses scalability issues by empowering the creation of independent blockchains or zones tailored to users’ needs. These zones can customize their consensus mechanisms and scalability, supporting horizontal scalability by incorporating additional zones to accommodate increased transaction volume. As a result, the Cosmos ecosystem boasts excellent performance and scalability.

Individual Sovereignty: The Cosmos ecosystem provides an ideal platform for creating chains that focus on individual sovereignty. By utilizing the infrastructure provided by Cosmos, such as Cosmos SDK, IBC, and Comet BFT consensus algorithm, developers can customize any aspect of the technology stack to enhance performance, throughput, security, and other key factors of the chain. For example, EVM chains like Evmos are built using the existing technology stack. Furthermore, specialized application layers can be developed to support these specific virtual machines (VMs), allowing chains to run on different virtual machines, such as Move or SVM.

Developer-friendly environment: Cosmos provides a friendly environment for blockchain developers. Cosmos SDK is a feature-rich platform for building dApps. With the modular framework of the SDK, developers can create their own unique blockchains outside of the SDK, simplifying the development process. This simplified approach allows developers to create custom chains that extend from Cosmos SDK, increasing the adoption and growth of the blockchain ecosystem.

Cosmos Application Chains

Application chains are an integral part of the innovative Cosmos ecosystem, representing specialized and specific application blockchains that meet different use cases. Unlike traditional monolithic blockchains, the modular approach adopted by Cosmos SDK allows developers to customize consensus, storage, and networking mechanisms according to the specific requirements of their dApps. This gives application chains a certain degree of autonomy, enabling developers to better control their applications and enhance their ability to shape the user experience. Additionally, the Cosmos application chain model offers attractive revenue opportunities, allowing dApp creators to explore unique monetization strategies and promote sustainable growth within their respective chains.

Furthermore, the flexibility of Cosmos application chains extends to the handling of MEV. By providing developers with tools to design MEV strategies that suit their needs, Cosmos incentivizes fair and transparent MEV extraction, promoting a more equitable and efficient ecosystem. Additionally, the interoperability facilitated by the IBC protocol is a key advantage of the Cosmos application chain model. It enables seamless communication and asset transfer between different application chains, supporting the development of advanced cross-chain DeFi applications and expanding possibilities for developers and users alike. In conclusion, application chains in the Cosmos ecosystem provide a promising path for dApp development, offering sovereignty, revenue opportunities, flexibility in MEV, and seamless interoperability, fostering a vibrant and thriving blockchain ecosystem.

Interchain Security

Interchain security is a groundbreaking approach aimed at enhancing the security of new Cosmos chains and facilitating their smooth launch. It involves the concept of “renting” economic security from the secure chain (Cosmos Hub) already established in the Cosmos ecosystem.

Main Advantages

Economically Secure Leasing: To launch a new Cosmos chain, developers can utilize the security of Cosmos Hub or other secure chains by locking a certain amount of the new chain’s native tokens as collateral. This process helps establish financial connections between the new chain and secure chains.

Cross-Chain Security: By obtaining economic security through inter-chain security, the new Cosmos chain has stronger resistance against attacks. It can rely on a large number of different validators in the secure chain to protect its transactions and assets, reducing the risks of 51% attacks and other security threats.

Independent Blockchains: Each Cosmos chain operates independently with its own governance, token, and use cases. However, through inter-chain communication protocols like IBC, they can securely exchange data and value, promoting interoperability and collaboration within the Cosmos ecosystem.

By adopting inter-chain security and collaborating within the Cosmos ecosystem, new chains can significantly lower entry barriers and gain a powerful and proven security infrastructure. This promotes innovation, accelerates the development of blockchain, and ushers in a secure and interconnected dApps era.

Cosmos SDK

The Cosmos SDK supports modularity and has created an ecosystem with various interchangeable modules. This approach liberates developers from the task of “building complex features from scratch.” Instead, developers can seamlessly integrate pre-built modules into their applications, simplifying the creation of application-specific blockchains. The Cosmos SDK offers high flexibility in module customization, allowing developers to tailor these modules to meet their application needs, opening up a potential area for fine-tuning chain applications. As the Cosmos Network evolves, the ecosystem of SDK modules will also evolve, providing developers with scalable choices and functionalities. In this dynamic environment, complex and highly specialized blockchain applications can be cultivated, fostering innovation and driving the development of the Cosmos ecosystem.

