Cosmos Review

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When analyzing a project, the Eden Labs team looks for projects that do something unique or do it much better than its competition. Quality projects should be able to explain complex ideas simplified to their audience. In addition, projects that rely heavily on a broad user base have to have an incentive for the first ten people to join the network before a million users is ever achievable. No project will succeed if it requires a million participants to bring any value to its users.

 

Summary

The Cosmos project is building a Tendermint-based, PoS blockchain that will facilitate blockchain interoperability and support any token asset. These goals are achieved through a network of “Zones” and “Hubs.” The primary Cosmos blockchain will be the first hub on the network, but over time, additional hubs will join.

 

Industry Need

Within the digital asset industry, many projects are vying to establish themselves as the leaders of their respective industries. However, with so many different projects, it is challenging for individual blockchain entities to communicate with one another. Today, Ethereum is unable to directly communicate with Bitcoin and vice-versa. This creates a tendency for current blockchains to exist as isolated silos and rarely share any information with one another.

If inter-blockchain communication was supported, it would reveal a world of possibilities for the industry. Some possibilities include cross-chain smart contracts and token exchange without the use of a third-party exchange. Additionally, it’s difficult to imagine a world where the various platforms supporting our digital economy are unable to communicate with one another.

 

Solution

Cosmos aims to become the “internet of blockchains.” Just as the TCP/IP protocol suite enabled internet interoperability, Cosmos attempts to establish a blockchain standard for communication between chains. The architecture behind Cosmos consists of several autonomous blockchains called “Zones” attached to a central blockchain known as a “Hub.” Zones are built using the Tendermint protocol and the Cosmos standard and can be written in any coding language. Launching a Zone is akin to launching an ER20 token on Ethereum. Zones can also function as the link between Cosmos and other blockchains such as Ethereum or NEO. The versatility of Zones allows them to interact with other blockchains as well as with the central Cosmos Hub. Zones are one of Cosmos’ strengths and are the main contributor to its interoperability abilities.

 

Tech Analysis

The Cosmos project has several essential technical features which allow it to achieve its interoperability goals. These elements are:

  • Scalability
  • Byzantine fault tolerance PoS
  • Cross-blockchain Bridges
  • Decentralized Exchange

Scalability is an essential feature of any project aiming to support future application development. Cosmos is planning on increasing its scalability by utilizing various other interoperable networks connected through Zones. These Zones function in parallel in order to increase transaction throughput. Each Zone maintains their own ledger, consensus protocol, and core language. The Cosmos central hub is a blockchain which helps keeps the state of each Zone, and each Zone keeps the state of the Hub; this method supports inter-chain communication. This method is somewhat similar to sharding, although, with Cosmos, each shard is another blockchain that can fail without compromising the network as a whole.

Byzantine Fault-Tolerant PoS is the Cosmos project’s variation of Proof-of-Stake based on pBFT. As the name suggests, this method is a mix of Proof-of-Stake elements combined with Byzantine Fault Tolerance consensus. The method relies on a collection of semi-trusted nodes to vote on blocks; as long as more than ⅔ of the voting nodes are honest, the protocol will operate without concern. Consensus nodes need to stake a share of ATOM tokens as collateral. Any node found to be acting with malicious intent will be removed from the system and their staked ATOMS will be burned.

In Cosmos, Zones acts as inter-blockchain Bridges which function as a communication gateway between incompatible blockchains, ultimately validating transactions between them. Validators operating on cross-blockchain Bridges (Zone blockchains) sync with the main Cosmos Hub. However, they also run a full-node on the opposing blockchain on the other side of the bridge to confirm the appropriate amount has been committed. The “original” tokens get locked in a multi-signature script until the bridge validator unlocks them and correspondingly destroys the tokens on the cross-bridge blockchain. This allows for digital assets to be transferred to different chains.

Regarding Cosmos’ ability to function as a decentralized exchange: the main Cosmos hub blockchain can function as a decentralized exchange by validating atomic-swaps between Zones. This is an essential function expected of interoperability centric projects.

Verdict

The Cosmos project is built on Tendermint and incorporates the technical elements needed to achieve cross-chain interoperability. By reformulating pBFT for the project’s needs and combining them with aspects of PoS, Cosmos will be able to provide cross-chain services to the industry and even enable a decentralized exchange. Each of the technical elements discussed above will ultimately contribute to the functionality of the Cosmos platform in a secure and efficient manner.

 

Roadmap

Future

  • Piggy Bank Fee Distribution
    • Validators will be able to set commission rates for their services rendered. Delegators will earn token provisions with every block.
  • Game of Steaks
    • “Game of Steaks” is a validator liveness contest.
  • Recommended Genesis Allocation
    • A recommendation will be published for how to compile the genesis file for the Cosmos Hub.
  • Starfish: Bonding Tool
    • Will be released to allow prospective validators to announce their candidacy. The tool will generate bonding transactions that can be added to the Cosmos Hub genesis file.
  • Genesis Bonding Transactions
    • Validator bonding transactions generated by the validator community will be collected.
  • Genesis Tool Released
    • A tool will be released for compiling the Cosmos Hub genesis file from the results of the Cosmos fundraiser and additional data provided by users.
  • SDK Feature Freeze
    • The SDK codebase is frozen in preparation for comprehensive code audits by security firms.
  • SDK Audit Results
    • The Tendermint team works with the SDK code auditors to analyze and fix all potential vulnerabilities. The audit results are released to the community.
  • Mainnet Network Launch

 

Verdict

The Cosmos Roadmap is simple but does not include any release dates for any of the features currently under development. This means that we do not yet know when the Mainnet Launch will occur. The previously accomplished milestones include dates; from that information, we can glean that Cosmos averages approximately two milestones per month. If the project keeps up this pace, the Mainnet should launch within six months – however, this is purely speculation-based.

