Cosmos Interview
The following is a discussion between Cosmos Core Dev Jack Zamplin and myself. The questions are a combination of my own and ones taken from my followers.
Dog: Really appreciate you taking the time for this interview. I think the best way to kick this off would be if you could pretend I know nothing about Cosmos for a moment. What is Cosmos and what makes it unique amongst so many projects?
Jack Zamplin: Cosmos, and its community centered around ATOM, are unique in crypto for putting tribalism aside and are trying to build an ecosystem where all chains can all live and work together. When projects choose to build on top of the Cosmos SDK they get the advantage of full sovereignty over their own network. The build your own blockchain kit comes with basic governance mechanisms, interoperability enabled through IBC, and is highly scalable due to CosmosSDK leveraging Tendermint, the most battle tested and performant BFT consensus engine.
Dog: For any devs reading this, what advantages would they have building on Cosmos versus other chains?
Jack Zamplin: The sovereignty, scalability, and interoperability are unmatched within the crypto space. This is why the likes of Binance (Dex), Crypto.com, Okex, Terra, Rune, etc. have all chosen to use the CosmosSDK or a slight modification to build their own blockchains. See a full list here: https://cosmos.network/ecosystem/tokens/
Dog: Tell me about the recent “Stargate” upgrade. What’s it done for the Cosmos ecosystem?
Jack Zamplin: There were a number of major improvements all bundled together for the Startgate upgrade. The goal was to put all Cosmos chains on a great foundation for the next phase of the growth of the ecosystem. The major changes include the addition of the IBC module, switching to Protobuf for data serialization, and state sync for node operators. IBC is the inter blockchain communication protocol for Cosmos. This allows coins and data to move between blockchains in a trust-minimized way. This protocol is the key development that allows Cosmos to call itself the internet of blockchains. The protobuf migration is pretty technical, but the short and sweet summary is a more efficient method of categorizing and organizing chain data. This greatly increases the performance and throughput of CosmosSDK chains as well as making it much easier to build UI for Cosmos based chains. The last major upgrade is state synch. This allows blockchains to start up a new node in much less time. This was a huge upgrade for validators.
Dog: So, Inter-Blockchain Communication, or “IBC,” was a highly-anticipated protocol included in Stargate. Could you quickly explain IBC?
Jack Zamplin: Sure, the idea of IBC is most closely related to TCP/IP. This is the idea of a common communication standard for communicating data between nodes on the internet. In IBC’s case, it’s a common standard for communication of data between blockchains. When I send coins from one cosmos chain to another, the receiving chain needs to know what type of coin is arriving, the coins on the original chain need to be locked to ensure the proper atomic swap / transfer of assets between chains, & the corresponding coin is minted on the receiving blockchain. This protocol allows data and assets to flow easily between chains, birthing the internet of blockchains.
Dog: Why should regular traders like me care about IBC?
In the finance sector, IBC will allow for the democratization of liquidity and financial products more generally. No longer does a quality project need to beg centralized exchanges for a listing and pay an arm and a leg for said privilege. With IBC, anyone can send their coin to any one of a number of cosmos DEXs and get liquidity from day one. Additionally, the scalability that IBC enables will allow people of all backgrounds to get access to financial products, unlike Ethereum or BTC where access to the chain is too expensive for most people on Earth.
In the computer science sector, there are some interesting roles IBC plays but many of these applications are theoretical at this point. As a potential use case, IBC can allow people to have skin in the game with the data they are providing, so it can be a form of trusted data/compute, up to the level the provider has at stake. So, there can be varying levels to how secure data can be, revolving around how much skin in the game the provider has for misbehavior.
Dog: Are there any IBC-supported DEXs live or on the way?
Jack Zamplin: At the moment there are no IBC enabled DEX’s. The Gravity DEX (built on top of ATOM) will be launching mid to late June and will allow any Cosmos projects with IBC enabled to create a liquidity pool in the pair of their choosing. Once gravity bridge goes live in Q3, ETH, ERC20, & shortly after BTC will be eligible pairs on the hub as well. This will allow new projects building in cosmos to have liquidity from day one in many pairs. Additional DEX’s coming soon to the cosmos include Osmosis, which is a sandbox for creating custom & potentially exotic pools for maximizing potential yield and chaos (in a good way). Additionally, Thorchain (RUNE) is looking at enabling IBC sometime in Q2, Crypto.com just enabled IBC, and many more I haven’t listed. A mostly complete list of project connecting to IBC soon can be found at the bottom of https://www.wenmainnet.com/
Dog: Web3 has only been a hotter and hotter talking point recently. How important would you say interoperability and IBC are to Web3’s future success?
Jack Zamplin: The way that the crypto space is evolving is making it more clear by the day we live in the multi-chain future. At which time you need to ask yourself: Should these chains be able to talk to/interoperate with each other? The obvious answer here is a resounding YES. This is where IBC shines. IBC is a common language that blockchains can use for communicating arbitrary data. This includes projects built outside of cosmos. For example, IBC or something very similar is how ETH2.0 shards will communicate with one another. So, when a project decides to build on the Cosmos SDK they don’t need to worry about designing their own IBC alternative, it comes prepackaged and ready to go for any project building on the CosmosSDK. To extend the point we see all the major ETH protocols moving to so called L2 chains, the need for interoperability between those systems is pressing.
Dog: I know the Gravity DEX is currently in the works, but where did this idea come from? What problems does it solve?