The Cosmos SDK also prioritizes security through its capability-based security concept. These capabilities act as “guardians,” clearly defining boundaries between modules and mitigating the risks of malicious or unforeseen interactions. By protecting creativity, the Cosmos SDK focuses on security measures.

Inter-Blockchain Communication Protocol (IBC)

IBC is a protocol within the Cosmos ecosystem that aims to facilitate secure and decentralized communication across blockchains. It serves as a bridge, facilitating data transmission throughout the entire Cosmos network. By utilizing cryptographic proofs and consensus algorithms, IBC promotes the integrity and trustworthiness of inter-chain transactions, maintains data confidentiality, and prevents tampering or unauthorized access. This protocol enhances not only the interoperability of chains but also enables collaboration and innovation by allowing project-specific systems to be leveraged on the network. With IBC, Cosmos has the potential to usher in a new era of blockchain interconnection, providing new possibilities for dApps, cross-chain asset transfers, and the creation of interconnected blockchain networks.

Tracking: Chain B continuously receives data headers from Chain A, and vice versa. This allows each chain to track the validator set of the other chain, essentially running a light client of the other chain.

Binding: When IBC transfer is initiated, tokens are bound.

Relay Proof: Then, 10 token binding proofs are relayed from Chain A to Chain B.

Verification: On Chain B, the data headers of Chain A are verified, and if the proofs are valid, 10 certificates are created on Chain B.

Cosmos Environment

The Cosmos ecosystem is currently thriving, attracting a variety of projects and establishing influential partnerships. By leveraging Cosmos’s powerful infrastructure, these projects enter a highly interoperable blockchain space, potentially unleashing strong network effects. This seamless collaboration and integration greatly enhance the overall ecosystem, promote innovation, and drive the adoption of Cosmos as a popular blockchain solution.

Projects Built on Cosmos

Osmosis

Osmosis is an innovative crypto project built on the Cosmos ecosystem, providing a DEX platform that facilitates liquidity provisioning. With the support of the IBC protocol, Osmosis enables seamless token swaps between different chains within the Cosmos network. This unique functionality allows users to access a variety of assets and pools, facilitating efficient and secure trading experiences. By leveraging Cosmos’s interoperability and scalability, Osmosis creates an inclusive and interconnected ecosystem, enhancing liquidity and enabling cross-chain collaboration. With its focus on user-centricity and optimized liquidity management, Osmosis opens up new opportunities for DeFi participants to explore a broader range of assets and unleash their trading potential.

dYdX

dYdX is a DEX platform that has gained popularity for its user-centric approach to crypto trading. By eliminating the reliance on centralized institutions and enabling users to have full control over their private keys and assets, dYdX promotes a more secure and transparent trading experience. Running on the Cosmos chain, dYdX utilizes the Cosmos SDK to facilitate fast and efficient transactions, as well as seamless interoperability with other Cosmos-based applications. In addition to basic crypto trading, dYdX also offers margin trading and lending services, catering to traders seeking leverage and borrowers looking to earn interest from idle assets. With its strong security features, Cosmos offers vast prospects on dYdX, fundamentally changing the way traders engage with cryptocurrencies while driving the growth of the DeFi ecosystem.

Akash Network

Akash Network provides a decentralized cloud computing marketplace. By leveraging the security of Cosmos, Akash Network offers a secure platform where users can send data to each other and develop applications. The network operates on a PoS consensus mechanism, enhancing transaction security. The native token of Akash Network is AKT, serving as a utility token within the ecosystem. Through integration with Cosmos, Akash Network benefits from the interoperability and scalability of a larger network, enabling seamless communication with other blockchain platforms. As a result, Akash Network empowers developers and organizations to access cost-effective decentralized cloud computing resources.

