A blockchain is a digitally distributed, decentralized, public ledger that exists across a network. Just like Internet of Things, there is this growing trend around blockchain to evolve as an Internet of Blockchain. This article presents Cosmos’s point of view on how to leverage Internet of Blockchain to make the world a better connected place.
This article was originally published in Cosmos.
In April 2021, Cosmos hit a historic milestone by launching the Inter-Blockchain Communication protocol (IBC), the Cosmos standard for blockchain interoperability. IBC enables independent blockchains to connect, transact, exchange tokens and other data, scale, and thrive in an interconnected network. In just eight months, we have witnessed the growth of a robust new economy. 25 chains have officially joined the #IBCGang — and many more are on their way!
The Internet of Blockchains is growing fast thanks to IBC. To date, we’ve seen a massive 5.8 million IBC transactions occur and major traction among Cosmos DeFi applications. The ecosystem of decentralized exchanges (DEXs), including Osmosis, Sifchain, the Gravity DEX protocol, and others, is expanding fast, making previously hard-to-discover tokens available and enabling transfers, swaps, and pooling of IBC tokens, among other activities.
Taking Osmosis as an example, since its launch in June, this Cosmos DEX has garnered an impressive user base, seeing a huge leap in liquidity, starting at $49 million and hitting an all-time high of over $730 million in December with daily trading volumes reaching over $85 million. OSMO/ATOM is the most popular liquidity pool, followed by OSMO/UST and LUNA/UST.
All applications and protocols that succeed with IBC and draw more users to Cosmos benefit the entire ecosystem and make DeFi on Cosmos a more engaging, satisfying, and rewarding experience for all. With DeFi on Ethereum now reserved for whale traders only due to its exorbitant transaction fees (the average trade size on Curve Finance is now between $500,000 — $1,000,000), Cosmos is becoming a serious contender in this burgeoning sector with low fees, high liquidity, and a massive variety of DeFi applications.
Emeris, the portal to all crypto apps, no matter what blockchain they are built on, will take the user experience to the next level from its public launch. Already integrated with the Gravity DEX protocol, Emeris will offer users a browser extension wallet, a super-intuitive way of managing tokens cross-chain, and integration with many other protocols and DEXs.
And there’s plenty more to come. IBC doesn’t stop at Cosmos-built blockchains. Coming up in 2022, we’ll be connecting to many other major ecosystems including Bitcoin, Ethereum, Polkadot, and Celo, unlocking vast amounts of liquidity that will flow through the Internet of Blockchains. Read on to find out more about this journey and the next steps on our path.
An Interconnected Network (#IBCGang) Worth $60+ Billion
The 25 chains that have enabled IBC and interconnected to join the #IBCGang already have a combined market cap of more than $60 billion. Assets that are available for users to trade include ATOM, USDT, OSMO, LUNA, CRO, SCRT, and many others. Let’s meet the #IBCGang chains below.
Since we began our first transaction between Cosmos Hub and IRISnet in April, we are now frequently registering more than 1.7 million IBC transfers in a 30 day period. Below, you can see graphical representations of IBC transactions, from quantity by chain to IBC transfers by zone. And did we mention, more Cosmos chains are coming fast?
Coming soon to the #IBCGang will be another score of Cosmos chains each bringing unique features, use cases, and value to the Internet of Blockchains:
Connecting External Blockchains with IBC
We’re thrilled to see the Cosmos economy growing, but our vision for the sustainable development of blockchain technology is far more inclusive than that. Enabling blockchain interoperability is not only about the Cosmos network. Multiple solutions are in the works right now that will allow us to connect to other major blockchain ecosystems. Let’s take a look at all the solutions using IBC to make it happen.
Nomic is Building a Bridge to Bitcoin
The Nomic Bitcoin bridge creates an NBTC token that is redeemable for BTC, which can be sent over IBC and used throughout Cosmos. This bridge makes use of Bitcoin’s new Taproot feature and provides strong safety guarantees, as, with some Bitcoin bridges, validators have the power to mint BTC tokens without them actually being deposited on the Bitcoin mainnet. With Nomic, this attack won’t work unless the validators also have a majority of the Bitcoin hash power.
There is also a security feature that returns everyone’s Bitcoin on mainnet if the network has an extended liveness failure. Nomic’s design further ensures that malicious validators lose their stake even if they have 2/3+ of the voting power (and therefore are able to censor transactions). It also uniquely creates an opportunity for validators to earn BTC rewards, providing an additional incentive to use it. Nomic is working hard on rolling out this groundbreaking solution and we’ll get our first taste of it in the coming months (more details on this soon!).
