Privacy in Cosmos: Scalability Edition Event Recap

Privacy in Cosmos: Scalability edition was the fourth Cosmos event hosted by ZKValidator and the third event to be funded by the Cosmos Hub as part of the four-part privacy focused event series. This event took place on 13th January, supported by our media partner Zero Knowledge Podcast. To view the recordings of the event, view the playlist here.

Follow ZKValidator on twitter to hear about our next events and to support us, stake your ATOMs, instructions here, or OSMO, instructions here, with us. The final event in the Privacy in Cosmos series will be taking place March/April, more details to follow soon so keep your eyes peeled.

Quick aside: We also had a $150 ATOM prize giveaway for a participant who filled out our feedback form. Congrats to our lucky winner!

Event Summary

Some highlights from the event on the themes of interoperability and scaling included:

• Evmos is launching the first EVM compatible zone in Cosmos enabling Cosmos coins and ERC20 tokens to be interchangeable. The network is set up to incentivise users, validators and developers with rewards for using smart contracts, transaction fees split between validators and developers and relayers rebates to drive cross-chain liquidity.
• Agoric is making building smart contracts in javascript possible to tap into the extensive developer talent already proficient in the language and component model.
• The permissionless, trustless and decentralised Gravity Bridge uses a batching process to enable low fees bridging Cosmos coins and Ethereum tokens.
• Celestia is developing a data availability solution that scales with increasing block size.

The previous Privacy in Cosmos event that took place last September focused on Defi within the Cosmos ecosystem. In that event, the topic of interoperability with respect to IBC and bridges came up and we decided to explore this in more detail, specifically with regards to scaling blockchains generally. Scaling blockchains is possible through increasing transaction capacity on a single blockchain or by spreading transactions across multiple blockchains, to achieve the latter, this requires interoperability of multiple blockchains. IBC has been live in the Cosmos ecosystem for sometime but the typical application is for transferring different network’s tokens between blockchains. Examining the interoperability of blockchains outside of Cosmos is relevant for more extensive scaling. In this event, we explored projects that exhibit a scaling component, improving interoperability, through connecting to other blockchain networks or otherwise and enabling a greater transaction throughput. The intersection of scaling and privacy is explored in more detail with projects involved in the panel discussions.

In this blog post, we will summarise each of the projects that showcased and then dive into some of the interesting discussion points that were raised during the panels covering the themes of interoperability, data availability and scaling generally.

Evmos

Watch the video here

Image sourced from here

Federico Kunze Küllmer gave an overview of Evmos, an IBC enabled EVM compatible blockchain that is fully interoperable with the Cosmos and Ethereum ecosystems. It is intended to be the entry point from the Ethereum ecosystem into Cosmos with an ERC 20 module which enables Cosmos coins to be represented as ERC 20 tokens and vice versa. The network is designed to incentivise the three major stakeholders in Evmos — developers, validators and users of the blockchain with a three pronged approach.

1. Usage Rewards — similar to incentive programs such as Avalanche rush, the polygon defi program or Osmosis liquidity rewards — users will receive more tokens for utilising smart contracts on the network.
2. dApp Store — the Evmos gas tokens will be split between developers and validators so they are both earning a share of transaction fees.
3. Relayer Fee Rebates — to reward relayers who are essential for driving liquidity to different chains, sending cross chain messages and keeping clients connected.

Agoric

Watch the video here

Founded in 2018, Agoric is a layer 1 proof of stake chain built using the Cosmos SDK and Tendermint consensus that enables smart contracts to be written in javascript. The motivation behind the project is to make programming smart contracts accessible to >10 million developers already proficient in javascript. Dean Tribble emphasised that it is not only the language that is matched but also the component model assimilates ReactJS for composition of DeFi, NFTs and beyond. RUN, a USD pegged token native to Agoric, is used to pay for transaction execution on the blockchain and can be used with other IBC enabled chains. RUN offers the benefit of a stable cost for smart contract execution. BLD is the staking token which enables participation in governance.

