The Internet of Blockchains is here – Cosmos set to take lead in Blockchain Interoperability
The most significant upgrade for the Cosmos Hub is live now with effect since 06:00 UTC on Feb 18th. The Stargate upgrade is realizing the vision of full interoperability between all Cosmos SDK Chains.
This is a long-awaited milestone for the Cosmos Network with some major breakthroughs that benefit the wider blockchain industry. Let’s take a look at Stargate and see what this means for the wider ecosystem.
What is Stargate?
Stargate is a set of upgrades that complete the original roadmap laid out in the Cosmos Whitepaper. For the first time ever, blockchains will be able to connect with each other using the first standardized protocol for Inter-Blockchain Communication (IBC).
IBC will take siloed, homogeneous Tendermint-based blockchains like Terra, Band, Kava as well as many others and bring them together to make the Cosmos ecosystem. Below is a graphic representation for how this can be conceptualized. With each zone presenting an independent blockchain. Heterogeneous blockchains like Ethereum and Bitcoin can be bridged via Pegged-Zones (a blockchain that tracks the state of non-tendermint-based chains)
This will enable seamless integrations with any decentralized application, relaying oracle data in a highly scalable and tamper-proof manner. Stargate could mark a new era in composability, where we see a system that lets lots of different chains trade value and build on each other’s strengths.
The Cosmos ecosystem will look to Cosmos Hub governance to vote on the features for Stargate. Here are the primary features:
Inter-Blockchain Communication (IBC)
IBC will bring the ability to exchange transactions of value and data across compatible chains. Developers can make blockchains easily with the Cosmos SDK, and IBC is what will connect them all together.
IBC allows blockchains to transfer tokens and data to each other, meaning that blockchains with different applications and validator sets are now interoperable. For the first time, public and private blockchains have the ability to transfer tokens to each other. Currently, no other blockchain framework enables this level of interoperability.
As well as IBC other primary features of Stargate include:
- Protobuf Migration Accelerates front-end development and 10x to 100x better blockchain performance.
- *State Sync* A new node can synchronize 200x faster, participating in consensus in minutes rather than days
- Full-Featured Light Clients
- Chain Upgrade Module Enables validators to upgrade the chain software asynchronously in minutes rather than an hour or more
Simply put, the Stargate launch will complete the roadmap and path the way for the future of the Cosmos Network.
What does Stargate mean for the Cosmos Hub?
The Cosmos Hub will be leading the way for the Stargate upgrade and is the first blockchain to support IBC in production. The first Hub launched in the Cosmos Network was the Cosmos Hub back on March 13th, 2019.
The Cosmos Hub is a public Proof-of-Stake blockchain whose native staking token is the ATOM which currently secures the network with approximately 180 million $ATOMs ($1,5 billion) staked.
What does that mean for Cosmos SDK-Chains?
The Cosmos SDK is a generalized framework that simplifies the process of building secure blockchain applications on top of Tendermint BFT.
It is based on two major principles modularity and capability. The main goal of the SDK is to allow developers to easily spin up an application/blockchain without having to code each bit of functionality from scratch. As the Cosmos network develops, the ecosystem of SDK modules will expand, making it increasingly easier to develop complex blockchain applications.
The Cosmos SDK is a generalized framework that simplifies the process of building secure blockchain applications on top of Tendermint BFT. Tendermint is a 7 year old Byzantine-Fault Tolerant consensus engine used to secure billions of dollars of value for major blockchain ecosystems around the world. I would recommend following the blog to stay up to date with all the activity.
One of the most significant changes Stargate will introduce is breaking changes to the core SDK framework, notably the switch from Amino to Google Protobuffs as the main SDK codec.
It will also introduce new features and modules such as light clients and the upgrade module that will significantly affect the way people run full-nodes.
With the Cosmos SDK, developers can easily develop entire application-specific blockchains, which have several advantages. Among others, they give more flexibility, security, performance and sovereignty.
As a result, the upgrade process to Stargate will be more challenging than usual for SDK-based projects. If you would like to know more about this process, join the Launchpad channel on the Cosmos Community Discord.
What comes next for the Cosmos Hub – WhitePaper 2.0?
The Stargate Upgrade marks the beginning for a new era within the Cosmos Ecosystem and Cosmos Hub in particular. There are multiple additional initiatives being actively developed as we speak!
1. Interchain Token Transfers
Through the implementation of the Inter-Blockchain Communication (IBC) protocol, data and value will be transferred through Cosmos blockchains as well as heterogeneous blockchains via the use of bridges
The Starport initiative grants developers the ability to create tokens on one chain and transfer it to an infinite number of other Stargate-compatible blockchains
2. Interchain DeX/AMMs
This is one of the most important developments that are related to the Cosmos hub.
