Tendermint CEO: How does the Cosmos ecosystem connect the multi-chain world?
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Tendermint CEO: How does the Cosmos ecosystem connect the multi-chain world?
Cosmos is an ecosystem composed of interoperable but autonomous blockchains. In March, Cosmos underwent a major upgrade with the introduction of the Inter-Blockchain Communication (IBC) protocol, which enables independent blockchains to connect and exchange data and assets.
Navigating Web3 tides with focused insightsNote: The original interview is from Forkast News; translated by Baize Research Institute.
Cosmos, aspiring to become the "Internet of Blockchains," has seen tremendous growth in 2021, hosting over 260 blockchain projects. Well-known platforms such as Binance Smart Chain, Terra, and Crypto.com were all built using the Cosmos SDK (software development kit). According to data, the Cosmos ecosystem now holds more than $170 billion in assets.
Cosmos is an ecosystem composed of interoperable yet autonomous blockchains. In March, it underwent a major upgrade with the launch of the Inter-Blockchain Communication (IBC) protocol. IBC enables independent blockchains to connect and exchange data and assets. Over the past month, more than 1.7 million cross-chain transactions have occurred among over 20 IBC-enabled blockchains, including Osmosis, Cosmos Hub, and Terra.
Peng Zhong, CEO of Tendermint—the core contributor to the Cosmos ecosystem—said in an interview that IBC will foster an entirely new cross-chain industry. “By the end of 2021, we should see around 30 IBC-enabled zones (independent blockchains in Cosmos), and I predict there will be over 200 by the end of 2022. This is where innovation will happen.”
According to DeFi Llama, Ethereum—the smart contract platform hosting most stablecoins, decentralized finance (DeFi), and NFT protocols—currently has a total value locked (TVL) of $170 billion.
Zhong said: “It’s a dazzling complexity, surpassing even Ethereum’s smart contract framework. Ethereum has tens of thousands of smart contracts, but in Cosmos, there could be tens of thousands of Ethereums, each with tens of thousands of smart contracts.”
Zhong, formerly a web developer, joined Tendermint at the end of 2015 as the company's chief design officer. Since then, Tendermint has continuously developed Cosmos infrastructure and tools—including the Tendermint Core engine, Cosmos SDK, and IBC protocol—to help developers and projects quickly build their own blockchains and enable cross-chain data and asset transfers.
Below is the edited transcript of the interview:
Why is Cosmos called the 'Internet of Blockchains'?
Cosmos was initially an idea proposed in 2016 by founders Jae Kwon and Ethan Buchman, who outlined what the “Internet of Blockchains” meant in a whitepaper. In 2017, the Interchain Foundation launched a 1CO, and the first blockchain in the Cosmos ecosystem, Cosmos Hub, went live in early 2019.
By 2021, the framework for building Cosmos blockchains had become extremely popular, with over 250 blockchains built using the Cosmos Software Development Kit (SDK). While many valuable blockchains were built using the Cosmos SDK, the Cosmos ecosystem had been unable to transfer assets between chains since the whitepaper was written in 2016.
Now, five years later, Inter-Blockchain Communication (IBC) has finally been enabled. It was launched in March this year on Cosmos Hub, the first blockchain in Cosmos. More than 20 Cosmos blockchains have already adopted IBC, and these chains are already seeing substantial traffic.
How does Cosmos compare to Polkadot? Do you consider Polkadot a competitor to Cosmos?
Currently, there is no competition between Cosmos and Polkadot, and I don't believe projects aiming to improve blockchain interoperability truly compete with one another.
The main difference between Polkadot and Cosmos lies in their initial directions. Cosmos focuses on permissionless cross-chain data exchange, allowing any Cosmos blockchain to send data to any other Cosmos chain. It allows developers to build a new chain and send its token to Cosmos Hub, while Cosmos Hub can simultaneously send tokens like ATOM back to this newly created chain—something already possible in today’s Cosmos.
Polkadot began by building shared security, meaning it is not a permissionless ecosystem where anyone can build a new chain and freely transfer assets between them. Instead, it is a more ordered system: while it allows a relay chain to connect up to 100 other parachains, becoming a parachain requires holding a large amount of DOT tokens and winning an auction. This means that within the Polkadot ecosystem, DOT holders have significant influence—they decide which projects become parachains and which ones bring value to Polkadot.
In contrast, ATOM holders in Cosmos currently have no say in which chains can connect to the network. Thus, the moment a new chain launches, it can immediately connect to Cosmos.
Of course, being a DOT holder is more valuable in Polkadot because you help secure all parachains. But in Cosmos, we believe developers should be free to build whatever they envision and connect it to the Cosmos network, which will drive greater innovation and growth for Cosmos.
How is security managed in the Cosmos ecosystem?
Currently, each Cosmos blockchain has its own security and operates its own validator nodes. On Cosmos Hub, there are 150 validator nodes, typically run by small-to-medium enterprises providing infrastructure for specific blockchains. Each validator runs identical software to ensure the validity of generated blocks.
