The advent of Ethereum smart contracts exponentially expanded the possible applications of blockchain technology. Since 2015, several smart contract layer-1s have gone head to head to gain market share. Thus far, Ethereum has dominated, attracting 55% of the market, followed by BNB Chain, and Cardano (at the time of writing). Despite clear market leaders, many believe a multi-chain future is inevitable. Among those is Vitalik Buterin, founder of Ethereum, who recently tweeted his multi-chain vision. In this vein, new layer-1 projects continue to emerge. One of these projects is Juno. Announced in March 2021, Juno is a growing smart contract network built on Cosmos.
Juno, a Cosmos community initiative, is the first interoperable smart contract platform in the Cosmos ecosystem. The Juno network serves as a decentralized, permissionless, and censorship-resistant avenue for developers to efficiently and securely launch smart contracts using proven frameworks and common languages, such as Rust and Go.
The original vision was for Juno to preserve the Cosmos Hub’s neutrality by offloading smart contract usage to a sister hub (i.e. Juno), thus enabling Cosmos to remain performant and congestion-free.
The current vision is one of expansion and collaboration. For example, Juno is launching more CosmWasm chains, Interchain protocols, and teaming up with Osmosis on Mesh Security. Additionally, there is a focus on enabling the creation of on-chain DAOs – at the time of writing there were around 500.
Ethereum vs. Juno – The Current Score
To best understand Juno, let’s compare it to the market leader, Ethereum, across eight key variables instrumental to layer-1 success.
Analyzing Layer-1 Success Variables
1. Smart Contracts
Solidity is the custom-built programming language for Ethereum. Thousands of developers have contributed and benefited from an extensive Ethereum smart contract library.
Smart contracts on Ethereum are relatively simple to navigate. Developers write a few lines of Solidity, compile the code, and deploy it. The process typically takes a day.
Unfortunately, Ethereum smart contracts only work on Ethereum mainnet and are not interoperable across multiple blockchains. However, the smart contracts on Juno can be “called” from any IBC-connected chain, making them inherently more flexible. Also, it’s a two-way street – Juno smart contracts can call on other IBC-connected chains.
Juno is fundamentally different from Ethereum. Instead of learning a new language like Solidity, Juno developers can use the CosmWasm library to code and deploy their contracts in different languages, such as Rust and Go, with more languages in the pipeline.
Rust is used across blockchains like Solana, Polkadot, Elrond, NEAR, and Zcash. Additionally, several major web2 companies like Microsoft are moving towards Rust.
As web3 matures, web2 developers with existing Rust knowledge will naturally be attracted to Juno. The co-founder of Juno and core-dev, Jake Hartnell, recently gave a talk in South Korea where he presented the following slide:
Hartnell explained that with CosmWasm, you do not have to rewrite math libraries from scratch. Instead you use a range of existing developer tools. The smart contracts are IBC-ready and instantly activated across multiple chains.
To get even more technical, CosmWasm allows developers to write modules in Rust that integrate seamlessly with the Cosmos SDK. This facilitates the development of a mainnet-proven Tendermint consensus engine while developing a largely Rust-based custom application logic.
What about Security?
While Solidity makes it easy to write a simple contract, complex contracts require more time dedicated to security considerations. Despite the efforts of Solidity developers, hacks have occured. Take the Ethereum DAO hack in 2016 which was due to a common reentrancy attack. Due to the underlying properties of CosmWasm smart contracts, it is challenging to perform these types of attacks, making Juno arguably more convenient when it comes to more complex smart contract security.
Smart Contract Programming Language
Juno supports Rust through CosmWasm, a more widely practiced programming language amongst Web2 developers than Ethereum’s Solidity. CosmWasm, allows powerful and widely-used languages to write highly performant and secure smart contracts deployable to many different blockchains, using IBC. CosmWasm support of Rust is contributing to an influx of devs moving into web3.
2. Developer Headcount
Developers play a key role in a smart-contract layer-1 economy. They are a core economic driver and deliver value by building network infrastructure/tooling and open-source decentralized applications (dApps).
