As I have done before with Tezos and the IRISnet, this article aims to provide a high level introduction to another Proof-of-Stake project: the Cosmos Network. This article is dedicated to any stakeholder in Cosmos and highly recommended to developers, fundraiser participants or even future stakeholders who are planning to interact with the ecosystem in one way or another.
What is Cosmos?
Cosmos is a collection of open-source projects, composed of mainly contributions to the distributed ledger technologies space. Higher level frameworks or projects are compiled under Cosmos GitHub, while lower level ones can be found under Tendermint GitHub. Some notable examples of the latter are Go Amino (encoding format), IAVL (Merkleized IAVL), and Tendermint Core (BFT consensus algorithm), whereas a notable instance of the former is the Cosmos SDK, a modular framework for building blockchains.
In addition to the wide repertoire of open-source contributions, the authors of the project will launch an example public blockchain using the Cosmos SDK, known as the Cosmos Hub.
The Cosmos Hub is characterised for not only its own variant of Proof-of-Stake, named Bonded Proof-of-Stake (BPoS), but also for relying on Tendermint Consensus, a variant of a new family of consensus algorithms inspired from decades of research in distributed systems. Until the Cosmos Hub (and others built using the Cosmos SDK, such as the IRISnet), most public networks relied on Nakamoto Consensus.
The well-spread tag line of “Cosmos– the Internet of Blockchains” refers to the the Cosmos Hub’s main purpose of acting as supporting platform to facilitate communication across any other blockchain, regardless of their nature, as long as they adopt the Inter-Blockchain Communication (IBC) protocol (specs).
Finally, the Cosmos Hub supports its own form of governance: anyone is able to submit proposals in plain text, validators’ voting power is proportional to their economic stake, and delegators have the option to overwrite their validator’s vote without changing the delegation. As voted proposals are non-binding, it serves as an on-chain signaling mechanism.
Must-Know Particularities of Tendermint Consensus and Bonded Proof-of-Stake (BPoS)
In Tendermint Consensus, trustless peers reach consensus over the latest block once 2/3 of the entire validating set have provided the attestation or signature. Unlike chains that rely on Nakamoto Consensus, Tendermint prioritises safety over liveness, meaning that the network will halt unless the above threshold of signatures has been reached.
In addition to the application of a novel consensus algorithm, the Cosmos Hub will rely on BPoS, as the mechanism to determine what requirements peers need to satisfy to participate in consensus. Although the exact parameters in BPoS used for mainnet are yet to be specified, it will include the following features that broadly differ from other PoS variants, such as Tezos’ LPoS (source):
- Self-bond and delegations will be at stake: should a validator commit a safety fault (double-vote), a
5%of the entire stake will be lost, the loss being proportional for both the validator and delegators.
- Tombstone: in addition to the above, the validator will no longer be part of the consensus set (the keys are no longer usable).
- Locking Period: as soon as ATOMs are bonded or delegated, they will remain locked until an unbonding transaction is sent. From that moment, the tokens will unlock after 3 weeks. Note that until then, the ATOMs will not be accessible.
- Liveness Slashing: should a validator fail to provide a signature in the lsat 10,000 blocks (~11 hours when block times are 5 seconds), a
0.01%of the entire stake will be lost.
- Jailing: after failing to provide signatures for 10,000 consecutive blocks, the validator will drop out of the consensus set for 10 minutes, thus not earning the corresponding portion of inflation.
- Adaptative Inflation: instead of having a constant expected annual inflation, the rate changes based on how much is globally at stake (self-bonded or delegated). E.g. should 100% of the ATOM supply be at stake, the annual inflation will be
7%, should 0% of the ATOM supply be at stake, the annual inflation will be
20%(exact values are subject to change).
- Rank Top 100 by economic stake: unlike LPoS, in BPoS validators must rank top 100 by stake (self-bond + delegations) in order to be part of the consensus set. The ranking is calculated at the end of every block.
Fundraiser, Game of Stakes, and Testnets
In 2017, the Interchain Foundation carried a capped fundraiser event that ended on April 6th, which lasted less than 30 minutes. The fundriaser allocated a total of 168,475,963 ATOMs among 1,090 participants at a valuation of $16.8 million (source).
