Cosmos is a distributed ledger technology (DLT)-based network that has been designed to allow different blockchain platforms to communicate and exchange data with each other. As noted on its official website, the Cosmos ecosystem aims to be the most scalable and most “customizable” platform for building high-performance applications.

According to Cosmos’ developers, the “internet of blockchains” network has been designed to solve three main problems faced by DLT-powered cryptocurrency platforms. These include scalability, interoperability, and usability.

Cosmos’ Design Team: Tendermint BFT Solves Blockchain Scalability Problem

As a proof-of-stake (PoS)-based platform, Cosmos has been developed to solve (what its creators consider) the inherent problems in proof-of-work (PoW)-enabled cryptocurrency networks. 

Large PoW chains including Bitcoin (BTC) and Ethereum (ETH) suffer from scalability problems as they can only process up to 20 transactions per second (TPS). A relatively large number of users currently transact on the Bitcoin and Ethereum blockchain, however, Cosmos’ design team claims these networks cannot effectively scale to accommodate a growing number of network participants. 

Cosmos’ Developers: Existing Blockchains are Slow and Expensive to Use

In addition to being “unscalable”, Cosmos’ technical team notes that PoW-based blockchains are usually slow and expensive to use. Moreover, these networks are managed using the energy-intensive mining process, which is harmful to the environment. This, according to Cosmos’ developers, who argue that the Tendermint Byzantine Fault Tolerant (BFT) blockchain consensus algorithm resolves the scalability problem.

Enabling Blockchain Interoperability

As explained by Zaki Manian, Director at Tendermint Labs (an organization that is responsible for the principal development of the Cosmos Hub), the Cosmos software development kit (SDK) allows developers to implement platforms that enable blockchain interoperability.

Interoperable blockchains are able to interact with each other – even though they might be based on two fundamentally different protocols. Launched on March 13, 2019, the Cosmos Hub is the first blockchain platform which was added to the Cosmos Network.

First Blockchain to Implement Classical BFT

Having worked on the Cosmos project for nearly three years, Manian revealed that the launch of the Cosmos Hub represents only the first stage in the development of a growing ecosystem of interconnected blockchains.

According to Manian, Cosmos is the first blockchain network that applies classic BFT consensus and also uses a special algorithm developed by Tendermint (the company). Manian, who’s also the Executive Director at the Trusted IoT Alliance, noted that Jae Kwon, the CEO and Founder at Tendermint, had invented the consensus protocol currently being used by Cosmos in 2014.

Delegators and Validators Help Secure and Manage the Cosmos Network

The developers of Cosmos had been working for the past year to finalize Tendermint’s implementation, which included integrating a PoS-based layer on top of the platform’s main consensus mechanism. As a PoS chain, the Cosmos network uses native tokens, called ATOMs, for on-chain transactions.

According to Manian, the Cosmos platform has been designed to enable thousands of delegators and hundreds of transaction validators to participate in its network. Currently, there are 146 million ATOMs delegated on the Cosmos network, an amount valued at around $850 million (at current market prices).

First “Truly Decentralized” Launch of a Proof of Stake Blockchain

Notably, Manian claims that the release of the Cosmos hub is the “first truly decentralized” launch of a PoS-based blockchain. He confirmed that there was no foundation or any other organization which helped in coordinating the launch.

The community of fundraising entities, which helped generate capital for the Cosmos project (beginning in April 2017), “collectively” launched the Cosmos Hub, Manian explained. He added that Cosmos has been developed to serve as an ecosystem of “sovereign” and “economically connected” blockchains.

Inter-Blockchain Communication (IBC) Protocol Enables Interoperability

Cosmos’ SDK allows application developers to create customizable blockchains, and Cosmos’ suite of software products are increasingly being adopted by leading crypto platforms including the Binance Chain. 

As noted by Manian, Cosmos’ technical team will focus on the platform’s inter-blockchain communication (IBC) protocol – which allows most standard PoS-based blockchains (including those that support the Casper protocol) to exchange data packets with each other.

The data packets may contain non-fungible tokens (NFT), regular crypto tokens, and even entire computer programs. At present, Cosmos’ developers are still working on the implementation of the IBC protocol.

Main Challenge Will Be to Make Legacy Blockchains Interoperable

Manian claims that ongoing research and development work related to finalizing the IBC protocol is a relatively low-risk process. He pointed out that developers have been working on exchanging data packets between networks since the 1990s. Referring to IBC’s current stage of development as the “intense specification” phase, Manian emphasized that it’s important to “incorporate all the lessons of the past.”

One of the main challenges that Cosmos’ technical team will face is enabling interoperability between legacy blockchains which include the Bitcoin (BTC) network and the Zcash (ZEC) blockchain.

Token Transfer Not Enabled At Launch Due to Security Reasons

Confirming that the launch of the Cosmos Hub did not (at first) allow users to transfer tokens, Manian mentioned that basic governance including its PoS-based consensus worked from the beginning. He explained that since the Cosmos Hub was launched in a decentralized manner, the platform’s developers could not guarantee the security of the network (during the launch process).

On April 23, 2019, ATOM holders voted to approve a proposal that involved enabling token transfers on the Cosmos network. After permitting the exchange of tokens, the Cosmos technical team began working on “Phase II” of the Cosmos mainnet project. During this phase, the Cosmos team will focus on developing the IBC protocol (as noted above).

“High Voting Participation Rates” 

Currently, there are 100 active validators (out of a total of 171 qualified validators) that are helping to manage the Cosmos network. As confirmed by its community members, Cosmos’ governance proposals have seen “high voting participation rates” – as participation regularly exceeded the “minimum 40% quorum” required for the approval of each proposal.

As noted by Chjango Unchained, the Head of Community at Tendermint, the Cosmos Hub has a built-in on-chain governance protocol that allows delegators and validators to cast their votes on proposals. In a manner that is similar to how Bitcoin or Ethereum improvement proposals are reviewed, Cosmos’ community members are able to approve (or disapprove) suggested changes to the Cosmos Hub. 

Once specific changes have been approved by the platform’s community, the Cosmos Hub validators begin activating the modifications associated with the upgrade.

Tendermint: Many Different Blockchains Will Co-Exist in the Future

Notably, Cosmos’ developers believe that there will be many different, established, and widely-used blockchain protocols in the future. Because many independent blockchains will co-exist, and different users will also have different preferences when it comes to using a particular chain, there should be a way to allow all these networks to communicate effectively. 

This, according to the management at Tendermint, which also mentioned that independent blockchains must be able to exchange information – in order to allow their users to participate in an evolving internet-based economy. 

Other major blockchain networks including the Cardano (ADA) platform also aim to allow different blockchain networks to communicate with each other. Many crypto industry participants believe that there will be a wide range of protocols supporting a growing ecosystem of blockchains in the future.