Today, blockchain development activity is heavily skewed towards Ethereum. However, developer communities outside of Ethereum are growing rapidly, as evidenced by the below chart – provided by Electric Capital.
Between 2020 and 2021, Ethereum developers grew 33% to 4000, while Cosmos outpaced Ethereum developers growth, increasing 73% to 1000. Juno benefits from its first-mover advantage on Cosmos as one of the earliest and most established projects, making it a likely candidate to attract developer talent joining the Cosmos ecosystem.
Ethereum has around 4000 dApps, the largest being DeFi projects MakerDAO, AAVE, UniSwap, and Curve (as measured by TVL). There are thousands of other dApps and web2 platforms like OpenSea (the largest NFT marketplace), Audius (music streaming), CryptoPunks NFTs, and the Decentraland metaverse.
Why are the majority of dApps built on Ethereum? Four main reasons exist:
- Ethereum was the first of its kind, which naturally enjoyed a quasi-monopoly over all dApp development.
- The Ethereum Virtual Machine (EVM) provides development kits and application templates, continuously improving the developer experience and time to launch.
- A vast community of developers amplifying the network effect.
- A clear path to monetization attracting builders. “
However, networks like Cosmos have shown that alternatives to Ethereum are gaining popularity within many dApp market segments. For example, Juno launched its Tendermint blockchain on Cosmos and offers developers the opportunity to build interoperable smart contracts across blockchains built on the Cosmos SDK – something that is not possible on Ethereum.
There are currently numerous apps, contracts, tools, and 500+ DAOs built on Juno, including an AMM DEX, Junoswap, and DAODAO, which is a DAO creation tool that includes the creation of a governance token. All of the DApps and tools are powered natively by Juno. Other projects worth noting are:
- Loop – DEX
- Kado – fiat-on-ramp
- Levana – GameFi
- The Graph – leading tools used by leading analytics firms
- WYND – next generation, ESG-friendly DeFi protocol
Although Ethereum enjoys a massive market share, other L1s continue to launch and compete for market share.
Traditionally, people think of metrics like transactions per second (TPS) when analyzing the speed of a blockchain; however, it is not that simple.
One major factor affecting speed is the type of transaction. Transaction types vary widely across networks and create challenges for a straightforward comparison. Some transactions are computationally intensive smart contracting interactions. Others represent simple value transfer transactions. And some represent votes or messages recorded in conjunction with the network’s consensus process. As a result, TPS is not directly comparable across separate chains.
Speed of the same transactions on different chains is measured with TPS and time to finality (TTF).
TPS is the number of transactions a network processes each second. TPS is measured by the number of transactions in a block divided by the block time in seconds.
Finality guarantees cryptocurrency transactions cannot be altered, reversed, or canceled after completion. Blockchain latency levels significantly affect a chain’s finality rate.
Juno has a shorter time to finality and a higher TPS than Ethereum. The TPS for Juno is at least 10,000 versus Ethereum’s 12-25. There are various reasons for this:
- Excess demand for Ethereum block space causes significant congestion.
- Juno has a different network architecture compared to Ethereum, enabling faster speeds.
- Currently, Ethereum has one validator set and one chain, whereas Juno is part of an ecosystem with multiple chains and multiple validator sets enabling higher throughput due to horizontal computation and reduced redundancy.
Regarding speed/cost, it’s worth noting that post-merge Ethereum average block time will improve by 12% declining to 12 seconds. This is negligible and should not be considered as “lowering gas fees”.
Scalability is a blockchain’s ability to handle large volumes of transactions at high speeds.
Ethereum’s Layer-2 solutions offer the ability to increase throughput and scaling of the ecosystem while mainiting Ethereum grade security. Layer-2 projects from StarkNet and zkSync enable “batching”, which bundles thousands of transactions into a single one and posts to the layer-1. This lowers the cost per transaction by orders of magnitude and increases speed and total transactions size.
Two significant Cosmos upgrades will improve scaling of Juno; shared security and interchain accounts.