 

Token Economics

Token: ATOM

Circulating Supply: N/A

Total Supply: N/A

Marketcap: TBD

Hardcap: TBD

Distribution:

  • 10% – Interchain Foundation, ICF
  • 10% – All in Bits, Inc., AIB
  • 5% – Initial Donors
  • 75% – Pre-Fundraiser Donors + Fundraiser Donors

Inflationary or Deflationary Factors: ATOMs has an inflation rate of 7% per year and distributed back to the validators and delegators for their work securing the ledger. This value will adjust over time to incentivize at least 2/3 of the ATOMs to become bonded (definition below).

Intrinsic Token Value: ATOMs are used to pay for transaction fees on the main Cosmos hub and are also required to participate in the consensus process. Validators stake ATOMs to earn both block rewards and transaction fees. To be a validator, one must bond their ATOMs (locking them up) with enough ATOMs in order to be among one of the top 100 of the highest staked balances in the network.

 

Verdict

Since Cosmos is not yet live, no marketcap can be found. However, the distribution plan for the ATOM tokens is reasonable. 75% of the tokens are allocated towards participants of the fundraiser; the team is compensated through the allocation toward the Interchain Foundation. ATOM’s intrinsic value is also justified. It is used for paying transaction fees on the blockchain and is used as the staking method for validators.

 

Team & Leadership

  • Jae Kwon – Founder & CEO
    • Co-Founder of Tendermint
    • Blockchain software architect
    • President of the Interchain Foundation
    • Graduated from Cornell University with a B.S. in CS
    • Experience as a professional developer in Silicon Valley, at Alexa and Yelp
    • Founded ‘i done this,’ productivity app
  • Ethan Buchman – CTO & Co-Founder
    • Co-Founder of Tendermint
    • Master student at University of Guelph
    • Chief at ConCulture CryptoConsulting
  • Peng Zhong – Chief Design Officer
    • Creator of PRISM Break
    • 7+ years as a front-end developer
  • Adrian Brink – Core Dev & Head of Partnerships
    • Experience as a software engineer
    • Previous Co-Founder and CTO of AvoGenie
  • + 28 other team members, mostly software engineers

 

Verdict

All of the Cosmos team members are also part of the development of the Tendermint protocol on which Cosmos is being built. That being said, the team building Cosmos all have relevant experience with blockchain technology and computer science in general. Jae Kwon, the founder and CEO, is also the Co-Founder of Tendermint; this fact already provides a significant advantage over any other project building on Tendermint. Overall the team is extensive, experienced, and full of knowledgeable software engineers.

 

Partners

 

Verdict

Cosmos has gathered the interest of many partners, especially among cryptocurrency projects. The list of partners is extensive and includes some well-known project names such as OmiseGO and 0x. These projects are interested in Cosmos’ interchain capabilities and therefore have partnered with Cosmos to benefit from the project’s technology once it is complete.

 

Marketing & Social

Twitter: 13,400 Followers

Reddit: 2,543 Readers

Youtube: 440 Subscribers, 13 Videos

Medium: 3,900 Followers, Lots of content

Telegram: 5,603 Members

LinkedIn: 849 Followers

Github: 16 Repositories, 20 Contributors, 574 Stars, 102 Forks

 

Verdict

The Cosmos project is active across its social media platforms. Although slightly lacking in followers on specific sites, the project actively posts content across their channels and communicates with their community through Telegram and Reddit. Cosmos is not lacking a presence on any primary platform and should continue to accrue followers as the project develops.    

 

Red Flags

  1. Incentives may lead to an oligarchy
    1. Since Cosmos requires users to stake ATOM tokens to become validators (which earn block rewards and TX fees), only the top 100 stakers will become validators. This creates an incentive for people to accrue tokens to get into the list of top 100 bonders. Such a race could potentially lead to the centralization of ATOM tokens where the top 100 stakers could hold a large percentage of the tokens.
  2. Blockchain interoperability extremely heated and competitive space. Will take a lot of effort to prove leadership position.
    1. Other interoperability projects such as Polkadot, AION, and Penta along with many others are working on interoperability systems for the future of digital assets.
  3. Systems based on the hub-and-spoke (Hub-and-Zone in this case) model are not the only path to interoperability and could come to be obsolete against other, more global and coordinated, methods.
  4. It will be difficult to convince existing blockchains to integrate Cosmos as the interoperability standard into their architecture. This will only happen when the Cosmos standard is ubiquitous across the industry.

 

Conclusion

In summary, Cosmos is a strong interoperability project with sound tech and an experienced team. Many cryptocurrency projects have expressed interest in collaborating with Cosmos and its interoperability functions. Although Cosmos is not the only project tackling blockchain’s interoperability issue, it is undoubtedly one of the most popular ones at the moment. However, much depends on Cosmos’ delivery of their final product. Therefore, a heavy emphasis must be placed on the launch of their Mainnet in approximately six months; this assumes the team maintains their current pace of development.

 


 

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Disclaimer: This is not investment advice, merely our opinion and analysis on the project. Do your own research.

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