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CEX.IO Spotlight: Cosmos

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What is Cosmos?

Cosmos embodies the creators’ vision of a decentralized network ecosystem. Although the networks are part of the same ecosystem, they are independent and interoperable, enabling them to swap information and tokens among themselves without any centralized interference. 

Cosmos seeks to solve the common problems of current blockchains that include scalability, usability, and governance. The network supplies developers with tools to create independent blockchains that could be applied for various use cases, empowering them to interact frictionlessly among themselves within the network.  

The independent blockchains are called “zones”. They are connected to the Cosmos Hub’s leading blockchain, the first blockchain within the ecosystem. The Hub tracks the condition of each zone and keeps a record of them. The zones perform the same function for the hub. The Cosmos Hub uses a Proof of stake (PoS) consensus mechanism. 

According to Cosmos, the interoperability that its predecessors lack will enable Cosmos users to trade tokens native to one blockchain like Solana for tokens on another blockchain like Ethereum.  

A brief history of the Cosmos network  

Jae Kwon and Ethan Buchman were the Cosmos network creators, which started with the Tendermint consensus algorithm in 2014. The Interchain Foundation (ICF), a Swiss non-profit that funds open-source blockchain initiatives, assisted the co-founders in the mission.

In 2017, the Interchain Foundation staged a two-week ATOM token initial coin offering (ICO), raising more than $17 million. Tendermint Inc. collected around $10 million in a Series A investment round in 2019, which helped them resume and speed up the development of the product.

Cosmos’ main features

There are three layers that make up the Cosmos network:

  • Application layer: They handle transactions and maintain the network up to date.
  • Networking layer: Allows zones and the hub to communicate more efficiently.
  • Consensus layer: The Proof-of-Stake principle is used to perform transactions’ authentication.

For the entire web of chains and layers to work together, these three layers must be interconnected to one another. A few open-source tools help this to become a reality, and they are constantly evolving in response to user feedback. Below are the main tools that help the network function unhindered.

Tendermint 

The Tendermint byzantine fault tolerant (BFT) engine allows developers to build blockchains without starting from square one.

Tendermint BFT is a state of the art algorithm used to protect the network, validate transactions, and commit blocks to the blockchain by a network of computers running the Cosmos software. It communicates with applications and interconnects them through the Application Blockchain Interface protocol.

Tendermint Core is the heart of Tendermint, a PoS governance mechanism that enables Cosmos Hub’s distributed network of computers to function concertedly.

The mechanism controls the immense web of transaction validators (or nodes). When some change or an upgrade is introduced to the system, the nodes must consent to a vote. For the changes to occur, validators need to stake the native coin ATOM. The more ATOM staked by a validator, the greater their voting power.  

Inter-Blockchain Communication (IBC) Protocol

Every zone in the ecosystem is connected to the Cosmos Hub through IBC.

The IBC ensures that data is transferred effortlessly, safely and fast among all interconnected zones. When a zone is connected to the central Hub through the IBC, it becomes interoperable with all the remaining zones. It means that all the blockchains within the system that operate immensely different applications, validations and consensus can swap data seamlessly. 

Cosmos Software Development Kit (SDK)

All developers can take advantage of the Cosmos software development kit to build their own blockchains with the help of the Tendermint consensus algorithm. 

The tools in the kit ensure that the main functions of the ecosystem, such as minting, staking, governance, and distribution of ATOM are available for the developers. This enables coders to make necessary changes and additions to their networks. The implementation of Cosmos SDK encourages developer customization.


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