Gravity Bridge (Althea)

Watch the video here

The Gravity Bridge, presented by Deborah Simpier and built by the Althea team, is a chain agnostic, open source and decentralised blockchain for bridging assets between the Ethereum and Cosmos ecosystems. The bridge is built purely for infrastructure purposes without DApps on top to make it application agnostic. As a trustless bridge, with no centralised entity responsible for moving tokens across it, it launched with over 100 validators from the Cosmos Hub validator set and leans into the security of the cosmos network.

The bridge consists of four components:

1. The gravity.sol ethereum smart contract
2. The gravity cosmos module
3. An Eth signer and oracle run by Cosmos validators alongside the Cosmos SDK
4. A market of relayers competing to submit transactions to ethereum on behalf of the Cosmos Validators. These relayers are predominantly existing Cosmos Validators but the team developing gravity bridge are looking to incentivise node runners to operate more relayers.

A diagram illustrating the flow of tokens when using the Gravity Bridge.

To transfer tokens from Ethereum across the bridge, a user sends tokens to the gravity.sol contract, this locks the tokens and mints the equivalent token in the Cosmos blockchain. The fees for moving between networks are reduced by batching multiple transactions so that transaction costs are split between these transactions. If the speed of transaction execution is important, a user can pay for an incomplete batch to be sent immediately. The bridge is currently live and has a user interface in development.

Celestia

Watch the video here

Image sourced here

John Adler presented Celestia, the first blockchain designed with a modular architecture and a general purpose data availability (DA) layer. The term data availability is a nuanced concept that is distinct from data retrievability or storage. John describes DA as not uniquely attributable and based on imposing a penalty if the claim that some data has been published is not actually true.

A blockchain architecture sets constraints on which transactions would be considered valid. Neatly described in Mustafa Al-Bassam’s paper, participants involved in reaching consensus for the blockchain are primarily concerned with ordering transactions and ensuring their availability rather than considering the contents of the transactions. Consequently, transactions could be added to the blockchain that are invalid, or potentially malicious. Full nodes in the network are responsible for downloading the block headers and all the transactions in each block to verify that the transactions are valid. However, running a full node requires extensive storage space, at least 200GB for the Netheremind client for Ethereum for a fast sync, and upwards of 5TB for the same client downloading the full archive. Moreover, as more transactions are added to the blockchain the demands on storage space will also increase. Celestia offers an alternative solution and approach to this problem.

In his talk, John drew attention to Satoshi’s paper introducing Bitcoin where in the second page the double spend issue is described — “the only way to confirm the absence of transactions is to be aware of all the transactions”. Celestia’s DA layer is based on this core concept; all of the transactions, both valid and invalid, are ordered and made available but not executed. The transaction validity is verified using data availability sampling which requires sub-linear work of the order of the square root of the block size. Data availability sampling was introduced in the paper here, the concept uses a combination of erasure coding and random sampling. Erasure coding breaks the data in a block into fragments stored across different locations with redundant data fragments. Used in combination with random sampling, you do not have to download all of the block data to check transaction validity and can reconstruct the contents of the block from a random sample. Therefore, with Celestia’s DA layer, the entire contents of a block does not need to be downloaded to verify transaction validity unlike full nodes in the aforementioned typical blockchain architecture.

Bridging and Interoperability Panel

Watch the video here.This panel was moderated by Anna Rose and featured Deborah Simpier (Althea), Zaki Manian (Sommelier Finance) and Sergey Gorbunov (Axelar).

In this panel, different three solutions to interoperability were represented through the participants:

1. A permissionless, decentralised open source bridging solution, represented by Deborah Simpier, part of the team creating the Gravity Bridge
2. An application specific purpose built bridge as seen in the case of Sommelier Finance, represented by Zaki Manian
3. and Sergey from Axelar, where a universal interoperability network connects multiple networks.

