What is Cosmos SDK? — Interchain Stack Highlights

Interchain Stack Highlights is a comprehensive ICF blog series that explores cutting-edge features, updates, and advancements shaping the future of the interchain. This edition focuses on Cosmos SDK, the gateway to the Interchain Stack, an open-source, modular, and scalable toolkit allowing developers to explore new ideas and concepts, and build innovative custom blockchain solutions in an ever-expanding interoperable ecosystem. Let’s dive in.

What is Cosmos SDK?

Cosmos SDK is the gateway to the Interchain Stack, a leading toolkit for building composable, modular, open-source protocols. With Cosmos SDK, developers can build multi-asset public Proof-of-Stake (PoS) blockchains, permissioned Proof-of-Authority (PoA) blockchains, and rollup solutions.

The primary goal of Cosmos SDK is to empower developers to realize their specific vision and design custom blockchain solutions from scratch that can seamlessly interoperate with other chains and applications. Cosmos SDK’s modularity is enhanced by its seamless ability to integrate various consensus engines into projects, such as CometBFT or Rollkit.

Thanks to Cosmos SDK’s flexibility, developers have the freedom to create sovereign applications entirely tailored to their specific use case, without worrying about the low-level details of building a blockchain from scratch. Blockchains built using Cosmos SDK are generally referred to as application-specific blockchains or ‘appchains’.

Why Build with Cosmos SDK?

Application-Specific Blockchains

In virtual-machine blockchain development like Ethereum, developers use smart contracts to build decentralized applications (dApps) on top of an existing blockchain. These dApps exist in a shared-state environment and are limited in flexibility, sovereignty, and performance. Application-specific blockchains offer a different development paradigm to support a single application, allowing developers to make tailored design decisions for optimal performance.

Sovereign Applications

Cosmos SDK-based applications are sovereign and self-governed. Cosmos SDK enables developers to build more complex decentralized applications as projects are their own base layer and don’t live in a crowded shared state environment. Using Cosmos SDK, developers have full control over all areas that affect their project, including governance, validator set, network upgrades, and which modules to add or remove (such as staking, governance, minting, consensus, or IBC).

Developers don’t have to wait for the underlying chain to pass proposals or push network upgrades and can make pivotal decisions that align with their project’s goals and vision. They make their own rules, integrate cross-chain components as they wish, and create customized sovereign solutions.

Modular Design

Cosmos SDK’s modular design enables developers to build various blockchain applications by combining individual components or modules that can be used, reused, and customized as needed. Developers can choose which consensus engine to use, experiment with governance structure, or implement custom banking functionality, from basic functions like transferring coins between accounts, to more advanced functionality like creating multiple bank denominations and transferring coins between different denominations.

Projects can leverage the SDK’s extensive predefined modules or build their own custom modules for their specific needs, presenting a highly flexible design pattern. Developers are not locked into a one-size-fits-all approach but can tailor their blockchain applications to achieve optimal functionality and performance.

Cosmos SDK’s modularity enables blockchains to scale easily by adding or removing modules as needed to handle increasing traffic and user demand without requiring an overhaul of the entire system. This makes their applications more secure as potential vulnerabilities can be isolated and fixed at a modular level. Cosmos SDK also comes with extensive tooling, including Protocol Buffers, Cosmovisor, Depinject, and Conflix for enhanced development, operating nodes, and improving the ease of use of Cosmos SDK chains.

Native Interoperability

Cosmos SDK-based blockchain applications are designed to interoperate easily with other applications via the Inter-Blockchain Communication (IBC) Protocol. IBC is a key module of Cosmos SDK, enabling seamless communication and out-of-the-box interoperability with different blockchains, fostering innovation and growth, and expanding the interchain. More than 115 networks are connected via IBC which is also integrated with Polkadot, Kusama, and Solana. Additional connections to other major blockchain ecosystems including Polygon and Avalanche are also underway.

Who Uses Cosmos SDK?

Hundreds of innovative blockchain solutions have leveraged Cosmos SDK to create composable, modular, open-source protocols. Cosmos SDK-based applications secure billions of dollars of digital assets across the blockchain space, and several dApps from external ecosystems such as Ethereum and Polkadot have migrated to Cosmos SDK to execute their visions unconstrained as sovereign applications.

Top-10 decentralized exchange dYdX suffered from Ethereum’s high fees and relatively slow throughput affecting its user base. Exacerbated by a lack of development control, dYdX was compelled to relaunch as a sovereign appchain. “The fundamental problem with every L1 or L2 we could develop on is that none can handle even close to the throughput needed to run a first-class orderbook and matching engine,” the migration announcement explained.

Decentralized VPN (dVPN) provider Sentinel also ran as an Ethereum smart contract but migrated to a Cosmos SDK appchain because it needed control over its development decisions. “We started not to develop, but rather work to combat against Ethereum restrictions… with fees making the cost of operating our dVPN infrastructure unpredictable,” Aleksandr Litreev, Sentinel contributor and Solar Labs founder, recently commented during the Interchain Jam. In that same session, Jackal Protocol contributor Patrick Dunlop, co-founder and CEO of Jackal Labs, pointed out, “If you don’t control what the gas fees are, a lot of use cases are deleted out of existence.”

You can read more Cosmos SDK Builder Stories including digital asset issuer Noble who leveraged Cosmos SDK to bring USDC to the interchain, Agoric JavaScript dApps that ran into development issues building with Polkadot before migrating to Cosmos SDK, and the interchain’s most popular DEX Osmosis, harnessing Cosmos SDK’s modularity to provide threshold encryption and enhanced privacy and security for its users.

What’s Next for Cosmos SDK?

As the interchain expands and its needs evolve, Cosmos SDK is in continuous iteration, incorporating new features and modules to become more modular, flexible, and performant, enhancing the developer experience further. Some upcoming performance improvements include:

• Finalizing the rewrite of Cosmos SDK’s storage layer to make storage smaller on disk, more efficient, and more performant.
• Reducing module size to only what is needed for the state machine, allowing clients to build more complex front ends and queries.
• Rewriting the core layer in Cosmos SDK to make it easier to use with different consensus engines to meet the demands of the growing rollup and EVM community that wants to leverage Cosmos SDK’s plug-and-play ability and use it as a middleware rather than for modularity.

All these enhancements aim to improve the developer experience, broaden the scope of applications that can be built with Cosmos SDK, and serve the wider blockchain ecosystem.

Wrapping Up

Cosmos SDK is the gateway to the Interchain Stack, making it easy for developers to build and deploy customized, secure, and performant blockchain applications. With many of the best-known blockchain solutions already built using Cosmos SDK and innovative use cases continually manifesting, Cosmos SDK has earned its place as the market-leading toolkit for composable, modular, open-source protocols.

Keep up to date with the latest features and version releases of Cosmos SDK by following its developments on X or diving into the docs. Stay tuned for the next edition of Interchain Stack Highlights, providing updates and insights across the stack.