Core contributors of the Cosmos ecosystem interpret cross-chain economy for you

Original Title: Tendermint CEO: How Does the Cosmos Ecosystem Connect the Multi-Chain World?

Source: Forkast News

Compiled by: Baize Research Institute

Aiming to become the "Internet of Blockchains," Cosmos has experienced tremendous growth in 2021, with over 260 blockchain projects, including well-known projects like Binance Smart Chain, Terra, and Crypto.com, built using the Cosmos SDK software development kit. According to data, the Cosmos ecosystem has amassed over $170 billion in funds.

Cosmos is an ecosystem composed of interoperable but autonomous blockchains, and with the launch of the Inter-Blockchain Communication (IBC) protocol, Cosmos underwent a significant upgrade in March.

The IBC protocol allows independent blockchains to connect with each other to exchange data and assets. In the past month, over 1.7 million cross-chain transactions have occurred between more than 20 IBC-enabled blockchains (such as Osmosis, Cosmos Hub, and Terra).

Peng Zhong, CEO of Tendermint, a core contributor to the Cosmos ecosystem, stated in an interview that IBC will create a whole new cross-chain industry. "By the end of 2021, we should see about 30 IBC-enabled zones (independent blockchains in Cosmos), and I predict that by the end of 2022, there will be over 200. This is where innovation will happen."

According to data from DeFi Llama, Ethereum is the smart contract platform hosting the majority of stablecoins, decentralized finance (DeFi), and NFT protocols, with a total locked value of $170 billion.

Peng Zhong believes, "This is a dazzling complexity that even exceeds Ethereum's smart contract framework. Ethereum has tens of thousands of smart contracts, but in Cosmos, there could be tens of thousands of Ethereums, each with tens of thousands of smart contracts."

Peng Zhong was once a web developer and joined Tendermint at the end of 2015 as the company's Chief Design Officer. Since then, Tendermint has continued to develop Cosmos infrastructure and tools, such as the Tendermint core engine, Cosmos SDK, and IBC protocol, to help developers and projects quickly build their own blockchains and achieve data and asset exchange across blockchains.

The following is an edited version of the interview:

Why is Cosmos referred to as the "Internet of Blockchains"?

Cosmos was initially an idea proposed by founders Jae Kwon and Ethan Buchman in 2016, outlining what the "Internet of Blockchains" is in their white paper. The 2017 ICO was initiated by the Interchain Foundation, and the first blockchain in the Cosmos ecosystem, Cosmos Hub, was launched in early 2019.

By 2021, the framework for building Cosmos blockchains became very popular, with over 250 blockchains built using the Cosmos Software Development Kit (SDK). Although many valuable blockchains have been built using the Cosmos SDK, the Cosmos ecosystem has been unable to transfer assets between them since the white paper was written in 2016.

It wasn't until five years later that inter-blockchain communication (IBC) was enabled. This was launched on the first blockchain in Cosmos, Cosmos Hub, in March this year. There are now over 20 Cosmos blockchains that have enabled IBC, and these blockchains have already seen considerable traffic.

How does Cosmos compare to Polkadot? Do you consider Polkadot a competitor to Cosmos?

Currently, there is no competition between Cosmos and Polkadot, and I believe that "projects aimed at enhancing interoperability between blockchains" will not truly compete.

The main difference between Polkadot and Cosmos lies in their initial direction. Cosmos focuses on permissionless cross-chain data exchange, allowing any Cosmos blockchain to send data to any other Cosmos chain. It enables developers to build a new chain and send its tokens to the Cosmos Hub, while the Cosmos Hub can send tokens like ATOM to this newly created chain, which is possible in today's Cosmos.

Polkadot, on the other hand, initially focused on shared security, meaning it is not a permissionless ecosystem that allows anyone to build new chains and transfer assets between them.

Instead, it is a more orderly system that does allow for a relay chain, capable of connecting up to 100 other parallel chains, but to become a parallel chain, you will need a lot of DOT tokens and be able to win an auction to become a parallel chain. This means that in the Polkadot ecosystem, as a DOT holder, you have significant power over which projects are allowed to become parallel chains and which projects will bring value to Polkadot.

In contrast, in Cosmos, holders of tokens like ATOM currently do not have a say in which chains can connect to Cosmos. Therefore, the moment a new chain launches, it can connect to Cosmos.

Of course, for Polkadot, being a DOT holder is more valuable because you can secure all parallel chains. But in Cosmos, we believe that developers can freely build whatever they imagine and connect it to the Cosmos network, which will bring more innovation and growth to Cosmos.

How is security managed in the Cosmos ecosystem?

Currently, each Cosmos blockchain has its own security and its own validating nodes. On the Cosmos Hub, there are 150 validating nodes, which are typically small to medium-sized enterprises running infrastructure for specific blockchains. Each validating node runs the exact same software to ensure that the created blocks are valid.

