Hoo Research ｜How Does Cosmos Connect the Chains to the “Ports”?
Author: Hoo Research
With the successful integration of Kava 9 mainnet to Cosmos IBC and the deployment of well-known public chains Terra and Binance Chain on the Cosmos ecosystem, Cosmos ecosystem has gained wider and wider attention.
Cosmos introduces BPOS (consensus protocol for Bonded Proof of Stake), also called Tendermint. This consensus protocol has improved performance compared to PoW, and also has censorship-resistant properties that individual verifiers do not have. the Cosmos network also aims to enable interoperability of blockchains, and it is the first platform to release such a feature.
Cosmos is also known as a cross-chain duo alongside Polkadot, and the Cosmos ecosystem continues to flourish and is expected to be the most promising public chain for growth in 2022.
1. Cosmos three major technical innovations
Cosmos network consists of many independent parallel blockchains. The first blockchain in the network is Cosmos Hub, and the other parallel chains are called Zones, which operate across chains with the Hub through the Interchain Protocol (IBC).
Here we take a look at three innovations in the Cosmos network, the Tendermint consensus, the Cosmos SDK, and the IBC protocol.
1.1 Tendermint Consensus
Tendermint consists of two main technical components: the blockchain consensus engine (Tendermint Core) and the common Application BlockChain Interface (ABCI). The Tendermint consensus algorithm uses a very typical Byzantine fault tolerance scheme, a hybrid PBFT+Bonded PoS (proof of stake with pledge) consensus.
There are two roles in the Tendermint protocol, the verifier: a role or node in the protocol, different verifiers have different powers (vote power) in the voting process; the proponent: generated by the verifier in turn. The validators take turns proposing blocks to the transaction and voting on the proposed blocks. Blocks are submitted to the chain, and each block is a block height. However, it is possible for a block to fail to be submitted, in which case the protocol selects the next validator to propose a new block at the same height and starts voting again.
As you can see from the above diagram, to successfully submit a block, it must go through two stages of voting, called pre-vote and pre-commit. a block is submitted when more than 2/3 of the validators have pre-committed votes on the same block in the same proposal round. the block is allowed in Tendermint due to reasons such as offline or network latency, which may If the proposer fails to propose a block due to offline or network latency, the validator will wait for a certain amount of time before moving to the next round of proposals to receive the block proposed by the proposer.
Assuming that less than one-third of the validators are Byzantine nodes, Tendermint is able to guarantee that a validator will never submit a block repeatedly at the same height and cause a conflict. To do this, Tendermint introduces a locking mechanism, where once a verifier has pre-voted a block, that verifier is locked to that block. That verifier must then pre-poll the pre-submitted block. When the block is not successfully submitted in the previous round of pre-proposals and pre-votes, that verifier is unlocked and then proceeds to the next round of pre-submissions for the new block.
1.2 Cosmos SDK
Cosmos SDK is a toolkit to help developers speed up the development process, typically characterized by modularity and pluggability. By using Cosmos SDK, developers can build their own blockchain or functional components on top of the Tendermint consensus algorithm.
Cosmos SDK is currently the most advanced framework for building customizable dedicated blockchains, and the advantages of Cosmos SDK can be summarized as follows.
l The default consensus engine of Cosmos SDK is Tendermint Core. l Tendermint is the most mature and only BFT consensus engine available. It is widely used in the industry and is considered to be the best standard consensus engine for building POS systems.
l The Cosmos SDK is open source and you can easily build out blockchains with combinatorial modules. With the development of various open source modules in the SDK ecosystem, it will become easier and easier to build complex decentralized platforms through Cosmos SDK.
l Cosmos SDK is inspired by function-based security and benefits from years of experience in the blockchain state machine space. This makes Cosmos SDK a very secure environment for building blockchains.
l Cosmos SDK has built out several running dedicated blockchains. For example, Binance Chain, Terra and Kava among others.
Cosmos SDK offers great convenience for developers and shortens their development cycle. Both public proof-of-interest and private license authority proof blockchains can be built using Cosmos SDK.
1.3 IBC Protocol
IBC is a cross-chain communication protocol designed by Cosmos to communicate between Hub and Zone for cross-chain interaction, and IBC is the core part of Cosmos. a milestone event in April 2021, the IBC protocol went live. the data after IBC went live is very impressive, as of January 28, 2022, there are 28 main chains on IBC As of January 28, 2022, there are 28 main chains running on IBC, and 5.1 million IBC transactions have occurred in the last 30 days.
