Cosmos Deep-Dive: The Internet of Blockchains

Blockchains can be separated into three conceptual layers from architecture: 

Application layer: It updates the state of blockchain based on the execution of transactions. 

Networking Layer: It is in charge of ensuring that transactions and consensus-related messages are propagated. 

Consensus Layer: It allows nodes to agree on the system's present state.

The Cosmos is a decentralized network of autonomous, scalable, and interoperable blockchains powered by the Tendermint Core Byzantine Fault-Tolerant (BFT) consensus algorithm. Cosmos is all about the multi-chain world, seamlessly communicating data and tokens between numerous sovereign blockchains. This establishes a collaborative ecosystem because no project or blockchain in the ecosystem exists to compete with others; instead, Cosmos connects them all. 

Features of Cosmos:

Tendermint Core

Tendermint BFT combines a blockchain's networking layer and consensus layer into a generic engine, allowing developers to focus on the development of the application layer rather than the complicated underlying protocol. Tendermint saves hundreds of hours of development time as a result. Tendermint is also the name of the byzantine fault-tolerant consensus method employed by the Tendermint BFT engine.

The Application Blockchain Interface connects the application layer of blockchains with the Tendermint BFT engine through a socket. Any programming language of your choice can be used to wrap the protocol, allowing developers to use whatever language best suits their needs.

Cosmos SDK

The Cosmos-SDK is an open-source framework for creating multi-asset public Proof-of-Stake (PoS) and Proof-of-Authority (PoA) blockchains, such as the Cosmos Hub. Application-specific blockchains are blockchains that have been created using the Cosmos SDK. The Cosmos SDK's purpose is to simplify developers to build unique blockchains from the ground up that can natively interact with existing blockchains.

IBC

It's a protocol that enables different blockchains to communicate with one another. Considering the legalities and constraints that needed to be met to make this communication process a reality was hard. IBC makes it easy to transfer tokens and other data in a trusted and frictionless manner. It opens up a world of possibilities allowing for interoperability and value transfer, without facing the scaling issues which can be seen today in many blockchains.

How does IBC work?

The logic behind IBC is very simple. Let us suppose, there is an account on chain X, and it wants to send 20 tokens (for eg. ATOM) to chain Y. 

Tracking

Chain Y receives the headers of chain X continuously and vice versa. This allows every chain to have the track record of the validator set of every other blockchain. For this purpose, each chain runs a light-client of the other.

Proof Relay

Proof that 20 ATOM tokens are bonded is sent from chain X to chain Y.

Validation 

The proof sent to chain Y is verified against chain X’s header and if the proof is found valid, then 20 ATOM vouchers are created on chain Y.

Keep in mind that, ATOM tokens created on chain Y are not real, because real ATOM tokens still exist on chain X. Tokens present on chain Y are just a representation of ATOM on chain X, along with proof that these ATOM tokens are frozen on chain X. A similar process is followed to unlock the tokens when they return to their origin chain. 

Tokenomics

Use Cases of ATOM Token

ATOM can be used in three ways: as a spam-prevention system, staking tokens, and voting method in governance. 

ATOM is used to pay fees as a spam prevention method. Similar to Ethereum's idea of gas, the fee might be proportionate to the amount of computation required by the transaction. Taking fees is necessary so that malicious actors don't misuse the blockchain.

ATOM can be staked to obtain tokens as rewards. The quantity of ATOM staked determines the Cosmos Hub's economic security. The more collateralized ATOM there are, the more skin is at stake and the cost of attacking the network rises. As a result, the more ATOM are staked, the better will be the economic security,

Governance: ATOM holders can also govern the Cosmos Hub by voting on proposals with their staked ATOM.

Initial Token Distribution of Cosmos(ATOM)

The Interchain Foundation held multiple private investment rounds, and a public fundraising event on April 6, 2017. 

According to the Interchain Foundation, private Contributors, Public Contributors, All in Bits Inc (AiB), and the Interchain Foundation were the recipients of these newly created ATOMs. 

In exchange for a $1,329,472.3 donation, strategic and early adopters received 7.1 percent of the first supply or 16,856,718.97 ATOMs. In exchange for $300,000, the seed contributors received 5% of the initial supply or 11,809,947.91 ATOMs. Public Contributors paid in BTC or ETH received 67.9% of the initial supply, or 160,293,050 ATOMs, in exchange for $16,029,305.06 in BTC or ETH. 

To develop the open-source IP utilized in Cosmos Network, All in Bits Inc (Tendermint Inc.) earned 10% of the first supply or 23,619,895.81 ATOMs. ICF earned a ten percent share of the initial supply, or $23,619,895.81, to continue its Web 3.0 R&D. At genesis, 984 accounts received a total of 236,198,958.12 ATOMs.

Investors, Partners, and the Team

Team

Jae Kwon is the co-creator of Cosmos and the founder and CEO of Tendermint. He has a background in distributed systems, computer science, and blockchain software architecture. Jae has worked on a bitcoin exchange and other open-source initiatives.

Ethan Buchman – The Tendermint and Cosmos projects' co-founder. He graduated from the University of Guelph with a BSc in Physical Science and a MASc in Engineering Systems and Computing (Canada). He also owns CoinCulture CryptoConsulting, which provides non-technical and technical audiences with in-depth courses on blockchain technology. Kwon and Buchman later wrote the Cosmos white paper, and the software was released in 2019.

Investors

The ATOM cryptocurrency had a two-week initial coin offering (ICO) in 2017, and the project raised approximately $17 million. Tendermint Inc. raised $9 million in a Series A investment round in 2019 to continue the project's development. 

Strategic partners: Binance Smart Chain. Band Protocol. Terra Protocol.

Roadmap of Cosmos

Theta Upgrade (expected April 2022) includes Cosmos <> Ethereum Gravity Bridge, which will enable transfers of ATOM, ETH, ERC-20, and various other tokens on the Cosmos Hub between Ethereum- and Cosmos-compatible chains

Rho Upgrade (due in Q2 2022): Tendermint v0.35 Interchain accounts. After this upgrade, users will be able to maintain accounts across several blockchains. Its goal is to provide locking and unlocking mechanisms for IBC-enabled blockchains. Custody providers would be able to service any IBC-connected blockchain using the Hub's common interface. Simple management of NFT identifiers, their owners, and associated data, such as URIs, content, and provenance, is possible with the NFT module. Collectables, custody, provenance, and marketplaces are all extensions to this adaptable basic module.

Interchain Security v2 Cosmos solution to shared security via cross-chain validation and interchain accounts is included in the Lambda Upgrade (scheduled in Q2 2022). Allows for the creation of a parent chain. Cosmos Hub, for example, maybe in charge of creating blocks for a young chain. For misconduct, validators of a baby chain will have their ATOM ownership in the Cosmos Hub halved. Issuance of Tokens Aims to deliver ERC20 capabilities by allowing token creation directly on the Hub.