Axelar are approaching interoperability from 2 key elements, a connectivity layer, which enables different languages, consensus mechanisms, and software stacks to communicate with bridging being one such solution here, and an application layer that makes it easier for cross chain applications to exist. Currently Sommelier are building their own bridge to accommodate their own specific requirements with flexibility to change the bridge implementation when a better solution becomes available. Owning a bridge is a difficult task and can be viewed in a relative sense as opting to vertically integrate your business rather than outsource. This raised the question of whether it is more secure to have a bridged network system or rollups. In reality, a rollup can be considered as a blockchain with a single bridge by default, the computation of transactions is off the main chain but data is kept on chain. On Ethereum a rollup offers the benefit that anyone running an ethereum layer 1 client can rebuild the state of the rollup, however it could be desirable for a rollup to bypass ethereum completely because of the large transaction costs. A rollup differs from the IBC system seen in Cosmos as the state transitions are verified for rollups, whereas the consensus mechanism of the sending network is verified for IBC. Until now, IBC has mainly been used for sending tokens between networks, but it is feasible to see future applications requiring features such as interchain accounts.

On the topic of privacy preserving bridges, it was acknowledged that there seems to be limited appetite in the market but there is no reason why this application should not exist. There is the hope that future developments could move towards achieving privacy in the interoperability layer and more development of zero knowledge bridges.

Data Availability Panel

Watch the video here.This panel was moderated by Anna Rose and featured John Adler (Celestia), Zaki Manian (Sommelier Finance), Dean Tribble (Agoric) and Henry de Valence (Penumbra).

In the Cosmos ecosystem, the Tendermint consensus engine is responsible for data availability in each zone. A data availability failure would occur when two thirds of the validators agree on producing blocks with unavailable data. For Agoric, DA is a complex topic due to the nature of the protocol which demands deterministic, replicated execution of javascript — for the same input the computation of js code must always be the same. A message from a client is recorded and must be remembered to execute the code, but this computation is not stored in the merkle tree and is only available if you run a full node and can send messages directly to the javascript engine. For a private or shielded blockchain the data model is also different — instead of having a global state, there are many tiny state fragments for each user. The fragments are committed on-chain but are not part of the public chain state; existing shielded chains also have encryption of on-chain data. In general, in a more private model, instead of each transaction changing the state directly, each transaction will consume a previous state without revealing which one. The SNARK proof verifies the validity of the transition from the old to the new state in accordance with the consensus mechanism of the chain, without revealing information of the transaction. SNARKs enable consensus rules to be pushed to the untrusted clients without having to include them in the trusted part of the system.

For other blockchains, there are three main benefits to using Celestia as a DA solution:

1. The DA sampling and logic is implemented by Celestia which is a non-trivial task.
2. The security is shared with all other native rollups on Celestia, and the bigger the blocks the better as scaling is in proportion to the square root of the block size.
3. The state machine has been made to be as light as possible. You can run a celestia light node, connect it with a remote call procedure (RPC) to make sure all the blocks are valid and then submit your roll up blocks.

For Agoric, migrating to a Celestia DA platform would offer scaling benefits and the protocol was intentionally designed for future flexibility, with tech migration being relatively straightforward. However, for a private blockchain, Henry was less convinced that Celestia would provide as much benefit because of the different set of design constraints imposed by retaining privacy and with less public chain state data.

Event Metrics

Feedback from the event was overwhelmingly positive, with all feedback from respondents rating the event 4 or 5 out of 5. Our audience also typically valued privacy highly in Cosmos with 74% of respondents valuing it as 4 or 5 out of 5. With regards to the budget for the event, a 90 day average ATOM price up until 21st January 2022 of $34.76 is used and the expenses can be seen in the table below. The event cost a total of 279 ATOM.

Table detailing the costs for the event.

Conclusions

This event focused on scalability in the Cosmos ecosystem which is a fundamental subject critical for the future of the blockchain space. Interoperability between networks is a pathway to scaling with Gravity Bridge, Evmos and Axelar all focusing on this solution, whilst Agoric offers a solution that scales innovation in the space enabling javascript developers to be onboarded easily into smart contract deployment and Celestia offers a data availability scaling solution. However, intertwining the theme of privacy with scalability seems to be more of a challenge and is not currently prioritised by the market.

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