Jack Zamplin: Jae Kwon, one of the founders of Tendermint, originally started working on something to replace centralized exchanges because he had lost money in the MTGOX hack, so decentralized exchanges are deep in the DNA of the Cosmos ecosystem. There have been many designs and prototypes over the years but for the last year most of the team has been working to ship IBC and the DEX work took a back seat. There was however one very talented team (BHarvest) working on this problem and the code they wrote is becoming the Gravity DEX. There is currently a competition ongoing that has 25k participants on top of the gravity DEX to test. We expect to see this live on the Hub sometime in early June. The gravity DEX has a batch mechanism as well as some other front running protections that are a huge improvement over the state of the art.
Dog: I’m sure I’m not the only one that wants to know, how will the Gravity DEX compare to something like Uniswap, or even popular CEXs?
Jack Zamplin: One differentiator on day one for the Gravity DEX will be low fees. The price per swap/entering a liquidity pool will range from 1c to 10c, AKA nothing compared to Uniswap. Additionally, Gravity implements batch execution which decreases the ability of major players to extract value from front running and other forms of MEV. Also, there are some improvements around price discovery in the protocol that we are excited to see in the wild.
Dog: Some of my followers wanted me to ask, do you guys see value in the Akash network hosting your nodes/infrastructure?
Jack Zamplin: Akash, as truly a first of its kind, provides incredible resilience/fault tolerance to the cloud infrastructure. Many cosmos validators run on bare metal, but sophisticated cloud set-ups can do the job as good or better. Leaving your validators fate in the hands of Jeff Bezos can have its own downfalls as well, which is where Akash steps in providing a worldwide marketplace for cloud computing. This is a game changer and can greatly increase the anti fragility of validator node infrastructure that choose to run on the cloud with the added benefit of being much cheaper than its competitors. Last but not least, it’s relatively easy to set up due to leveraging kubernetes, which is the cloud industry standard and is a real differentiator between Akash and other crypto projects attempting to create a similar product but require learning new tooling/languages.
Dog: A few people wanted to know Cosmos’ position on concerns about base chain value accrual compared to coins like DOT, and to a certain extent KSM. Anything you can say about that?
Jack Zamplin: Cosmos has always had the goal of building a valuable network that people want to build on, and figure out how to capture value once you have Devs and Users. This same model can be seen all through Silicon Valley and created some of the greatest network effects in human history (Google & Facebook just to name a few). Now that IBC is shipped and the Cosmos SDK has garnered the attention of developers and entrepreneurs the world round, its time to start enabling ATOM’s value capture methods. Step one is turning the gravity DEX on. This will be the marketplace of the cosmos hub, the first major port city in the cosmos. Additionally, Q3 or Q4 of this year interchain staking will be shipped. This is the cosmos version of Polkadots shared security. In the cosmos model, a chain will rent security from the hub much like DOT’s model, but the major difference is the modularity of cosmos shared security. It will allow projects to rent only as much security as they need. AKA crypto kitties chain may only want to rent $50 million of security where an options and derivatives platform may need to rent 5 Billion due to the high value TX’s that will be handled on that chain. Staking derivates, interchain accounts, & chain naming services (crypto DNS equivalent) are all in the works. At which point you might ask…. How won’t ATOM moon when all this is built out (LOL)?
Dog: Obviously, validators are crucial to any blockchain. What role do you see validators playing in the expanding financial sector in the future?
Jack Zamplin: Validators are the core of the Cosmos and proof-of-stake ecosystem. They have become investors, network operators, invaluable sources of feedback, and help for networks bootstrapping. I see many financial institutions (venture capital firms first among them) becoming validators and building on top of that infrastructure to offer unique products to their users. See exchange staking for the first of these.
Dog: I just want to quickly say I really appreciate how detailed your answers have been. You guys obviously know your mission and are in it for the long-haul. I guess we can end on this, what else do you guys have coming down the pipeline?
Jack Zamplin: The Gravity bridge to Ethereum will ship later this year and offer IBC like connections to chains like ETH, BSC, Matic, Optimism, etc. that are all secured via atoms. Additionally, an Atom secured BTC bridge is in the works with a estimated ship date sometime around Q3/Q4 of 2021. Cosmos is in the process of finalizing the cross chain staking framework which will allow atoms on the Cosmos hub to provide security to other chains for a fee, similar to Polkadot’s para chain slots security model. The added benefit of Cosmos cross chain staking approach allows for chains to rent only as much security as they find necessary for the application they are building. AKA I’m building a new crypto kitties, I may only need to rent $5M of security vs the multiple billions a large scale financial application would need to rent. Last but definitely not least (check out: https://blog.cosmos.network/the-cosmos-hub-is-a-port-city-5b7f2d28debf to get an idea of the potential scope of ATOM/Cosmos, the bottom of the page has a break down) there is staking derivatives. Which sounds scary, but simply put allows the ownership of staked atoms to be able to change hands. While currently it takes 21 days for staked atoms to become liquid, this creates a market for people that usually want to keep their coins staked but have a life emergency or smell a large dip on the horizon to get liquidity without waiting 21 days. On the other side of the trade is someone who has a stack of liquid atoms laying around so whenever people get desperate you can get a nice “free” yield by switching your liquid atoms for staked. Additionally it can allow the ATOM yield curve/ bond market to start forming. A cornerstone of modern financial system. Thanks for taking the time to read all of this and make sure to check out cosmos.network &&the new DEX/AMM built on ATOM at gravitydex.io.