We are now innovating further, developing technology that will allow shared security similar to Polkadot’s—but not exactly the same. For Cosmos Hub, we are working on interchain security, which will allow Cosmos Hub validators to validate another chain or multiple chains simultaneously.
What is Tendermint, and how does it fit into the Cosmos ecosystem?
Tendermint is essentially the oldest company in the Cosmos ecosystem. Jae Kwon and Ethan Buchman, co-founders of Cosmos, are also co-founders of Tendermint Inc., established in 2014—even before Cosmos existed.
I joined Tendermint at the end of 2015 as the first employee. When I joined, we were focused on the Tendermint consensus protocol for enterprise blockchains. But after deciding to focus on Cosmos, our mission shifted toward building a network—creating as many sovereign blockchains as possible—and enabling people to govern their networks online through blockchain governance, while also allowing asset transfers between these blockchains. Blockchains have the real potential to reshape global collaboration, connectivity, and decision-making.
Cosmos is an idea created by Tendermint’s founders, but at the same time, Cosmos is much bigger than any single company. Due to the permissionless nature of our tools and their open-source licenses, many companies now use Cosmos technology to build and contribute to the ecosystem.
What are some key features of the Cosmos ecosystem?
At a high level, Cosmos is about autonomy, sovereignty, and scalability.
The ability for developers to launch a blockchain in Cosmos and permissionlessly send tokens is truly unique. This means underfunded developers and teams can build freely on Cosmos. I am deeply passionate about preserving this core value because I used to be a web developer, and on the web, you can almost do anything for free. This completely free and permissionless nature of Cosmos will define the direction of Web3.0.
DeFi carries risks both within ecosystems and across chains, as seen when hackers exploit bugs in smart contracts or manipulate oracles. Cosmos has spent five years researching and developing IBC, and our technology is renowned in the industry for its high standards. Many top blockchain projects—including Crypto.com, Terra, and Binance Smart Chain—are built using Cosmos technology. Everything we do undergoes comprehensive audits to ensure additional security.
IBC is designed to be a framework analogous to TCP/IP, the message transmission protocol of the traditional internet. Just as there are many different web development frameworks today, Cosmos SDK may not be the final solution. But as long as other blockchain frameworks adopt the IBC protocol, full interoperability among all IBC-connected blockchains becomes possible.
Significant development and research are underway in other blockchain ecosystems interested in adopting IBC. Imagine, for instance, if Polkadot adopted IBC—what would the future look like? Polkadot uses the Substrate framework; if Substrate adopts IBC, it would mean every Polkadot parachain and even the relay chain could transfer tokens to and from Cosmos without permission. You might even envision a future where Polkadot chains communicate via IBC with Kusama chains.
As more blockchains choose to adopt the IBC protocol, a powerful network effect will emerge. The next network might no longer just need to connect to Cosmos chains, but think: “Oh, if I adopt IBC, I can connect to both Cosmos and Polkadot,” and the next one might think: “Oh, I can connect to Cosmos, Polkadot, and Avalanche.”
Adopting the IBC protocol makes multi-chain integration effortless.
What do you see as some factors driving Cosmos’ growth?
The main reason Cosmos is gaining more recognition is that 2021 marks the rise of “multi-chain interoperability”—the growing idea that valuable blockchain ecosystems need cross-chain bridges to exist. We predicted this future back in 2016: a world with many valuable blockchains capable of sending assets to one another. Today, we’re seeing the rise of DEXs and the decline of centralized exchanges—all thanks to the development of cross-chain bridges.
With so many blockchains already existing, do you foresee industry consolidation?
From a Web3.0 perspective, Cosmos and the Cosmos SDK make it extremely easy for small teams to launch new projects and instantly make them accessible to all other blockchains in the Cosmos ecosystem.
On a technical level, many want to use various protocols across different Cosmos blockchains and integrate them seamlessly. For example, if someone wants automated investing, multiple Cosmos chains could operate on their assets—similar to Ethereum smart contracts—and return the results.
But at the user level, I expect many users will find managing assets across thousands of blockchains burdensome. How do they track their holdings? So we’ll likely see some consolidation, but probably at the UI or wallet layer. Wallets are a great way to hide the blockchain backend and achieve complete abstraction from blockchains.
What are your thoughts on highlights from 2021 and predictions for 2022?
The Cosmos ecosystem has successfully enabled the IBC protocol, which will create an entirely new cross-chain industry. Cross-chain DEXs like Gravity DEX and Osmosis have shown people the value of a multi-chain world and have truly brought a large number of users to Cosmos.
There’s still much to be done in the NFT space. I’m somewhat concerned about NFT predictions. People worry that anonymous addresses can buy, sell, and inflate NFT values beyond what individuals can reasonably afford. This will attract regulatory attention. But at the same time, regulation exists to protect consumers. We’re happy to work with regulators to ensure what we’re building serves all users genuinely—not as scams.
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