Many blockchains want to solve the issues around scaling and interoperability. Blockchain devs continue to find that having everything run on one blockchain causes gas fees and transaction times to skyrocket. Both of these hurt users, meaning new avenues need to be taken.
The Cosmos network hopes to solve these issues by acting as a network of associated blockchains, each of which can handle transactions or house smart contracts for dApps.
The Cosmos network is an interconnected system of blockchains and applications. Rather than creating a single server for these projects to be hosted on, Cosmos instead acts as a central hub for different projects to communicate with one another.
The design of Cosmos allows blockchains to communicate from within the ecosystem without using a bridge or pegged tokens. Instead, blockchains across different zones can transact with others by routing through the central hub of Cosmos and its three major layers of transaction processing and sorting. This hub, called Cosmos Hub, was the first blockchain created on the network.
Cosmos was also the first blockchain to release open-source tools for creating and maintaining a blockchain project. This toolset, called Tendermint, allows devs to create a blockchain or generate one using an algorithm included with the dev kit.
Finally, Cosmos operates on a proof-of-stake (PoS) consensus mechanism for its transactions, allowing the network to utilize fewer hardware resources and less electricity to handle its transactions compared to proof-of-work (PoW) blockchains. As a result, transactions are also faster for users under this mechanism.
Two of the big developers of the Cosmos network, Jae Kwon and Ethan Buchman, co-founded the Cosmos network back in 2014, which started with the creation of the Tendermint development tools. In 2019, the two developers released a white paper about the project and released the software for use.
These two got their start thanks to the Interchain Foundation (ICF), a Swiss non-profit dedicated to helping open-source blockchain projects get their start. The project had a few initial coin offerings (ICOs) between 2017 and 2019 before launching shortly after the release of the white paper.
Cosmos isn’t a standard blockchain project. Instead, the Cosmos ecosystem is an assembly of blockchains brought together under a central hub. This structure allows blockchain devs to work in an interoperable and scalable ecosystem without creating a blockchain from scratch.
Overall, Cosmos has three main layers to its system:
Application: This layer handles transaction processing and sends updates about the state of the network out to the rest of the layersNetworking: As the communication layer, this component retrieves and sends data from the other layers to each otherConsensus: This layer works with the validator nodes to create agreement on the current state of the overall ecosystem.
To bring all the separate layers and blockchains together, Cosmos provides a collection of open-source tools to devs.
The biggest of these tools is Tendermint, the tool that allows devs to build blockchains without creating them from the ground up. Tendermint uses the Tendermint Byzantine Fault Tolerance (Tendermint BFT) algorithm for this generative process.
The native coin for Cosmos exists mostly as a governance token. Users can hold their ATOM crypto in staking protocols contributing to the blockchain network’s proof-of-stake mechanism through validator nodes.
To implement and fuel transactions, users on the Cosmos network have to use a different token called Photon.
Cosmos is a potential solution to the blockchain trilemma. Many major blockchain projects find that they cannot achieve all three ideals of a decentralized blockchain project: scalability, security, and decentralization. Because of this difficulty, Cosmos believes the best way to achieve these features is through a decentralized network of blockchains rather than a single one.
Scalability in Cosmos comes through the ability of blockchain devs to create new chains in the Cosmos network. New chains on the network can communicate with any other blockchain in the network, allowing users to operate across chains without the need for blockchain bridges.
Security comes in through the multiple layers handling transactions and validation data, as well as the separation between each blockchain. Problematic chains can be disconnected from the central hub by validators if enough votes come through governance.
Finally, decentralization is easier with smaller projects. By encouraging smaller blockchains on the Cosmos networks, the validator nodes for the network can handle the large number of transactions across the network. Plus, the proof-of-stake mechanism allows users to participate in governance without buying expensive electronics.
The Cosmos network is much different than what you see in other crypto projects. Most projects work on a singular blockchain that acts as the foundation of the dApps and transactions for the entire ecosystem. Cosmos, on the other hand, focuses on network infrastructure and open-source dev tools.
Even blockchains working with or utilizing Layer-2 blockchains look differently than Cosmos. While Layer-2 solutions act as an off-loading of transaction traffic from the Layer-1 chain, the Cosmos network instead acts as a centralized hub for validating communications between blockchains and the network.