Sei Network

Sei Network is a high-performance blockchain platform that runs on the Cosmos SDK blockchain platform as L1, providing financial services to users and facilitating the deployment of the DeFi ecosystem. The network was created to prioritize transaction speed and security in a decentralized financial system where innovative financial tools are provided to users. Sei utilizes its proprietary PoS consensus algorithm to provide secure transaction confirmation through marking and ownership verification. The platform’s three-layer architecture includes the client layer, service layer, and chain platform layer, supporting high throughput with the ability to process up to 20,000 transactions per second. With built-in support for smart contracts using Rust and Solidity programming languages, developers can easily build customized projects and DeFi applications on Sei. The native token of the network, SEI, serves as an internal asset for rewards, staking, and project management, promoting a sustainable and prosperous ecosystem. Additionally, the integration of Sei with Cosmos gives it interoperability and scalability, allowing seamless communication with other blockchain platforms and providing support for wider adoption and easier access to decentralized financial services. Ultimately, Sei Network will become a cost-effective and powerful blockchain platform that drives financial inclusion and supports the development of cutting-edge applications in various blockchain fields.

Neutron

Neutron is a DeFi platform within the Cosmos ecosystem that introduces a transformation in cross-chain communication. Neutron aims to be the first consumer chain on Cosmos, operating with an open policy and the ability for interchain communication, promoting seamless interaction between different blockchain networks. With support for smart contracts in multiple programming languages through CosmWasm, it provides flexibility and scalability. Its interoperability allows developers to access the feature set of other blockchains, opening up a new realm of possibilities and unleashing the true potential of blockchain technology. By adopting the security from the Cosmos Hub, Neutron facilitates a secure and reliable infrastructure, laying the foundation for mutually beneficial relationships in Economic Zones. The features and strategic positioning of Neutron herald a transformative era for the Cosmos ecosystem, with profound implications for the future of DeFi and interchain collaboration.

Celestia

Celestia is a project within the Cosmos ecosystem that provides consensus and security on demand. It aims to advance blockchain deployment by significantly reducing costs through eliminating the need to bootstrap new consensus networks. Unlike traditional blockchains, Celestia’s throughput scales with the number of users due to the unique property of data availability sampling. What sets Celestia apart is that its blockchain does not rely on the honest majority assumption to guarantee state validity, ensuring the highest security standards. Furthermore, Celestia’s flexible design allows developers to define their own execution environment, empowering them with freedom and creativity. Celestia supports various types of Rollups, including EVM and Cosmos SDK, offering a solution for building interconnected blockchain networks with security and scalability.

Stride

Stride is a liquidity staking platform built on the Cosmos blockchain, revolutionizing token staking and DeFi. By allowing users to stake any IBC-compatible token and earn stTokens as rewards, Stride unleashes liquidity and enables users to increase their yield through DeFi trading. This innovative approach allows users to maintain flexibility while earning rewards, cultivating a more dynamic and productive ecosystem. The platform prioritizes security and has undergone multiple audits to ensure the safety of user assets. The significance of Stride lies in reshaping the staking landscape, bringing enhanced liquidity and earning opportunities to the Cosmos ecosystem, and driving the growth of the broader DeFi space through seamless integration and user-centric governance.

Leap Wallet

Leap Wallet introduces an innovative mobile browser extension and application that optimizes Web3 interactions on the basis of simplicity and security. Leap emphasizes user autonomy, ensuring that all assets are under the control of the user and adhering to decentralized principles. Fast and cost-effective asset swaps facilitate DeFi investments and the exploration of NFTs. Leap’s extensive collaboration network with dApps, Aggregators, DEXs, and Marketplaces creates a high-quality Web3 experience. The platform has undergone rigorous audits to create a secure environment for users, fostering trust and confidence. Leap Wallet offers multi-platform support across various devices, including mobile devices, tablets, laptops, and desktops. It is a multifunctional tool that enables individuals to explore the unlimited potential of Web3 while protecting their financial future.

Conclusion

The flexible architecture of Cosmos supports secure asset transfers between different chains and unleashes the full potential of blockchain technology. Notably, the thriving development of key projects such as Terra, Polygon, and Cronos on early versions of Cosmos highlights its multifunctionality in supporting diverse ecosystems. With the collaboration between Noble Chain and Circle, seamlessly introducing USDC to the Cosmos ecosystem, a new chapter of DeFi has been initiated, and users are increasingly optimistic about Cosmos. Tether launching its USDT stablecoin on Kava, an L1 chain built on Cosmos, further strengthens the multi-chain presence of Cosmos and brings a future of vitality and interoperability to the entire crypto community.

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