How Layer 0 solutions like Cosmos are creating a decentralised 'Internet of Blockchains'. Randy Ginsburg explains how, in doing so, Cosmos can create a blockchain ecosystem that could scale to power the entire world.
Despite major progress in blockchain innovation over the last decade, most major Layer 1 blockchains like Bitcoin and Ethereum still face fundamental issues around scalability, usability, and sovereignty. Layer Zero solutions like Cosmos are aiming to change the way blockchains are developed and operated, and thus help Layer 1s like Ethereum tackle these issues.
With Ethereum still operating under the proof-of-work consensus, all Ethereum decentralised applications (dApps) are competing for limited space on the blockchain. This results in slow throughput rates (15 transactions per second) and significant network congestion, which in turn leads to higher gas fees. Furthermore, Ethereum, like all Layer 1s, is unable to communicate with other blockchains without the use of cross-chain bridges, whose efficiency acts as a bottleneck on a multi-chain web3 future.
Meanwhile, since the Ethereum Virtual Machine (EVM) is a sandbox built to broadly accommodate all use cases, it offers developers very little flexibility for specific application functions, design, and efficiency. Among other technical shortcomings, Ethereum developers are limited to a few programming languages like Solidity and Serpent and cannot implement automatic execution of code.
Further, Ethereum dApps are dependent on the Ethereum platform itself, which governs the EVM. From fixing otherwise fatal bugs to simply adding a new feature, all changes must run through the Ethereum governance protocol before they ship, and the bottlenecks in this process are ironically counterproductive to everything that Web3 is aiming to achieve in decentralisation and ownership.
To combat these issues, organisations like Cosmos are aiming to create a decentralised network of independent parallel blockchains each powered by BFT consensus algorithms like Tendermint. (Byzantine Fault Tolerance algorithms ensure that a chain can still operate securely even if a minority of the participating nodes fail.) The end goal is to create a decentralised network of interconnected blockchains capable of quickly processing transactions, maintaining sovereignty, and communicating with one another through the Application Blockchain Interface (ABCI), an interface that connects each application to Tendermint.
At its core, Cosmos represents a completely new way to create Layer 1s, with interoperability inherently built in. All Layer 1 blockchains can be divided into three layers: an Application aspect, responsible for processing transactions; a consensus aspect, through which nodes can agree on the current state of the ledger used by a specific chain; and a networking aspect, which facilitates the communication of transaction and consensus-related messages.
Until now, building a blockchain required building all three layers from the ground up. Not only is this incredibly time-consuming, but it also requires a significant amount of technical know-how. And while Ethereum simplified the development of decentralised applications by allowing the deployment of smart contracts on the Ethereum Virtual Machine, the development of blockchains themselves has still remained complex. Prior to Layer Zero solutions, developers either had to fork the codebase of an existing blockchain or build an entirely new blockchain from scratch.
Instead of relying on dApps built on top of Ethereum’s virtual machine application layer, Cosmos uses Tendermint to facilitate the development of a separate blockchain dedicated to the application itself. Now, developers only need to define the transaction types and state transition functions needed for the blockchain to serve specific applications.
Created by Jae Kwon in 2014, Tendermint makes blockchain development easy by packaging the networking and consensus layers of a blockchain into a generic engine suitable for both public and private blockchains. With the networking and consensus layers completed and accounted for, developers can focus their time and effort solely on the development of scalable and secure applications by using the Cosmos software development kit, an ecosystem of pre-coded, customizable modules. When combined, cosmos lets developers build high-performance blockchains capable of handling thousands of transactions per second and dedicated to their specific use case.
Once these application-specific blockchains are created, they can be connected to permit the flow of data between each chain, enabling public and private heterogeneous blockchains with different applications and validator sets to all function interoperably. These independent application-specific blockchains can be further connected through scaling solutions to create an 'internet of blockchains' capable of transferring value and data beyond the currently closed borders of specific chains.
The application-specific blockchains that Cosmos makes simple come with significant advantages.
First, application-specific blockchains and broader blockchain networks like Cosmos are designed with scalability in mind. Whereas virtual machine blockchains like Ethereum run all smart contracts on the same virtual machine, application-specific blockchains no longer need to compete for shared resources.
This allows for significantly greater throughput and cheaper transactions than a Layer 1 blockchain. Take blockchain gaming for example. No current Web3 game is able to support the network traffic required to facilitate the number of concurrent microtransactions of a popular Web2 game. Imagine a future where every game, protocol, and dApp has its own extremely scalable blockchain dedicated to its operation. This is the future Cosmos is aiming to create.
Next, application-specific blockchains provide developers with far more flexibility. Without any virtual machine-imposed constraints, developers can choose which programming language, consensus mechanism, and development frameworks they want to use to build their application, and if a module from the Cosmos SDK doesn’t have exactly what they need, they can customize the components as they see fit.
In addition, developers have far more meaningful ownership and sovereignty over the governance of their specific blockchain. Through this, they are afforded far broader abilities to tailor their chain for their specific application(s), such as deploying it as a public or private chain, and are able to implement changes with fewer bottlenecks.
Cosmos can be used with any consensus engine that implements the Application Blockchain Interface. Over time, we expect multiple SDKs to emerge, each built with varying architecture models and compatible with multiple consensus engines.
But for now, the premise of the Cosmos network lies as this: tackling core Ethereum bottlenecks of usability and scalability with the Cosmos SDK, which when combined with Tendermint allows any developer to create a blockchain dedicated to a single use case or dApp. These application-specific blockchains can then be connected to build a network of inter-connected blockchains capable of functioning faster and cheaper than any available alternative. That opens up an entire cosmos of beautiful opportunities.
Cosmos lets developers build high-performance blockchains capable of handling thousands of transactions per second.
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