The goal of IBC is to pass application information between two independent Layer 7 networks, so an off-chain relay is needed to relay packets between the networks of Chain A and Chain B. Chain B receives data from Chain A and must be able to independently verify the proof information it contains, which represents the authenticity of a state (and its corresponding operation) on Chain A. In order for the IBC protocol to work, it must rely on underlying trust mechanisms, trusting the respective consensus algorithms in chains A and B, and also trusting light client-side validation, which proves what has happened on the blockchain through the verification of the block header information.
The principle of IBC is that the blockchain independently verifies the transaction information transmitted across the chain. Any transaction information on a blockchain can be transferred and interacted with based on the IBC cross-chain protocol. Therefore, in addition to the simplest token transfer, it can also support NFT transfer, smart contract invocation, etc.
In 2022, the IBC protocol also plans to connect networks such as Bitcoin, Ether, Polkadot, Avalanche, Harmony and Celo across chains, further unlocking the massive liquidity of the blockchain.
2. Cosmos Economic Model
The initial supply of ATOM amounted to 200 million pieces and as of Jan 28, 2022, the latest price of Astro (ATOM) is $29.62 with a 24 hour trading volume of $1,732,782,563. The price of ATOM has declined -2.33% in the last 24 hours. Cosmos has a float of: 226 million ATOM, a max supply of. 284 million, total supply: 284 million, liquidity: 79.65%, market cap outstanding: $6,701,878,211, total market cap ranked 20.
2.1 Token Distribution Mechanism
The initial distribution of Atom tokens and validators will be 75% for Cosmos public participants, 5% for pre-sales, 10% for teams, and 10% for Cosmos Foundation. Starting with the Genesis block, 1/3 of the total Atom volume will be distributed as rewards to the validators tied each year as well as to the principals. the base price of the ICO (seed round, strategic round and public sale) is 0.1, with discounts of 25% and 15% for strategic and seed investors respectively.
2.2 Token Release Mechanism
The model used for ATOM is inflationary incremental, with an incremental rate of 7% to 22%, depending on the current number of Atom Staking. When the number of Stake is greater than 1/3 of the overall Atom total, the incremental rate is 7%; when the number of Stake is less than 1/3, the incremental rate is 20%~22%.
2.3 Rights of ATOM Access, Revenue & Governance
2.3.1 Rights of ATOM Access
For the right to use, it is necessary to use ATOM to perform transactions and other operations in Cosmos Hub. Although there will be other Hubs in the Cosmos ecosystem in the future, Cosmos Hub will be the core Hub. After IBC is realized, the value of Cosmos Hub will be significantly increased, and most of the value in the ecosystem will converge to Cosmos Hub, and the use of ATOM by users will increase. After IBC is realized, the application value of Cosmos Hub will be significantly increased, and most of the value in the ecology will converge to Cosmos Hub, and the users’ use of ATOM will increase.
2.3.2 Rights of ATOM Revenue
The right to income is mainly reflected in the user’s inflationary gains by pledging ATOM and a portion of speculators holding ATOM for appreciation.
2.3.3 Rights of ATOM Governance
For governance rights, first, users pledge ATOM to vote for validators, and second, users participate in voting for various governance proposals in the ecosystem.
The governance mechanism of Cosmos Hub is on-chain governance. Any user can submit a governance proposal, and then ATOM holders will vote on it, and if the proposal is passed, it will be upgraded accordingly. At present, Cosmos has conducted several votes on governance proposals, and the voting participation rate is basically higher than 50%, so the community is more enthusiastic about governance participation.
3. Projects Worthy of Attention
As of 2022 to January 28, Cosmos official website shows that assets have exceeded 130 billion and Dapp has exceeded 262. Projects containing IRISnet, Starname, Sentinel, Crypto.org, Regen Network, etc. have been built in Cosmos, and this report focuses on the analysis from Secret Network, Osmosis, Juno Network, kava, Terra.
3.1 Secret Network
Secret Network（https://scrt.network/） is the first blockchain with privacy-preserving smart contracts, which is based on Cosmos technology and plays an important role in the Cosmos ecosystem. Applications built on Secret can use encrypted data without the permission of anyone (even the nodes in the network). This unique feature protects users, secures applications and unlocks hundreds of Web3 projects like never before.
