Author: Xangle, authorized and translated by PANews
Compiled by: Felix, PANews
The Cosmos ecosystem is developing rapidly in 2023, attracting many developers and projects with its unique interoperability and modular architecture, features that open up new horizons for blockchain technology.
This article will explore the major changes, major technological updates, and prominent new projects that occurred within the Cosmos ecosystem in 2023. In addition, it also studies the technological advancements and market changes in the Cosmos ecosystem, and how Cosmos redefines the existing blockchain paradigm.
1. Infrastructure
1.1 Major updates to the Cosmos SDK
The modules managed by the Cosmos SDK are mainly used to develop chains in the Cosmos ecosystem. The following are the major updates to the SDK released in 2023.
Version 0.47 Update
Upgrading to CometBFT: The renamed CometBFT is a fork of the previously used consensus engine Tendermint, which is now officially available in the Cosmos SDK. There are no major changes in the 0.47 version, and this update is designed to help chains that previously used Tendermint migrate to CometBFT.
Version 0.50 Update
ABCI 2.0: ABCI is an interface responsible for data exchange between the consensus engine and the application layer responsible for different functions on the chain. The consensus engine CometBFT (Tendermint) is responsible for block generation and transaction broadcasting, which is the process of determining the order of transactions. Due to the design of ABCI, there are limitations in processing transactions in the memory pool in the required order. To overcome this problem, ABCI 2.0 adds a new process called "PrepareProposal" to determine the order of transactions in the memory pool and pass it to CometBFT.
Optimistic Execution: In the previous Cosmos SDK, all validators needed to reach a consensus before the transaction could be executed and the results submitted to the chain. This slowed down the execution of transactions. To overcome this problem, a feature called "Optimistic Execution" was introduced. This feature allows transactions to be executed and submitted without the consent of all validators, thereby increasing transaction throughput.
SDK modules: The Cosmos SDK contains various modules for application development. Previously, the update of each module followed the update version of the SDK, so it was difficult to track the update history of each module. In version 0.50, the version control of each module is independent, making it easier to track the update record. In addition, the data storage model Store and IAVL have been decoupled so that they can be updated separately.
1.2 Cosmos on Metamask
Since there are multiple chains in the Cosmos ecosystem, even if the mnemonics are the same, each chain has an independent address. Although the Keplr wallet is currently used for integration and management, a new wallet application needs to be used, which has a poor user experience and increases the entry barrier.
Cosmos is working on a project to solve this problem. In this context, Metamask has implemented full support for Snap, allowing custom features to be added on Metamask. Transactions can now be created on Cosmos-based chains, including the Leap wallet. In other words, the technical foundation has been laid, and users who are familiar with EVM-based chains can be more easily attracted to the Cosmos ecosystem.
Leap Wallet (https://cosmos.leapwallet.io/portfolio/overview)
1.3 MultiVM
Unfortunately, the Cosmos SDK does not support virtual machines for smart contracts. As a result, several projects have emerged to develop virtual machines that have been verified and used in other blockchains, or to develop virtual machines that are unique to the Cosmos ecosystem. Some have tried to integrate various virtual machines (such as EVM, WasmVM, SolanaVM, MoveVM, etc.) with the Cosmos SDK, and some have been highly praised. If more commonly used virtual machines are supported, it will be easier for dApp developers to enter the Cosmos ecosystem.
2. Project
Here are some interesting and eye-catching projects emerging in the Cosmos ecosystem in 2023.
2.1 Celestia
The hottest project in the Cosmos ecosystem in 2023 is undoubtedly Celestia. Celestia is a representative modular blockchain project that roughly divides the functions of the blockchain into four parts:
Execution: The ability to process transactions and change the state of the chain.
Settlement: Verify transactions processed by the computation layer.
Data availability: Storing information from transactions and blocks and ensuring it is always available.
Consensus: The ability to determine the validity of transactions or the order in which they are included in a block
Among these features, Celestia focuses on data availability. Celestia combined with the term "L2" has triggered the Rollup craze in the Cosmos ecosystem. To this end, a framework called "Rollkit" has been created and supported, which supports ABCI between Celestia and Cosmos SDK.
Celestia Rollkit ( https://docs.celestia.org/developers/rollkit )
Rollkit replaces Cosmos' consensus engine Tendermint (more precisely CometBFT) and allows Celestia and Cosmos SDK to communicate directly. Rollkit allows Sovereign Rollup by aggregating transactions in one block and leveraging Celestia's consensus engine and data availability.
2.2 Skip Protocol
Skip Protocol is a project with the vision of "sovereign transaction infrastructure for sovereign blockchains". The protocol can improve the user experience of sovereign blockchains, make the order of transaction processing transparent, prevent malicious MEVs, and improve the network in terms of quality.
Among the user experience improvements, the project aims to address issues with the Inter-Blockchain Communication (IBC) protocol. IBC is a protocol for trading assets between different chains within Cosmos. In order to transfer assets via IBC, a communication "channel" must be created, and each channel requires a unique ID for each connected chain. The following figure shows an example of ETH being sent from Axelar to Terra2.
