Kaiko, the cryptocurrency market’s leading data provider, has conducted research on the Cosmos ecosystem, one of the largest interoperable blockchain protocols that power some of the industry’s best-known Layer 1s.
Summary
Kaiko studies the Cosmos ecosystem
Analytics firm Kaiko has conducted research on the Cosmos ecosystem, a network of multiple blockchains that operate and communicate with each other. Due to its features, this blockchain is expected to provide greater security, speed, scalability and cost-effectiveness of each transaction.
This is one of the first projects of interoperability between blockchains that can communicate with each other, to facilitate the task of participants such as developers and dApps who want to overcome the limitations of a single blockchain, allowing transactions between different blockchains.
An effort to overcome these obstacles between different blockchains has been pioneered with the creation of so-called bridges between blockchains, but these very systems have been the objects of very serious hacker attacks (the last sensational one being the one involving the Nomad bridge, which syphoned off $190 million in August).Â
Also sensational was the one in April suffered by Ronin, the company behind the development of the game Axie Infinity, whose breach of its bridge earned hackers as much as $615 million (since the beginning of the year, thefts of tokens through bridges by hackers would amount to more than $1.3 billion).
Hence the solution offered by Cosmos remains the most secure and easy for facilitating communication between blockchains and their interoperability. It eliminates the need to create bridges that are easily hacked by hacker attacks, as seen in recent months.
It is no coincidence that the company’s ATOM token has achieved a real rally in the past month, gaining 25% and reaching over $14, after hitting a low at $10. It is still one of the assets that has seen the smallest declines from its November highs (about 55%). This rise is partly due to the announcement made by the company’s management team about the imminent major news.
According to early rumors, this would be a new plan that “will make EIP 1559 look like a joke.”
Interoperability offered by Cosmos
Cosmos currently uses a so-called multiform system to solve inter-chain operability. The system is based on their Software Development Kit (SDK), which provides a basis for developers to create their own test blockchains within its ecosystem. The majority, if not all, of the largest blockchains in the Cosmos ecosystem are written using their SDK, including Binance Smart Chain, Terra and Crypto.com, among others.
The Cosmos report also highlights why this system is considered one of those with the most transaction security:
“One of the most pivotal and unique components of Cosmos’ SDK is their Inter-Blockchain Communication (IBC) protocol. IBC acts as the connection between the different blockchains, or zones, on Cosmos and is aided by something called the Tendermint consensus engine. Tendermint consensus is when finality is instant – this differs to consensus on Ethereum where transaction finality requires that a transaction in a block is built upon by a number of follow-on blocks.”
The report also points out that the main driver behind the increased adoption of Cosmos earlier this year was Terra itself, which was part of the ecosystem (at one point it accounted for about 90% of the TVL on the network). Terra’s rapid rise and subsequent fall resulted in an immediate and sudden paradigm shift in projects on Cosmos, which nevertheless overcame the resounding failure of Terra without too much trouble after an initial moment of natural disarray.
