What you need to know about Ethereum and Cosmos
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Back in 2009, the elusive founder of Bitcoin, Satoshi Nakomoto created the first blockchain technology to gain adoption. Since then, there has been a boom of several alternative cryptocurrency projects inspired by this initial cutting-edge tool. The crypto projects that followed Bitcoin are popularly known as altcoins. Although developers modeled new blockchains using the Bitcoin template, there are now feature improvements and new possibilities for blockchain technology.
Developers built on the basic functionality of the first blockchain to create platforms with more utility. A blockchain is a record for storing crypto transaction history on a distributed ledger. This means copies of transaction data are shared among users on the network.
Developers with new ideas introduced a myriad of novel applications of blockchain technology, such as smart contracts, internet-of-things blockchains, decentralization finance (deFi), etc. This led to the development of a full-fledged crypto market, with an active community.
This article will be focusing on two successful blockchain projects that have racked up mass adoption due to their diverse functionality and use case; Ethereum and Cosmos. They both provide unique solutions to the crypto community.
This article will satisfy all your curiosities concerning both projects: What are they? What principle are they built on? What is their unique use case? How did they become so popular in the crypto space?
Let’s have a deep dive at Ethereum and Cosmos individually.
What is Ethereum?
Ethereum was co-founded by Vitalik Buterin, a young Russian-Canadian computer programmer. Ethereum’s blockchain hosts the second-biggest cryptocurrency in the world, only behind Bitcoin in terms of market cap.
Ethereum runs an open, permissionless blockchain, which means the records of transaction activity, called states, are stored on computers connected to its network. Each computer, making a node, is interconnected via a peer-to-peer network. Unlike the traditional model of banks, where users can only make requests to withdraw or send assets over a bank’s network, in this case, users are completely responsible for both the request and execution of transactions.
Ethereum and Cosmos use the same consensus protocol — proof of stake (PoS). Consensus protocols determine how transactions are validated on a blockchain. In the case of PoS, nodes on a network contributing the most staking power (which is needed for adding new blocks to the chain) are prioritized in the validation process.
This network allows users to seamlessly transfer ETH to each other, stake tokens to earn interest, and mint Non-fungible Tokens (NFTs). NFTs are unique digital assets that provide proof of ownership and are stored on a blockchain.
Unique Solutions of Ethereum
The developers of Ethereum have expanded the horizon of blockchain to introduce clever solutions like, Decentralized Finance (DeFi) services, and Decentralized Autonomous Organizations (DAO). Decentralized applications are like regular mobile/desktop applications, aside from the fact that they may not have any central owner; ownership is shared among users. The question is, how was Ethereum able to achieve this fit?
Smart Contracts
In 2013, Vitalik published a whitepaper introducing the idea of smart contracts. He proposed that these smart contracts will moderate decentralized applications, ushering in a new era of applications that operated without the sovereignty of its creators.
Smart contracts are computer programs stored on the blockchain which execute transactions if certain predetermined conditions are fulfilled. By employing smart contracts, deals between two parties can be brokered by a computer network transparently. The need for an intermediary for validating the transaction is replaced with a computer program.
These features opened the doors to new dimensions in the crypto space. Ethereum, as pioneers of smart contracts, provided a platform for developers to build all sorts of decentralized applications on its blockchain. Today, over 3,000 dApps are built on Ethereum’s blockchain.
Additionally Ethereum offers a module for developers to create their own Decentralized applications (dApps), and design native tokens which will facilitate financial transactions on their platforms. These dApps seed control over the protocols and data used for running applications to the user.
Moving on to our next case study, Cosmos.
What is Cosmos?
In 2014, Tendermint the core of Cosmos blockchain was invented by Jae Kwon. Ethan Buchman later joined Jae in developing Cosmos blockchain which is a decentralized network, featuring a collection of independent blockchains. such as Osmosis, Cosmos Hub, and Juno. These separate blockchains run concurrently and are connected by IBC protocol. There are over 40 parallel blockchains in its ecosystem, hosting over 262 dApps. Ethereum has only one blockchain containing thousands of dApps.
ATOM is the native cryptocurrency to Cosmos. This digital currency facilitates transactions on the Atom blockchain. Participants on the network are encouraged to stake ATOM tokens for sustaining the network by rewarding them with interest via staking.
Unique Solution of Cosmos
Cosmos added a new feature allowing cross-blockchain interoperability. This means users in its vast ecosystem of independent chains can communicate with each other and exchange data in the process trustlessly.
Every blockchain originating from Cosmos is known as a zone. Each one acts as a sovereign unit, operating on its own accord without the interference or assistance of other sibling blockchains. Cosmos united these independent entities by stringing them together using an Inter-blockchain communication protocol (IBC).
Cosmos developer team Tharsis has deployed a public use blockchain and EVM named EVMOS which is currently live and helps to bridge the gaps between Ethereum and Cosmos. Projects no longer have to worry about bridges when everything is connected by IBC Protocol.
https://github.com/cosmos/ibc-go
Inter-Blockchain Communication (IBC)
Every blockchain originating from Cosmos is known as a zone. Each one acts as a sovereign unit, operating on its own accord without the interference or assistance of other sibling blockchains. Cosmos united these independent entities by stringing them together using an IBC (inter-blockchain communication protocol).
By combining the Tendermint’s Byzantine Fault Tolerant consensus protocol with IBC, Cosmos created a portal for the distinct zones in its ecosystem to interact, while still maintaining their independence.
Comparing Zones and Dapps
When it comes to understanding blockchains, if you are not actively following the development process there is a good likelihood that you may have missed some changes. That is one thing that both Cosmos and Ethereum share in common, they are moving at neck-breaking speeds.
It is important to remember that Ethereum was previously operating as a Proof-of-Work network, where users mined in competition to earn block subsidy rewards. As of today Ethereum is now operating on a Proof-of-Stake consensus model after an event occurred which is known as “The Merge”.
Osmosis.Zone is the leading example of the cosmos model which can be compared to Uniswap on Ethereum. On the Ethereum network, Uniswap only exists as a decentralized app in the form of a set of solidity contracts. Osmosis is its own app specific blockchain focused on servicing the AMM marketplace and is able to leverage the IBC Protocol to lessen the reliance on bridge technology. Having the sovereignty of its own chain has allowed it to become custom tailored to the needs of the community, changes are made by way of on-chain consensus and voting on proposals. To help boost adoption the Osmosis network allowed 0 gas transactions for almost a year of time, which is something the Uniswap protocol would have been unable to accomplish as it has no say in the governing of the Ethereum chain.
Things get interesting when you begin to look at the EVMOS blockchain, which is a fork of the Cosmos SDK that is running an Ethereum Virtual Machine. The implications of such a development ensures there will be competition in the coming years between the Ethereum and Cosmos ecosystem. Ethereum has had a history of high fees for users of the network, and even with the introduction of Proof-of-Stake, the fees still are many multiples higher than a transaction on the EVMOS EVM or on other zones within Cosmos.
Ethereum has a clear first movers advantage in terms of being an established platform to develop decentralized applications, having the dominant volumes and TVL ( Total Value Locked ), however just because you are the first does not mean you will always be the number one in the long run.