Another point of interest about Secret Network is that it was formerly known as Engima, Egnima was born in 2015 at MIT, the MIT Media Lab, with founder and CEO Guy Zyskind, a top American school who founded Engima at the MIT Media Lab to become the star project in 2017.
In addition, Secret Network has received investment funding from top institutions. On January 20, 2022, Secret Network announced $400 million in ecosystem funding, including a new $225 million ecological fund and a $175 million gas pedal pool. Investors include DeFiance Capital, Arca, Alameda Research, ArkStream Capital, Bison Fund, CoinFund, Dragonfly Capital, Fenbushi Capital, HashKey Capital, Huobi Capital, Kucoin Labs, NGC, and others.
As of Jan 28, the latest price of Secret Network (SCRT) is $5.67 with 24 hours trading volume of $31,811,697. The price of SCRT has risen 2.78% in the last 24 hours. Secret Network has a float of: 150 million SCRT, max supply: 190 million, total supply. 190 million, Liquidity: 78.78%, Market Cap Outstanding: $849,769,796, Total Market Cap Rank 97.
3.2 DEX — Osmosis
Osmosis ( https://osmosis.zone/) is a decentralized exchange (Dex) with an AMM (Automated Market Maker) model that extends the use of AMM to the Cosmos ecosystem. Simply put, an automated market maker is one that allows users to provide liquidity (liquidity) in the market in a non-custodial form, become a small market maker, and then share the trading fees. Other users are free to trade different tokens through the existing liquidity, which is the decentralized exchange model.
Now Osmosis has supported 32 kinds of tokens: ATOM, OSMO (Osmosis’ native token), ION,, AKT, DVPN IRIS, CRO, XRPT,, REGEN, UST, etc., which really realize the free conversion between different chains, and the arrival speed can be measured in seconds in person, and the fee is almost negligible. In addition, the APR of pledges on Osmosis is very substantial.
As of Jan 28, the latest price of Osmosis (OSMO) is $7.88 and the 24 hour trading volume is $214,427. The price of OSMO has dropped -4.37% in the last 24 hours. Osmosis has a float of: 186 million OSMO, max supply: 1 billion, total supply: 325 million, float is. 57.32%, market capitalization outstanding: $1,468,387,592, and total market capitalization ranked 56.
3.3 Smart Contracts Platform — Juno Network
Juno（https://junochain.com/） main network, officially launched on October 1, 2021, is a fully interoperable smart contract network built from the Cosmos SDK and launched as a hub in the Cosmos ecosystem. Juno aims to ease the computational burden of smart contracts from the Cosmos Hub itself, which can focus on the core of the broader Cosmos ecosystem activities, security, etc.
As a platform-level public chain whose main purpose is to host an ecology of smart contract applications, Juno is also pushing its ecology forward. After a few hackathon events, the ecosystem on Juno is now taking shape. Although many projects are still in the early stages of development, a number of noteworthy projects have emerged.
l Junoswap is a native asset trading platform on the Juno chain. Unlike Osmosis, which is geared towards the asset trading needs of that Cosmos ecosystem, Junoswap is aimed more at the local CW20 asset trading in the Juno ecosystem.
l JunoMint is a one-click issuance platform for CW20Token on Juno. JunoMint allows users to issue Tokens for their projects by filling in core parameters such as Token name, number of decimal places, total supply, etc. In addition, JunoMint provides various templates for users to choose from.
l DAO is a decentralized collaborative organization creation tool on Juno. Similar in design logic to JunoMint, both simplify the otherwise complex task of deploying smart contracts into a standard user interface for one-click deployment. In it, users can directly create DAOToken, set voting rules, etc.
Currently, Juno has 44 applications deployed. Another noteworthy aspect of Juno is the possibility of getting airdrops by participating in pledges, etc. on the main Juno network.
As of Jan 28, the latest price of Juno (JUNO) is $16.44 and the 24 hour trading volume is $3,622,083. OSMO’s price has dropped -2.2% in the last 24 hours. the outstanding volume of JUNO is: 39,103,717 JUNO, Max Supply: 185,562,268, Total Supply: 71,739 ,986, market capitalization outstanding: $643,146,212, total market capitalization rank 118.
