To conclude our mini-series on projects oriented towards improving the current environment of blockchain by fixing issues like the lack of interoperability between the main blockchains and the increasing threat of very poor scalability options, we will cover the most popular of them all: The Cosmos Network.
Developed by All in Bits, Inc., a Delaware-based corporation contracted by the Interchain Foundation, Cosmos is an independent decentralized platform that is expected to become the base for a new generation of internet, one where different blockchains can freely communicate with each other, without any considerable effort or increase in costs.
Starting from Scratch
The Cosmos Network is developed on top of a base layer called the Tendermint Core, a development platform that allows any user to create applications with it, allowing for quick and simple integration with the decentralized network and take advantage of the BFT-like consensus protocol.
With Tendermint as starting point, the following step was to stablish the way for connecting the different blockchains, so the team created a second layer: The IBC (Inter-Blockchain Communication), which creates hubs and zones that act independently from each other, allowing for scalability by creating new zones, while they all use the same architecture for seamless communication between them.
The way the network is built incentivizes developers and enthusiasts to create their projects on it, giving them every tool necessary to fully develop applications or intranets, while also allowing them to choose their way of governance. The only thing that remains out of the creator’s control is the token that enables the conversation between Proof-of-Work ecosystems and the Proof-of-Stake model used in the bottom Tendermint layer.
Visual representation of the Cosmos Network topology. Taken from Twitter.
Sustain and Financing
The network launched on March 14, 2019, and held an ICO nearly a month after, in which they raised more than $17 million in USD, BTC and ETH, selling the entirety of the available supply for sale (75%) while the rest of the tokens were reserved for investors and the teams of All in Bits and the Interchain Foundation. The ATOM token currently trades for $3.82 and it’s estimated that over $40 million is traded daily using it.
The interesting thing about ATOM is that it can’t be mined but earned only through actively participating in the consensus protocol. If a node stakes more tokens, they have an increased probability to become a validator and earn a reward after validating a new block or delegating their tokens into a node and earn a fraction of the rewarded tokens.
In the case of a malicious node being detected, the node is instantly removed from the network and the staked tokens are frozen for 21 days, then destroyed if the incident is confirmed, which allows for a safe period of evaluation. However, a security loophole allowed hackers to have access to this “frozen” tokens before destruction. While the details on how much ATOM was at risk were undisclosed, the team managed to find the exact flaw and quickly address it.
In conclusion, Cosmos has proven itself to be able to cater to the needs of a very wide market, while being run by a competent team that cares about the wellbeing of the network. The next step is to stablish external partnerships to accelerate their widespread, but that step might take a while.