Cosmos: The Evolution of IBC

JUL 21, 2022 • 23 Min Read

DISCLOSURES: DELPHI VENTURES HAS INVESTED IN ETHEREUM, OFF-CHAIN LABS (ARBITRUM), SOLANA, CELESTIA, AVALANCHE, DYDX. THE AUTHOR OF THIS REPORT HAS MATERIAL OPEN POSITIONS IN ATOM & OSMO. THE AUTHOR HAS NOT PURCHASED OR SOLD ANY TOKEN FOR WHICH THE AUTHOR HAS MATERIAL NON-PUBLIC INFORMATION DURING THE RESEARCH AND DRAFTING OF THIS REPORT. THESE STATEMENTS ARE INTENDED TO DISCLOSE ANY CONFLICT OF INTEREST AND SHOULD NOT BE MISCONSTRUED AS A RECOMMENDATION TO PURCHASE OR SELL ANY TOKEN, OR TO USE ANY PROTOCOL. THE CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND YOU SHOULD NOT MAKE INVESTMENT DECISIONS BASED SOLELY ON IT. THIS IS NOT INVESTMENT ADVICE.

Key Takeaways

  • Cosmos is a network of monolithic blockchains, predominately app-specific, connected through the Inter-Blockchain Communication (IBC) protocol

  • There are now 48 active zones, up from 8 a year ago (IBC went live at the beginning of 2021)

  • IBC has a few limitations, namely that tokens are “path dependent”, and thus IBC is likely to adopt a hub & spoke model around major “Hubs”

  • To date, IBC has mostly been used for token transfers; now it is evolving, expanding into novel use-cases like Interchain Security and Interchain Accounts

  • Interchain Security is the solution to Cosmos’ bootstrapping bottleneck and allows the Cosmos Hub to scale new features

  • Interchain Accounts enable chains to open & control accounts on other chains, greatly increasing the scale and complexity of cross-chain interactions

  • Other major Hub contenders are Osmosis (Liquidity Hub), Axelar (non-IBC assets Hub), Juno (WASM Hub) and Evmos (EVM Hub)

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