3.4 DeFi Applications — kava
Kava（https://zh.kava.io/）is the first DEFI platform relying on Cosmos cross-chain, built on Cosmos SDK and running on Tendermint-based Proof of Stake (PoS) consensus mechanism. On the application side, Kava has created two applications, CDP, a lending platform, and HARD Protocol, a cross-chain currency marketplace, providing stable coins, loans and interest-bearing accounts, allowing users to access more usage scenarios and values with digital assets. The main difference lies in the different collateral assets, the PoS mechanism of the native token pledge verification transaction, and the difference of the token capture value mechanism.
January 20, 2022 KAVA 9 goes live, the upgrade of Kava 9 mainnet will connect Kava to cosmos and unlock new assets and revenue opportunities through the integration of the IBC protocol. Based on Cosmos SDK’s Layer-1 public chain, the Kava 9 upgrade significantly extends the Kava ecosystem. the IBC integration allows new users and projects alike to access more high-yield opportunities through cross-chain, and it opens up new usage scenarios for existing Kava-native assets.
The upgrade of the Kava 9 mainnet further prospers the IBC ecosystem, and the Cosmos mainchain will be fed back. But the concern is that as more and more chains are added, it seems that the Cosmos hub itself will eventually face bottlenecks and they will probably end up having to turn to scaling mechanisms and the like.
As of Jan 28, the latest price of Kava (KAVA) is $3.22, with 24 hour trading volume of $83,098,779. KAVA’s price has risen 6.11% in the last 24 hours. kava has a float of 149 million KAVA, max supply: unlimited, total supply: 154 million, and a float market cap of $478, 374,513 with a total market cap rank of 151.
3.5 Stablecoin — Terra（UST）
Terra is a Tendermint blockchain based on Cosmos IBC with the advantage of interoperability with any other IBC blockchain in Cosmos IBC, allowing for easy future collaboration or tie-ins with other projects in the Cosmos ecosystem. Currently Terra ecosystem has covered stablecoin (UST), synthetic assets, machine gun pools, real world payments and other scenarios.Terra takes stablecoin as its core and connects its stablecoin to the real world through diversified DeFi products to achieve a real sense of business landing.
So far, Terra is the leader of the Cosmos ecosystem. But whether Terra’s stablecoin UST can skip the “death melody” of stablecoins remains to be seen, especially in the current unstable market situation.
As of Jan 28, Terra (LUNA) last traded at $53.67 with 24 hours volume of $2,575,455,758. LUNA’s price has dropped -5.16% in the last 24 hours. terra has a float of: 406 million LUNA, max supply: 1 billion, total supply: 819 million, float is. 49.56%, market cap outstanding: $21,774,023,748, total market cap rank 9.
The latest price of TerraUSD (UST) is $0.9987 with 24 hours trading volume of $895,002,221. The price of UST has decreased by -0.25% in the last 24 hours. the outstanding volume of TerraUSD is: 11,252 million UST, the total supply is: 11,252 million, the liquidity rate is: 100%, the outstanding market capitalization is: $11 ,239,931,013, with a total market cap rank of 16.
4. Cosmos Ecology Airdrop
As of January 28, many airdrops of Cosmos ecology have ended their snapshots, such as Evmos, etc. But Cosmos ecology has more airdrops worthy of our attention in the future, and some of the projects in the chart below are worthy of attention.
After nearly five years of development, Cosmos ecological layout has been gradually improved, this report is only a kind of bird’s eye view of Cosmos ecology. 2022 with the rise of cross-chain wave, the improvement of IBC ecology, the launch of Interchain Security and more airdrops under Cosmos ecology, Cosmos ecology will also get more attention.
- Cosmos Official Website: https://cosmos.network/
- Cosmos WhitePaper: https://v1.cosmos.network/resources/whitepaper
- Cosmos profile on Messari: https://messari.io/asset/cosmos/profile
- The Cosmos Hub Roadmap 2.0:
- Why Blockchains Need Cosmos Proof-of-Stake for a Sustainable Environment: https://blog.cosmos.network/why-blockchains-need-cosmos-proof-of-stake-for-a-sustainable-environment-878b3edd2e85
- blog.cosmos.network: https://blog.cosmos.network/
- Deep Dive: How Will IBC Create Value for the Cosmos Hub?
- Build Your Blockchain with Starport and Connect to a $75B+ Ecosystem of Digital Assets
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