B-Harvest and Hyung Lee are working with All in Bits (Tendermint) on developing an AMM/DeX on the Cosmos Hub.
Vision of the Gravity DeX (Cosmos Hub AMM):
- The central marketplace platform to aggregate token liquidity from all over the interchain galaxy
- Providing most core financial infrastructure for DeFi innovation across millions of blockchains
- The blockchain agnostic melting pot of digital assets mixed and cooked
- The intersection of connected liquidity from AMMs in various different networks
Benefits to $ATOM:
The Gravity DeX will become the center of liquidity in the interchain world. Users from all connected blockchains will use Cosmos Hub Gravity DeX to exchange digital assets from different networks. Lots of value will be stored and traded inside the Gravity DeX, which will result in significant value appreciation of the Cosmos Hub and its native staking token, Atom.
Gas fees will be settled in $ATOM also and – albeit low gas fees – users will need to keep $ATOMs in their wallets.
It was recently announced that Gravity Ethereum bridge will enable the swap/trading of $ETH assets on the AMM!
The new Osmosis Zone will bring an AMM DEX Liquidity Module with fast finality DEX based on a scalable consensus mechanism toward allowing exchange of assets across blockchains.
3. Interoperability with ETH
Backed by billions of dollars of Atoms staked on the Cosmos Hub, the Gravity Bridge will be the most secure, efficient, and decentralized cross chain bridge to Ethereum. It is a by- product of a partnership between Althea Network and the Interchain Foundation (ICF) and a collaboration with Informal Systems.
Gravity is designed specifically for the Cosmos Hub. Gravity and intended to pull as many transactions and as much value as possible into the orbit of the Hub by bridging it directly to Ethereum.
The Ethereum contract is highly optimized to use as little gas as possible, and transactions are batched. This results in very cheap and frictionless transactions from Ethereum to Cosmos and back.
Gravity will be able to bring ERC20 assets from Ethereum into Cosmos, but it will also be able to bring Cosmos assets to Ethereum. $ATOM and every other asset in Cosmos ecosystem will trade on Uniswap and other Ethereum AMMs, bringing a huge amount of liquidity and value to these assets.
4. Cross-Chain Staking / Optional Shared Security
The basic idea of the Cross-Chain Validation protocol is to allow validators that are already securing some existing blockchain (parent blockchain) to also secure a “new” blockchain (baby blockchain). The stake bonded at the parent blockchain guarantees that a validator behaves correctly at the baby blockchain. If the validator misbehaves at the baby blockchain, its stake will be slashed at the parent blockchain.
Therefore, at a high level, we can imagine the Cross-Chain Validation protocol to be concerned with following entities:
- Parent blockchain: This is a blockchain that “provides” validators. Namely, “provided” validators have some stake at the parent blockchain. Any misbehavior of a validator is slashed at the parent blockchain. Moreover, parent blockchain manipulates the validator set of a chain that “borrows” validators from it.
- Baby blockchain: Baby blockchain is a blockchain that is being secured by the parent blockchain. In other words, validators that secure and operate the baby blockchain are bonded on the parent blockchain. Any misbehavior of a validator at the baby blockchain is punished at the parent blockchain (i.e., the validator is slashed at the parent blockchain).
- IBC channel: IBC channel allows the parent and baby blockchain to communicate. We assume that the IBC channel is ordered and provides “timeout” and “acknowledgements” mechanisms.
The most remarkable difference is that blockchains being sovereign within the Cosmos ecosystem, shared security/cross-chain validation is an option, not obligatory.
5. Interchain Accounts
6. Staking Derivatives
- Many teams within the Cosmos sphere have been actively exploring the concepts around Liquid Staking. The goal is to allow trustless derivatives to be created for staked ATOMS on any validator, not only custodial validators, in order to allow non-custodial validators to remain competitive.
This stems directly from the vision of Zaki Manian and the ATOM2021 initiative.
7. Chain Name System
Gaia will deploy a Chain Naming Service (CNS) to prevent collision in the Interchain naming space. Think DNS for IBC. All in Bits (Tendermint) will develop this project.
8. BTC Bridge
Bitcoin Interoperability is on the table although no team is currently working full-time on it; however there is great prior work by the Nomic and Summa One to draw from.
Further Cosmos Initiatives in the talks:
- Interchain Auctions
- Smart Contracts and Cross Chain Contracts
2021 could be one of the deciding years for PoS blockchains and interoperability.
The Stargate upgrade and launch of IBC from Cosmos takes place on February 18th, and will usher in a new era for development on Cosmos and will be the first time we get to see what a multichain future could bring for the industry.
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