We are now innovating, and the technology we are building will allow for shared security similar to Polkadot, but not exactly the same. For Cosmos Hub, we are exploring cross-chain security, which will allow Cosmos Hub validating nodes to simultaneously validate another chain or multiple chains.

What is Tendermint, and how does it fit into the Cosmos ecosystem?

Tendermint is essentially the oldest company in the Cosmos ecosystem. The co-founders of Cosmos, Jae Kwon and Ethan Buchman, are also co-founders of Tendermint Inc., which was established in 2014, even before Cosmos emerged.

I joined Tendermint as the first employee at the end of 2015, and when I joined, we were focused on the Tendermint consensus protocol for enterprise blockchains.

However, after we decided to focus on Cosmos, our mission shifted to building a network, creating as many sovereign blockchains as possible, and allowing people to control their own networks online, i.e., blockchain governance, while also allowing these blockchains to transfer assets between each other. Blockchains have the potential to truly reshape global collaboration, connectivity, and decision-making.

Cosmos is an idea created by the founders of Tendermint, but at the same time, Cosmos is much larger than any other company's idea, and due to the permissionless nature of our tools and the open-source licenses these tools have, many companies are now using Cosmos technology to build and contribute to Cosmos.

What are some key features of the Cosmos ecosystem?

At a higher level, Cosmos is about autonomy, sovereignty, and scalability.

The ability for developers to launch blockchains in Cosmos and send tokens permissionlessly is truly unique. This means that underfunded developers and teams can build for free using Cosmos.

I am very passionate about maintaining this core value because I was previously a web developer, and typically when developing things on the web, you can do almost anything for free. This completely free and permissionless nature of Cosmos will be the direction for the development of Web 3.0.

Whether within a single ecosystem or across chains, DeFi carries risks, as hackers exploit vulnerabilities in smart contracts or manipulate oracle outcomes.

Cosmos has been developing IBC for five years, and our technology is known for its high standards in the industry. Many top blockchain projects are built using Cosmos technology, including Crypto.com, Terra, and Binance Smart Chain. Everything we do is thoroughly audited to ensure additional security.

IBC is designed to be a framework similar to the traditional internet's message transmission protocol TCP/IP. So just like today, there are many different web development frameworks, the Cosmos SDK may not be the final solution. But as long as other blockchain frameworks adopt the IBC protocol, interoperability can be achieved between all blockchains connected by IBC.

Other blockchain ecosystems looking to adopt IBC are undergoing significant development and research. So you can imagine what the future would look like if Polkadot adopted IBC.

Polkadot uses the Substrate framework, and if Substrate adopts IBC, it means that each Polkadot parallel chain and even the relay chain could transfer tokens with Cosmos permissionlessly. You could even envision a future where Polkadot chains can communicate with Kusama chains through IBC.

As more and more blockchains decide to adopt the IBC protocol, this will create a very powerful network effect. The next network may not only need to connect to Cosmos chains but could be: "Oh, if I adopt IBC, then I can connect to both Cosmos and Polkadot," and the following network might be: "Oh, I can connect to Cosmos, Polkadot, and Avalanche."

Adopting the IBC protocol can make multi-chain a breeze.

What do you think are some factors driving the growth of Cosmos?

The main reason Cosmos is gaining more recognition is that this year marks the rise of "multi-chain interoperability"—the idea that there needs to be cross-chain bridges between popular blockchain ecosystems.

We predicted this future back in 2016 when there would be many valuable blockchains capable of sending assets to each other. Today, we see the rise of DEXs and the decline of centralized exchanges, all thanks to the development of cross-chain bridges.

With so many blockchains already in existence, can you see industry consolidation?

From a Web 3.0 perspective, Cosmos and the Cosmos SDK allow small teams to easily create new projects and make all other blockchains in the Cosmos ecosystem directly accessible to them.

On a technical level, many people hope to use multiple protocols across different Cosmos blockchains and connect them in a way. If they want to perform some kind of automated investment, multiple Cosmos chains could operate on your assets in a manner similar to Ethereum smart contracts and send them back to you.

But on the user level, I expect many users will find the idea of managing assets across thousands of blockchains cumbersome. How do they track their assets? So we will have some consolidation, but it may happen at the UI or wallet level. Wallets are a good way to hide the blockchain backend and completely abstract away from the blockchain.

What are your thoughts on the highlights of 2021 and your predictions for 2022?

The Cosmos ecosystem has completed enabling the IBC protocol, which will create a whole new cross-chain industry. Cross-chain DEXs like Gravity DEX and Osmosis have shown people the value of a multi-chain world and have truly brought a large number of users to Cosmos.

There is still much to be done in the NFT space. I am a bit concerned about the predictions regarding NFTs. People worry that anonymous addresses have the ability to buy, sell, and inflate the value of NFTs beyond what a person can actually afford to pay. This will attract the attention of regulators. But at the same time, regulation is meant to protect consumers. So we are happy to work with regulators to ensure that what we are building is truly suitable for all users and not a scam.