How does cosmos work

Holders can also choose to delegate their ATOM coins with validators instead of running the validator software themselves, which still allows them to receive a portion of the rewards for staking. As an interoperable, highly scalable blockchain network capable of hosting smart contracts, Cosmos has become popular among dApp developers that want to build efficient cross-chain decentralized applications dApps.

Each change, upgrade, or feature activation in the Cosmos protocol depends on approval by ATOM holders. Because the Cosmos network launched relatively recently and is still somewhat in its developmental stage, it hasn't yet fully realized the vision set out in its whitepaper.

Stargate is live! Congrats to Cosmos Hub Validators and engineers for making this happen! Today, we enter the Stargate! However, with the launch of the Stargate upgrade, blockchains can now communicate with one another thanks to the Inter-Blockchain Communication IBC protocol—which developers are now free to build with.

On top of this, the Stargate upgrade brings with it automatic upgrades, full-featured light clients, and efficiency gains of x, making Cosmos a force to be reckoned with. Read on the Decrypt App for the best experience. For the best experience, top crypto news at your fingertips and exclusive features download now. Learn The Projects. Create an account to save your articles. In brief Cosmos aims to create an "Internet of Blockchains" by improving interoperability.

Did you know? Load More. The problem describes a situation where decentralized actors in the system must agree on a common strategy, while some of the actors are malicious and cannot be trusted. Tendermint Core is a proof-of-stake algorithm which is supposed to be faster and more scalable compared to proof-of-work blockchains like Bitcoin. The event raised many discussions in the blockchain community on the importance of an individual behind a project for its survival and success.

The research and development projects on Cosmos blockchain are promoted and supported by grants from a Swiss-based Interchain Foundation. The major goal of the Cosmos blockchain is to connect other blockchains with each other, through expanding their functionalities and improving their efficiency. The vision for the Cosmos use-cases presented in its white paper included hosting distributed exchanges, bridging to other cryptocurrencies like Ethereum and multi-application integration. To date, more than 70 applications run their mainnets on Cosmos, while 57 more are at a proof-of-concept stage.

The main areas of applications include finance including decentralized exchanges , infrastructure, privacy and social interactions. For example, Binance Chain — a Binance project aimed to create a marketplace for issuing, using, and exchanging digital assets — is built using the Cosmos SDK. Other examples of the Cosmos projects are DATA — a blockchain based digital data authentication protocol, and CyberMiles — a blockchain for e-commerce.

Cosmos Hub is the central zone connected with all the others. All token exchanges between blockchains go through Cosmos Hub which ensures their tractability.

To facilitate the development of multi-functional applications on Cosmos and increase its attractiveness to developers, Cosmos is using Cosmos SDK. It is an open-source modular framework that allows developers to build interoperable, customized blockchains.

As Cosmos is a proof of stake blockchain, investors can earn rewards by staking its native token ATOM. Trying to solve the blockchain interoperability problem, Cosmos is competing in the field with some heavy-weight players like Polkadot. The transaction is able to propagates out across the peer-to-peer network to a large percentage of the nodes within seconds.

After a transaction is propagated to the network, it needs to be added to the blockchain. If you want to dive into it, here is a great explainer to get you started. Unlike Bitcoin, Ethereum is designed to enable decentralized applications. Ethereum has a high-level language i. It compiles smart contract code into byte code using an EVM compiler, which is then uploaded on the underlying blockchain.

The EVM then executes these smart contracts. All nodes in the Ethereum network run the EVM. Similar to Bitcoin, Ethereum also uses the gossip protocol to enable nodes to communicate messages and transactions with their peers. Just like Bitcoin, Ethash is inherently Sybil resistant because it relies on Proof of Work as of now.

I hope this has given you some clarity on blockchain architectures. This is because Bitcoin and Ethereum are built as one unit. On the other hand, Cosmos takes a slightly different approach: It separates the application layer from the consensus and networking layers. Since Cosmos is aiming to build a network of blockchains, this makes sense; each blockchain is independent and has its own needs and requirements i.

Pretend we are trying to build a money application. A simple stack-based scripting language like Bitcoin Scrypt makes the most sense in this scenario. This is exactly what we want when dealing with money and store of value. But this simplicity has its limits. Trying to do anything more elaborate e. The Bitcoin scripting language is restrained in the complexity of code it can execute and not exactly user-friendly.

Solidity is Turing-complete, so it can execute code of arbitrary algorithmic complexity… in theory. In this scenario, security is paramount. Moreover, smart contracts are hard to upgrade; this makes iterative development incredibly difficult. You ship once and just pray it all works!

Cosmos was built to serve this need, albeit it makes some huge tradeoffs to do so. But first, we must understand how the three layers of a blockchain work in Cosmos. Doing so will give us a better understanding of how building applications with Cosmos differs from making one with Bitcoin or Ethereum.

Blockchains in the Cosmos network use the Tendermint consensus algorithm. Recall that a consensus algorithm is responsible for making sure the state stored on every state machine is the same after a transaction occurs. The Tendermint consensus algorithm, therefore, defines the rules for how all the nodes within a blockchain network agree on the next block.

For doing so, validators receive fees and a block reward as payment. Tendermint aggregates votes from these validators to determine the correct next block. Each validator has its own voting power which is used to weigh the votes. The voting power is typically determined when the blockchain first launches at genesis or by the blockchain through some logic that the application developer decides on.

The typical approach to determine voting power is by the amount of tokens validators lock up in the system as collateral. By following protocol rules, validators come to a consensus on every block in rounds. Each round is composed of three steps Propose, Prevote, and Precommit , along with two contingent steps Commit and NewHeight. At a high level, here are the protocol rules that validators use to come to a consensus on what block to add to the next height:.

Note that there may be more than one round required to commit a block at any given block height. There are various reasons for this. The full details of the protocol can be found here. Unlike Nakamoto consensus and Ethash which is probabilistic, Tendermint is deterministic. In Tendermint, blocks are confirmed immediately after validators successfully vote and commit a block. Conversely, Tendermint consensus requires there to be a fixed and known set of validators, where each validator is identified by their public key.

Nakamoto Consensus and Ethash have no designated leader to propose the next block i. On the other hand, Tendermint chooses a leader, or proposer, who is responsible for proposing the next block. The Tendermint consensus algorithm follows a traditional approach which relies on all validators to communicate with one another to reach consensus.

Because of the communication overhead, it does not scale to s of validators like Bitcoin or Ethereum, which can have an unlimited number of validators. Tendermint works when there are s of validators. Besides this, it also requires the system to maintain some notion of time, which is known to be a complex problem in theory. Although in practice, Tendermint has proven this can be done reasonably well if you use the timestamp aggregates of each node. Well, decentralization is a means to an end, not a goal unto itself.

Having 10, 20, or validators is good enough. Therefore, the application state and logic lived on a blockchain. Our front-end, on the other hand, was proprietary.

This allowed us to build an incentive system to reward good behavior and punish bad behavior, it gave users transparency over the data layer, and allowed users to share in the ownership and governance of the network. They can vote on new features, vote out bad actors, and curate the network to their liking, both at the user and infrastructure level. It also gave developers the ability to inspect and build their own tools and services on top of the back-end blockchain logic.