Shared security is getting a massive update on Cosmos Hub benefiting Juno. Juno validators can “rent” out their security services to other chains within the Cosmos ecosystem. In return Juno validators earn Juno tokens and/or tokens from other chains – thus, bolstering APY. Announcements estimate a Q3/Q4 2022 launch.
Secondly, interchain accounts are one of the biggest upgrades to enter Cosmos. Interchain accounts are akin to granting blockchains the power to open up native functionalities as an “API” – dramatically streamlining the user experience.
In practice, a user on the Cosmos Hub, Evmos, or Osmosis can execute transactions on Juno (e.g., stake, vote, and swap) without leaving their interface and vice versa. This interchain aspect is important for scalability. Currently, users have to flick between different interfaces to gain access to different Cosmos ecosystem blockchains.
5. Validator headcount
Validator headcount is typically associated with decentralization, but this is not always the most accurate way to think about it.
Take this example:
Lido is the most-used liquid staking protocol, commanding a huge one-third share of total Eth staked on the Beacon chain (Ethereum’s proof of stake chain).
Lido, Coinbase, Kraken, and Binance are the four largest validator node operators on Ethereum’s PoS Beacon Chain of the total 400k validators. The top four amassed a 54% share of all Eth staking activity, according to Nansen. Lido controls a third of all Beacon chain validators, raising significant centralization concerns. The issue of Lido’s concentration of staked Eth was highlighted by Danny Ryan, lead researcher at the Ethereum Foundation. Danny wrote on Twitter, “Lido passing ⅓ is a centralization attack on PoS.”.
Jake Hartnell (Juno core-dev), highlights an alternate approach to quantifying the decentralization of a blockchain called, the Nakamoto coefficient, as broken down by Balaji Srinivasan in his 2017 Medium article.
The Nakamoto Coefficient represents the number of validators (nodes) that would have to conspire together to successfully slow down or block any respective blockchain from functioning correctly. The higher the Nakamoto Coefficient relative to the total number of validators, the lower the risk of collusion. Although outdated, one previous estimate for the Nakamoto Coefficient of Ethereum was 12, and 6 for Cosmos. Juno is decentralized across 250,000+ unique addresses. These are delegators that decide the direction of the blockchain via on-chain governance, and 150 validators that run nodes to secure the network (as of July 2022).
Generally speaking, Despite Juno having a differentiated approach to decentralization thanks to Cosmos, Ethereum is still considered to be the most decentralized layer-1 chain. Another decentralization metric worth noting is token ownership diversification. We delve into this under the community and ethos section below.
As more products and services are delivered on top of smart contract platforms, attempting to quantify decentralization will become increasingly important. The requirements to participate in consensus provides insight into what model of decentralization platforms are capable of delivering. Market data allows us to make quantitative estimates of real-time levels of decentralization. Nevertheless, the actual composition of validator sets is opaque. For now, quantifying decentralization is more of an art than a science.
6. Inter-chain interoperability
Web3 is heading towards a multi-chain future. While different blockchains host a variety of unique qualities and a multitude of projects, tech complications for inter-chain communication remain.
Ethereum communicates with foreign layer-1 ecosystems using bridges to transfer assets between chains. There are two major types of bridges, namely centralized and decentralized ones. A centralized bridge employs a third-party mediator who oversees transactions between two blockchains. Conversely, decentralized bridges operate using consensus protocols that act independently of any centralized authority.
Bridging technology is in its infancy. Many bridges have an insufficient number of validators, meaning hackers only need to compromise a handful of nodes to access passwords necessary to drain funds present on a bridge.
In 2022 alone, hackers stole $1.3 billion from bridges, according to blockchain analytics firm Chainalysis. The largest incident was the record $615 million haul snatched from Ronin, a bridge supporting the popular Web3 game, Axie Infinity.
Ethereum inter-chain transactions remain a significant security problem.
Cosmos proposes an alternative to bridges that many support – enter the Inter-Blockchain Communication protocol (IBC). Launched in March 2021, it is adopted by 50+ zones that leverage Cosmos technology. As IBC becomes more established, it could provide insights into the future of interoperability with the potential to be adopted by other chains outside the Cosmos ecosystem.
