What upgrades in Cosmos 2.0, set to be released on September 28, are worth paying attention to?
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What upgrades in Cosmos 2.0, set to be released on September 28, are worth paying attention to?
Cosmos has been receiving a lot of attention recently, but its ultimate move hasn't been unleashed yet.
Navigating Web3 tides with focused insightsAuthor: The DeFi Investor
Translation: TechFlow
Cosmos has recently drawn significant attention, but its ultimate moves have yet to be revealed—interchain security and interchain accounts are just part of the upcoming innovations. Here’s the ultimate guide to Cosmos’ next major narrative:
A Brief Overview of Cosmos
Cosmos is an ecosystem of interconnected applications, where apps are deployed on sovereign blockchains connected via the Inter-Blockchain Communication (IBC) protocol.
Cosmos offers application developers unprecedented customizability. As a result, notable figures in the crypto space such as Delphi Digital and dYdX have announced their intentions to build applications on top of Cosmos.
However, Cosmos is not without flaws. Since protocols built on Cosmos are deployed on sovereign blockchains, they do not share security, which often leads to centralization and security risks.
Additionally, the user experience within Cosmos leaves much to be desired—users must rely on cross-chain bridges when interacting with another Cosmos application on a different chain. Fortunately, developers are actively working on solutions to address these issues:
Interchain Accounts
Interchain Accounts will allow users to seamlessly interact with any IBC-enabled Cosmos chain directly from their Cosmos Hub account.
Because each Cosmos application is deployed on a separate blockchain, direct interaction between apps is currently not possible. For example, you cannot use funds on Evmos to execute transactions (such as swaps) on Osmosis, or vice versa.
If you want to swap tokens on Osmosis but your funds are on another Cosmos chain, you must first bridge them over to Osmosis.
Interchain Accounts simplify this process. Interacting with Cosmos applications will become as simple as interacting with protocols on Ethereum or other L1s. This feature is expected to launch this year.
Interchain Security
Another fundamental issue for Cosmos applications is lack of security. While this may not be a concern for protocols with large user bases and strong communities, it poses a real risk for newly launched applications.
If a new application is secured by validators staking a token whose market cap is lower than the TVL on that chain, it becomes vulnerable to attacks.
But this will soon no longer be an issue. Interchain Security V1, launching in Q1 2023, will allow these applications to be protected by the Cosmos Hub in exchange for sharing a portion of their transaction fees.
Currently, the cost of attacking the Cosmos Hub stands at $3 billion (2/3 of ATOM's market cap), making an attack highly improbable.
Interchain Queries
As the name suggests, this feature will enable one blockchain to retrieve data from another.
Why does this matter?
Because Interchain Queries will open up an entirely new world, enabling the creation of cross-chain smart contracts.
For instance, users will be able to borrow against collateral held on a different Cosmos chain.
Currently, this isn't feasible without first bridging funds to the chain where the lending application is deployed.
Combined with Interchain Accounts, Interchain Queries will greatly enhance the user experience by enabling complex transactions across multiple blockchains.
ATOM 2.0
ATOM 2.0 will likely be the most anticipated aspect of this Cosmos upgrade for investors. It will introduce a completely new tokenomics model for ATOM, potentially solving long-standing value capture questions. All mysteries will be unveiled on September 28!
Undoubtedly, Cosmos is one of the most innovative projects in the Web3 space. I plan to hold it long-term and am excited for its future.
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The DeFi Investor
