Purely Cosmic: Cosmos Network Review
Jul 10, 20225 min read
The ever-expanding Cosmos ecosystem is positioned as an Internet of blockchains. The blockchains launched in the Cosmos Network can interact with each other through the basic Cosmos Hub blockchain via the IBC protocol (Inter-Blockchain Communication protocol). The main feature of the Cosmos Hub blockchain is cross-chain solutions that allow any blockchains launched in the Cosmos ecosystem to interact with each other and with external networks such as Ethereum and Bitcoin.
Cosmos Is Blockchain 3.0
To begin with, let’s still figure out why Cosmos is blockchain 3.0. The largest cryptocurrency by capitalization is the first Bitcoin cryptocurrency that launched the entire industry. At the same time, the only function of the Bitcoin blockchain is to record transactions. Now Bitcoin has “overgrown” a large ecosystem, is widely used to transfer value, and is rightfully considered “digital gold,” despite the duration of transactions and the lack of additional functionality in the blockchain. Therefore, Bitcoin can be called blockchain 1.0.
As for blockchain 2.0, the Ethereum project comes to the fore here, which, in addition to being a decentralized network, has created a unique programming language, Solidity. The Ethereum Virtual Machine allows you to build applications that can interact in the blockchain fulfilling their role. The functionality of Ethereum greatly exceeds the functionality of the Bitcoin blockchain. Still, the writing of smart contracts takes place according to the rules of the network, and developers cannot change any essential principles of interaction depending on the needs of their projects. There are three main problems of Ethereum, which are also common to other blockchains 2.0 projects:
As the network grows, transactions become slower and more expensive. This is especially noticeable in the field of decentralized finance, where frequent small transactions are in demand — the use of ETH in DeFi projects is already impractical;
Using only one development and interaction environment. When developing applications for Ethereum, it is difficult to go beyond the network and its functionality;
- Ease of use
The functionality does not allow developers to build some complex products and applications.
And if the launch of Ethereum 2.0 partially solves the scalability problem, the sovereignty is solved by Layer 2 solutions. Then there is nothing to solve the problem of convenience and limited functionality.
Now let’s figure out how Cosmos works and what it consists of. First, it is a blockchain that allows you to connect different blockchains. Cosmos allows you to build a decentralized application or launch your blockchain as quickly as possible, with minimal costs, and at the same time be able to interact with other blockchains within the ecosystem (Interchain) and external blockchains through so-called decentralized bridges.
Cosmos cryptocurrency has open-source tools. This guarantees the interaction of blockchains with each other within the network. The protocol itself monitors the status of each block of the digital circuit. Individual blockchains within the system are called zones.
They have access to all the tools of the parent network. These chains are independent of each other and perform any operations. For example, issuing and distributing new tokens, opening accounts, conducting transactions, voting, or updating the protocol without the influence of the Cosmos.
Cosmos Hub is a meeting place for blockchains. This protocol works as an intermediary. The zones are connected to a hub that keeps a permanent record of the current state. Interaction with other participants is possible as soon as they connect to the platform.
The system is based on three layers:
- The transaction processing application layer also monitors the state of the platform.
- The network allows individual digital circuits to communicate. Projects on different technologies with different protocols can use internal functions.
- The Tendermint BFT Consensus. It is responsible for protecting the network and supporting nodes. The protocol validates transactions and adds blocks to the chain.
Cosmos was created to solve problems with scalability, usability, and issues associated with interaction limiting developers to only one network. Opensource tools such as Tendermint and Cosmos SDK allow developers to quickly create secure, scalable, and compatible blockchain applications and free them from restrictions on interactions inside and outside the network. For example, a Tendermint-based blockchain can interact with the Ethereum blockchain, which does not belong to the Cosmos ecosystem. Furthermore, Tendermint is a core connected to the ABCI interface (Application BlockChain Interface), allowing you to create applications in any programming language. Thus, by creating a blockchain on the Tendermint core, developers can focus all their attention on their product without worrying about consensus and security, developing applications in any language convenient to them.
In addition to the advantages listed above, by choosing Cosmos as the basis of the project, developers get the opportunity to select validators for their blockchains. This allows you to create the most decentralized public networks with many validators and private networks with specific validators. For example, the Binance Smart Chain network is private, and only validators selected by the Binance administration can confirm (validate) transactions in this network.
The main advantage of Cosmos is a cross-chain solution, the ability to connect different blockchains in one ecosystem, and the interaction between them.
This connection can be explained as follows: there is a blockchain A and a blockchain B in the Cosmos ecosystem.
We need to transfer tokens from one blockchain to another, but the tokens are not transferred anywhere. Instead, they are locked in blockchain A and created in B. After that, the tokens in blockchain B begin to “live,” but the tokens in blockchain A remain frozen and cannot be used until they return from blockchain B. This is similar to a smart contract in the Ethereum network but valid between different blockchains.
Cosmos (ATOM) Prospects
To date, the ATOM token of the Cosmos blockchain has already been added to the largest exchanges. The coins that early investors bought are already in circulation, and the project is in the TOP 50 by capitalization. The project has no analogs, and comparing it with someone else is difficult. Perhaps the closest project in scale is the Polkadot project, which offers the creation of parachains on its basis.
The platform is a strong example of solving the problem of blockchain interoperability. Its success largely depends on the technology’s long-term performance and the strategy’s flexibility in response to competitors’ actions. There is acceptable space for several platforms in the interconnection market to meet the demand fully.
Polkadot and other projects like Ethereum are a single chain where an attack or a problem in one place can lead to a network rebuild. In Cosmos, a problem in one circuit will not affect the others.