Axelar is Connecting Cosmos to Bitcoin
The Axelar Network is a decentralized network enabling cross-chain interoperability between all blockchain ecosystems. The suite of protocols supported by the Axelar network, including IBC, supports integrations with Cosmos, Ethereum, Polkadot, Avalanche, Fantom, and other chains. Its building blocks can be used by developers to deploy connections to other blockchains and develop custom protocols quickly.
Axelar’s primary goal is to make it easy for developers to build their dApps on the blockchain platform best suited for their needs without sacrificing access to applications, assets, or users on other chains. To achieve this, Axelar is building a developer toolkit of protocols and APIs that run on top of their decentralized network of validators, which secure the network. This general-purpose toolkit enables developers to seamlessly build and deploy their dApps, while connecting their users to every blockchain participating in the Axelar network.
Axelar is currently in a testnet mode with dozens of validators and hundreds of ecosystem participants building around the stack. Axelar also recently launched an incentivized community program and community academy.
Connecting Cosmos to Polkadot and Kusama
Very soon Cosmos will be connecting to Polkadot! There are several key teams working on robust IBC solutions that will allow the two giant ecosystems to interoperate. The support for integrating IBC into Substrate is already in active development, with teams from core Cosmos contributor Informal Systems working on major codebase refactoring such as Rust no_std support in ibc-rs (the repo that contains IBC module support in Rust).
Octopus Network has been working hard as well at implementing IBC support for Substrate (substrate-ibc), and there have been some advances in the relayer logic in order to enable one-day transfers from a Cosmos chain to a Substrate chain. The Composable Finance team also has a number of efforts in progress to make this integration a reality, including working on an IBC light client for BEEFY, the substrate-based bridging solution for Kusama, to non-substrate based chains.
This light client would be merged into the canonical IBC-go repo and would be available for all Cosmos chains to communicate with Kusama and Polkadot. In addition to this, Composable is working with Strangelove Ventures to add support for substrate-based chains to ibc-relayer-go, and the Parity Bridges team to get BEEFY live on Kusama.
Enabling Interoperability Between Cello and Cosmos
In coordination with the Interchain Foundation (ICF), the Celo Foundation awarded a grant to Chorus One to construct a bridge between the Cosmos Hub and Celo, making use of IBC technology. The bridge will expand interoperability between the Cosmos and Celo ecosystems, allowing users, funds, and value to flow more freely — another important step toward achieving a globally inclusive alternative financial system.
The Proof of Concept for the integration has already been approved, the functionality is working, and the development teams are now testing the full integration with the relayers and end-to-end tests. Watch this space in the coming year!
Driving Enterprise Interoperability With Hyperledger
Datachain has been working on various solutions developing blockchain interoperability for enterprises, releasing an IBC module in Solidity that enables interoperability between different EVM-compatible blockchains, starting with Hyperledger Besu. This solution will allow for tokens, NFTs, and local currency built with Hyperledger Besu to communicate with different blockchains, such as Hyperledger Fabric.
Interconnectivity between enterprise chains with IBC is a major step to onboarding global enterprises, helping them scale to meet the needs of their users, and grow for mass adoption of their applications.
Bridging to Harmony its Mainnet Etherium Applications
Datachain also recently submitted a proposal that was unanimously approved to the Harmony blockchain community to build a bridge between Cosmos and Harmony. Harmony’s mainnet runs Ethereum applications with 2-second transaction finality and 1000 times lower fees, as well as secure bridges to Ethereum and other chains.
To develop this IBC-enabled bridge, Datachain will develop token transfer using ICS-20. The HRC-20 token on Harmony will be handled as ICS-20 on Tendermint based ledgers. The estimated timeframe for completion is three-four months, so taking Cosmos interoperability to a whole new level.
Avalanche Connection Soon in the Works
No concrete projects are yet in the works for a bridge to Avalanche, however, founder Emin Gün Sirer revealed that connecting to Cosmos through IBC was “something I’ve thought quite a bit about,” and said that “we could have Cosmos to Avalanche bridges in a very seamless manner.” We’ll be keeping a close eye on developments with this up-and-coming blockchain ecosystem!
The Cosmos Hub Will Become the Interchain IBC Router
Thanks to proposal 56 which was unanimously voted in, an IBC router will soon be added to the Cosmos Hub. This is a fundamental step in the continued growth and efficiency of the Internet of Blockchains. The Hub will become the Interchain Router, meaning that new zones joining the #IBCGang no longer need to maintain a large amount of infrastructure, such as archive nodes and relayers for each counterparty chain, to connect with the growing number of chains in the ecosystem.