At its core, IBC is a messaging protocol that is often analogized to the TCP/IP layer of the blockchain. IBC is agnostic to the actual contents of messages which include:
- fungible token transfers
- cross-ledger voting
- account delegation
- cross-ledger decentralized exchange
- settlement information
- cross-chain queries
- smart contract calls
Juno is fourth in total IBC volume for the past 30 days (at the time of writing), positioning it as one of the most important zones within the Cosmos ecosystem. Just behind Osmosis, Cosmos Hub and Axelar, the total amount processed on Juno was around $33 million.
7. Network Architecture
Layer-1 Network architecture is one of the most varied factors across chains leading to chain differentiators. Some layer-1s employ the battle-tested, one-chain approach, optimizing their networks to provide the highest level of performance. Others deploy multi-chain frameworks and forging full force into the land of asynchronous networks where cross-chain communication facilitates the interaction between and within applications. Both approaches come with their own sets of pros and cons that have implications for performance, decentralization, security, and usability characteristics.
Currently, the ‘one validator set, one chain’ model comprises consecutive blocks in a single chain which is secure and makes information easy to verify. However, requiring each full node to process and validate each consecutive transaction reduces the ability to process transactions quickly – especially in times of high mainnet activity like in Q2 of 2021.
Alternatively, the ‘multiple validator sets, multiple chains’ architecture on Cosmos allows for customizable Tendermint-based blockchains to be rapidly spun up and interconnected through IBC. This configuration also enables blockchains to create their security models under multiple validator sets. As with Ethereum’s sharded model, this network configuration is still under development and is not yet tested.
8. Community and Ethos
Ethereum and Juno have several things in common; decentralization focused, offer smart contracts, and have an active community of developers, dApps, and investors. That said, there are stark differences, such as Juno not having a figurehead (like Ethereum’s Vitalik) and Juno being seemingly more community-focused from the outset, illustrated by the token allocation.
To understand the point around token allocation and community ethos, let’s look back at Ethereum’s original token distribution event. Managed by the Ethereum Foundation, it sold roughly 60 million Eth (80% of the initial 72 million Eth supply) to the public. The sale occurred between July 22, 2014, and September 02, 2014. However, the Eth purchased by crowd sale investors were not usable or transferable before the launch of the Genesis Block on July 31, 2015. The price of Eth was 2000 ETH per BTC until August 05, 2019. Eth value proceeded to linearly increase, resulting in a final rate of 1337 ETH per BTC, on August 28, 2014.
The remaining 12 million ETH (20% of the initial supply) were allocated to the Foundation and early Ethereum contributors. Ethere sent to the foundation was distributed as follows:
- 3 million allocated to a long-term endowment
- 6 million distributed among 85 developers who contributed prior to the crowdsale
- 3 million designed as a “developer purchase program” which gave Ethereum developers the right to purchase ether at crowdsale prices
Skipping ahead a few years, the Juno Network describes itself as a completely community-owned and operated smart contract platform. Therefore, the majority of the genesis supply was stake-dropped to Atom stakers (46,000 in total), committed to the community pool, and the development reserve for the ongoing network expansion. There was no seed, private or public sale. You’ll note from the below image that the core team was granted less than 3% of the total supply (vested over 12 years).
The Bottom Line
We continue to move towards a multi-chain world. Investors, developers, and others will gravitate towards the ecosystems which most closely align to their values, economic interests, performant needs and dApp selection.
Ethereum has exciting plans with the success of the merge, roll-ups development aiding scalability, a global reputation, and the community continues to build upgrades and dApps.
Juno is young and growing rapidly. A map of Cosmos Zones shows that a significant amount of volume is transacted through the Juno network. Further, the ecosystem prides itself on its tight-knit community, and its smart contracts offer web2 developers an opportunity to break into web3 seamlessly, due to CosmWasm smart contracts being compatible with traditional languages such as Rust.
As any true football fan will tell you, sometimes it’s not about supporting your team but the beauty of the game itself. We’re here to spectate and cheer on both sides in the match, where hopefully, the fans and communities from all sides decide to converge and grow together.
Keep the goals coming.