The Future of IBC
As a value-bridging protocol, IBC has been a massive boon to the Cosmos ecosystem. So valuable that development is widely occurring from blockchains such as Ethereum, Avalanche, Polkadot, NEAR Protocol, and Penumbra to integrate with the trust-minimized bridging protocol.
The Cosmos ecosystem has rapidly been growing over the past two years. The early years of the IBC ecosystem have seen blockchains with the Cosmos-SDK connecting to the trust-minimized bridging protocol.
This has included blockchains of all flavors, including those with no virtual machine (such as Cosmos Hub), those with CosmWasm (such as Juno and Terra), and those with Ethermint (such as Evmos).
This is expected to continue to proliferate with more innovations in the IBC ecosystem in the coming years, and we’re excited! As the IBC ecosystem grows, Nolus will have greater access to DEX liquidity and could enable even more efficient lending, which will, in turn, provide a higher yield for Nolus’ depositors.
Expansion to the Evm Ecosystems
An expansion into the crypto ecosystem’s largest DeFi economy is no small spectacle! Polymer Labs and Electron Labs have been working on bringing IBC to Ethereum and other EVM ecosystems.
Enabling IBC on Ethereum has been a question that has been queried many times after the first IBC connections in the Cosmos ecosystem. This would require running the Tendermint light client on Ethereum as a solidity smart contract which is an extremely gas-expensive operation.
By augmenting IBC with the use of zero-knowledge proofs (ZKPs), both projects aim to reduce the on-chain costs of header verification without introducing additional trust assumptions.
This is then expected to further expand into other Layer-1 blockchains leveraging the EVM. It is also possible that IBC may become the default blockchain communication protocol between Layer-2 blockchains as the technology will be easily transferable at that point.
Furthermore, Avalanche will see the launch of a CosmWasm-specific subnet that will be IBC-Compatible. This will form the basis of the harmonization of both ecosystems, with assets flowing throughout the ecosystem through both Inter-Blockchain Communication and Avalanche Warp Messaging.
Expansion to Other Ecosystems
Many other initiatives are ongoing to expand the reach of the IBC ecosystem to blockchains that are active today and unique blockchains that are still in development. This includes:
- NEAR Protocol
- Polkadot
- Penumbra
Penumbra will be part of a new generation of blockchains that do not use Cosmos-SDK yet retain IBC-Compatibility. These custom blockchains building to retain IBC-Compatibility shows the strength of the protocol and further solidifies IBC as the premium trust-minimized bridging protocol.
Moving Beyond Fungible Token Transfers
Up until now, IBC has largely offered a route to conduct trust-minimized bridging of fungible tokens. However, interconnectivity expands far beyond this, and ongoing initiatives to extend IBC to non-fungible tokens are a big step in creating a comprehensive value-bridging protocol.
Furthermore, other developments, such as the greater adoption of Interchain Accounts (such as that between Nolus Protocol and Osmosis), provide better clarity to the ecosystem on the potential of IBC more broadly than just value transfer. Interchain Queries will further build upon that and grow IBC into a fully-fledged value and data-bridging protocol.
The possibilities of a mature value and data-bridging protocol are endless. With the research done by many of the talented teams within the Cosmos ecosystem, such as Delphi’s slAMM, which proposes to share liquidity across various chains, the liquidity fragmentation initially created by IBC will re-unify and provide users with the best experience and the cheapest prices.
For Nolus Protocol, we can see a Cosmos where Nolus will extend ICA to various other ecosystem chains and then be able to leverage ICQ to scour different DEXs to find the cheapest swap (which will be the most efficient for lenders).
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