A new feature will be added to IBC on the Hub that enables packet routing for ICS20 transfers. Strangelove Ventures has delivered an IBC Middleware module that will allow the Hub to play the role of IBC Router. This marks the beginning of a new era of the Hub offering critical interchain services to other chains and, at the same time, allowing validators and stakers to benefit from these relationships.
IBC is Starting to Reach its Full Potential
With 25 chains already connected and the Cosmos Hub at the center providing vital interchain services, IBC is starting to reach its goals. Connecting to Bitcoin, Polkadot, Celo, Harmony, and other flourishing ecosystems will also greatly increase the utility and scope of Cosmos DeFi, unlock deep liquidity that will flow into the Cosmos ecosystem, and help grow the DeFi sector at large.
Through IBC, we can improve inter-blockchain collaboration, and provide a much-enhanced user experience, from more intuitive interfaces and lower fees to a simpler way of managing their cross-chain assets. In 2021, IBC was launched, in 2022, we’re going to see what happens when it reaches its full potential.
Appendix: The #IBCGang Complete List of Connected Chains
Cosmos (ATOM) — The Cosmos Hub is the economic center of the Cosmos network, providing vital connections and opportunities to all blockchains that interact with it.
IRISnet (IRIS) — IRISnet is an Interchain service infrastructure provider and protocol for building trustworthy and distributed business applications.
Osmosis (OSMO) — Osmosis is an interchain DEX where users can create liquidity and trade IBC-enabled tokens.
Sentinel (DVPN) — Sentinel is a global network of independent dVPN (decentralized Virtual Private Network) applications for a private and censorship-resistant web.
Crypto.org (CRO) — Crypto.org Chain aims to drive mass adoption of blockchain technology through use cases like Payments, DeFi, and NFTs.
Regen Network (REGEN) — Regen Network aligns economics with ecology to drive regenerative land management.
e-Money (NGM) — e-Money is an electronic payment system and cross-chain platform developing advanced stablecoins to transcend money within the Web 3.0 world.
Akash (AKT) — Akash Network is the world’s first decentralized open-source cloud for faster, more efficient, and lower-cost application deployments.
Persistence (XPRT) — Persistence is an ecosystem of advanced Web3 products to drive liquidity and interoperability.
Ixo (IXO) — Ixo is a protocol that allows users to create verifiable claims of how people and companies change the world through a global network of data.
Terra (LUNA) and TerraUSD (UST) — Terra is a digital financial system of stable payments and open infrastructures maintained by various stablecoins and its native LUNA token.
Juno Network (JUNO) — Juno is an interoperable smart contract network that is scalable, robust, secure, and easy to deploy.
Sifchain (ROWAN) — Sifchain is a DEX that uses pegged tokens to facilitate cross-chain IBC transactions, as well as transactions to Ethereum through its Peggy protocol.
Ki Chain (XKI) — KiChain offers a variety of DeFi products and services, including asset management, trading, and staking, with a bridge to Ethereum in the works on testnet.
Injective Protocol (INJ) — Injective is a layer 2 DEX protocol with advanced features like cross-chain margin trading, derivatives, and synthetics on Cosmos and Ethereum.
LikeCoin (LIKE) — LikeCoin is a decentralized publishing infrastructure to promote the ownership and verifiability of online content for creators and consumers.
BitCanna (BCNA) — BitCanna is a decentralized payment network for the legal cannabis industry that allows businesses and customers to easily connect, interact, and transact.
Secret Network (SCRT) — Allows developers to construct permissionless and private decentralized applications (dApps) to drive utility for DeFi, NFTs, and other elements.
Starname (IOV) — Starname is a decentralized digital identity platform that allows users to create and assume custom immutable blockchain profiles.
BitSong (BTSG) — BitSong is designed to give artists, fans, distributors, and music labels a decentralized and open marketplace for sharing music.
Stargaze (STARS) — Stargaze is a decentralized protocol and NFT market that leverages a social network concept in the blockchain and crypto settings.
Microtick (TICK) — Microtick is a decentralized price oracle that provides real-time price data to dApps with access to the Inter-Blockchain Communication protocol (IBC).
Comdex (CMDX) — Comdex is a decentralized synthetics protocol that builds solutions to democratize finance by giving investors exposure to a large range of asset classes.
Bostrom (BOOT) — Bostrum is a Cyber network chain dedicated to furthering web 3 and providing decentralized tools such as browsers for its users.
Shentu (CKT) — Recently rebranded from CertiK Chain, Shentu was built to enhance the security of smart contracts, leveraging the CertiK Foundation’s unique Formal Verification platform.