Skip API ( https://api-docs.skip.money/docs/ibc-routing-algorithm )
In addition, Skip proposed an optimal routing algorithm for delivering assets in the Cosmos ecosystem and provided a better user experience by determining the Denomination of assets.
Skip Protocol also provides various APIs that are very useful for developing blockchains based on the Cosmos SDK, such as multi-chain transaction tracking. Skip also proposed to the community to incorporate Skip's functions into the Cosmos SDK to contribute to the development of the ecosystem.
SKIP API ( https://api-docs.skip.money/docs/ibc-routing-algorithm )
2.3 Other Projects
Be
Sei is positioned as a chain specialized in transactions, and its goal is to become a fast Layer1 rather than Rollup, which is also a major trend in the development of blockchain in 2023. Sei focuses on improving the performance of the chain by leveraging various technologies.
Injective
Injective is committed to building a blockchain ecosystem specifically for financial applications. Injective has established partnerships with Figment and Binance, and supports various dapps such as Helix and Hydro to join the Injective ecosystem.
dYdX
dYdX is considered the most successful DEX and has successfully migrated to Layer 1 using the Cosmos SDK.
dYdX strengthens governance through its own token.
Stride
Stride is a liquidity staking protocol similar to Ethereum Lido. In the Cosmos ecosystem, liquidity staking is inherently difficult because assets are scattered across multiple chains. Stride aims to enable multi-chain liquidity staking in the Cosmos ecosystem by leveraging ICA (inter-chain accounts), ICQ (inter-chain queries), and ICS (inter-chain security).
The core
Coreum is an enterprise-oriented Layer 1 blockchain that supports Wasm-based smart contracts, RWA tokenization, NeoBanking applications, etc.
3. On-chain performance
3.1 Development Activities
While the development activity of the Cosmos network remains healthy overall, the number of smart contract deployments in Q2 2023 was the highest (2,226) and the highest growth rate (21.4%). The number of core developers is gradually increasing, which is also a sign of active ecological infrastructure construction.
Meanwhile, the number of smart contracts deployed in Q2 and Q3 of last year was 2,226 and 1,777, respectively, up from 1,701 in Q4. While development activity did slow compared to the previous two quarters, the level of activity continues to be sustained given the decline at the end of Q4.
3.2 Network Activities
The most noteworthy aspect of Cosmos Network activity is that development activity in Q2 and Q3 translated into growth in the entire ecosystem in Q4. As shown in the figure, TVL in the Cosmos ecosystem continued to decline in Q3, but then increased significantly in Q4.
The explosive growth of TVL in the Cosmos ecosystem in the fourth quarter can be attributed to two factors. The first is the influx of liquidity from the Layer1 narrative in mid-October. In the second half of the year, a large amount of funds flowed into the Layer1 ecosystem, and Solana, Cosmos, and Avalanche drove the overall TVL up with explosive performance.
In addition, the developer-friendly infrastructure environment including the Cosmos SDK and the vast blockchain connection network built on the IBC ecosystem have brought real utility to users. By observing the TVL trend, it can be found that this is not just a temporary rise, but a continuous trend. The market's satisfaction with the maturity of the protocol may drive the liquidity of Layer1, promote the development of Cosmos and reduce user churn.
Compared to the worst performing Q3 (1,470,050), the number of active wallets in Q4 also increased by nearly 55% to 2,280,335, reflecting the vibrant ecosystem. The interoperability of the Cosmos IBC ecosystem has driven the increase in on-chain activities.
In addition, judging from the TVL trend of key protocols in the IBC ecosystem, the continued hype of protocols based on Cosmos SDK in the second half of the year also played a role in revitalizing the ecosystem.
3.3 Network Security
Cosmos currently has 180 active validators. The top 9 validators hold 40.89% of the ATOM supply. There are currently 2.44 billion ATOMs staked on Cosmos, accounting for about 65% of the total supply.
4 Conclusion
2023 is a milestone year for the Cosmos ecosystem, witnessing the development and major changes of several projects. These changes show that Cosmos is not just a field of blockchain technology, but is driving innovation in the entire blockchain ecosystem.
Celestia, Skip Protocol, and other well-known projects demonstrate the diversity and flexibility of the Cosmos ecosystem and how it continues to evolve. These projects have pioneered new use cases for blockchain technology and helped create a more efficient and user-friendly blockchain environment.
The growth and development of the Cosmos ecosystem has heightened excitement about the future of blockchain technology. It has opened the door to new opportunities for developers, users, and investors, and paved the way for continued innovation in the coming years. It is expected that the Cosmos ecosystem will continue this positive trend in the coming years, and new technical challenges and opportunities will continue to emerge in the process.
Related reading: The Cosmos ecosystem wealth effect is gradually emerging, what other airdrop opportunities are there?