From December 2018 until February 2019, a series of incentivised testnets, known as Game of Stakes had been launched. Participating validators were encouraged to compete against each other, with the promise that top ranking participants will receive some ATOMs as rewards, except for participants that are or used to be employees or core developers from All in Bits Inc., company in charge of developing the network.
In addition to Game of Stakes, there had been many testnet releases,
gaia-13k being the latest one. The mainnet launch is planned for Week 11 (subject to change) without transfers enabled (source). Consequently, at launch only fundraiser participants, Game of Stake winners, or All in Bits employees will have access to ATOMs.
Major Stakeholders on Cosmos
The Interchain Foundation (ICF)
The Interchain Foundation (Stiftung Interchain) is a nonprofit entity based in Baar and governed by the laws of Switzerland. The Foundation has the mandate to promote and develop technologies and applications, in particular, open and decentralised software architectures, which focuses (but is not limited to) on the Cosmos Network and its ecosystem. The original text (in German) states as follows:
Förderung und Entwicklung von neuen Technologien und Applikationen, insbesondere in den Bereichen von neuen offenen und dezentralisierten Softwarearchitekturen; im Vordergrund — aber nicht ausschliesslich — steht dabei die Förderung und Entwicklung des Cosmos Netzwerks, des Polkadot Protokolls und der entsprechenden Technologien, sowie Beschaffung der erforderlichen Mittel durch die Zuwendungen Dritter; vollständige Zweckumschreibung gemäss Stiftungsurkunde — Stiftung Interchain’s Purpose, retrieved from the Commercial Register of Canton Zug
All in Bits Inc.
All in Bits (AiB), commonly known as the Tendermint team, is a software development company contracted by the Interchain Foundation to develop the Cosmos Hub. AiB was co-founded by Jae Kwon, the author of Tendermint: Consensus without Mining, and Ethan Buchman.
Following the stages of the Cosmos Hub launch, transfers will not be enabled. Thus, the initial set of ATOM holders is limited to the participants in the fundraiser, winners of Game of Stakes, or AiB current and past employees. ATOM holders are able become validators or delegate.
They are entities who own ATOMs and choose to not operate their own validator. Instead, they indirectly participate in consensus by delegating to one or many validators. In return, they will receive rewards in proportion of the delegations’ contribution to the validators total stake — minus service fees. Notable differences in Cosmos delegations are: delegations are at stake and reward payments are enforced by the protocol. In governance, delegators have the option to overwrite their validator’s vote without moving their delegation.
They are entities who choose to operate a validating node and participate in consensus. In order to do so, they need to rank top 100 by bonded stake. Validators can increase their stake by bonding more ATOMs or by attracting delegations. There are mainly two types of validators: private ones, whose purpose is to simply generate rewards from their own tokens; and public ones, who wish to offer services to stakeholders that do not want to operate a consensus node. In exchange, they will charge a % in service fees.
Similar to other protocols, such as Tezos, there is no explicit way for validators to deny delegations, in exception of increasing the service fees to discourage them. Following the existing governance feature on the Cosmos Hub, validators’ voting power is proportional to their stake.
The Cosmos Ecosystem
(To be expanded)
For ATOM holders to interact with the Cosmos Hub, there exists many interfaces. Users that are familiar with the command-line can opt to use
gaiacli, developed by AiB. Additionally, there is Ledger support.
Voyager is the official software wallet developed by All in Bits, with currently developer versions available. Should you plan to interact with the Cosmos Hub at launch, the most trustless set of tools to use is: storing the funds in the Ledger, download and install the Cosmos SDK’s
gaiacli, run your own full node and interact with it using the latter command-line tools.
- Further Reading — How to Install Cosmos and Run Your Full Node (Public Testnet): https://medium.com/cryptium-cosmos/how-to-upgrade-your-cosmos-full-node-to-the-latest-public-testnet-be2d38d476ba.
- Further Reading — How to Upgrade Your Cosmos Full Node to the Latest Public Testnet: https://medium.com/cryptium-cosmos/how-to-upgrade-your-cosmos-full-node-to-the-latest-public-testnet-be2d38d476ba.
- Further Reading — How to Store ATOMs on Your Ledger and Delegate with Gaiacli on the Command-Line: (Link TBA)
There will be web, desktop and mobile-based wallets, just be mindful of the risks involved in using third party applications that are under development.
Blockchains Built Using the Cosmos SDK
Find here a list of projects currently building their own blockchain using the Cosmos SDK.