The long-awaited vision of the Cosmos blockchain has now been realized as ATOM token holders have voted via inter-blockchain communication (IBC) so that assets can be easily transferred between blockchains.
The final vote to activate the feature was between 112 and 75 million, which mostly supports activation.
In the simplest sense, IBC enables messages to be transmitted between blockchains that have implemented the standard. The most obvious use case in crypto is sending messages to transfer tokens from one chain to another.
“IBC is essentially a method for the secure exchange of data between two independent (sovereign) blockchains. This means that any two blockchains that support IBC can send the communication back and forth without permission, ”Zarko Milosevic, chief scientist at the blockchain consulting firm Informal Systems, told CoinDesk via email.
This development has the potential to open up opportunities in the decentralized finance (DeFi) sector, where a product on an application-specific blockchain could use an asset from an entirely different chain.
For example, ATOM is the governance token for Cosmos, the blockchain that was created to enable IBC. “Previously, ATOM had been relegated to the Cosmos Hub for its usefulness as a governance token. It is now transferable and interoperable with all blockchains that support IBC, ”said Milosevic.
Pent-up demand
One place ATOM could go: the Terra blockchain, which operates a DeFi savings account called Anchor. Terra could join IBC and make ATOM one of the tokens the underlying money market will borrow.
IBC has been incorporated into the Stargate upgrade that was activated by the Cosmos ecosystem in February. However, ATOM owners decided to let Stargate run a little longer and do more testing before IBC was activated. IBC put the vote into effect on Cosmos.
There was no delay between the voting and the release of the feature. “Since this is a parameter change, there is no need to stop the chain,” explained Milosevic.
However, activating IBC is not enough for all blockchains to work together. IBC is a protocol that other blockchains can use, but it needs to be updated to the IBC standard.
This is theoretically possible for any blockchain, but those based on Tendermint, the consensus model native to the Cosmos ecosystem, are likely to be the first to adopt the standard. Some of the blockchains based on Tendermint are Kava, Agoric, Akash, Foam, and Crypto.com.
“It’s like dropping a crystal into a supersaturated solution: the pent-up need for links between chains is released,” Agoric CEO Dean Tribble told CoinDesk via a spokesman. “Some of the most interesting connections will be between chains we have never heard of and accomplishing things that are currently not possible.”
Agoric is a secure platform for smart contracts. It’s not yet running in the wild, but its developers have tried IBCs in tests.
The open source cloud service provider Akash and the crypto trading app Crypto.com told CoinDesk that everyone is technically ready to join IBC and should do so in a few weeks pending approval from the respective token holders .
Mix and match
Funding for Cosmos came from an initial coin offering for 2017 that raised $ 17 million to support a cross-blockchain future. The war chest was valued dramatically thanks to the skillful treasury management. The project had a multitude of leadership changes up until the rocky year 2020, but it continued.
The website Cosmos-Cap estimates the combined market cap for the ecosystem’s blockchains at over $ 60 billion, led by Binance Coin, Terra, Crypto.com and Cosmos.
“Because IBC is modular, it can easily be expanded to support more chains outside of the Tendermint ecosystem. For example, the modules required to open IBC connections to the Polkadot and Kusama networks and other substrate-based networks are under development, ”wrote Milosevic.
Similarly, venture fund Multicoin Capital recently released a report on a blockchain in the Cosmos ecosystem, Thorchain, a cross-chain decentralized exchange, in the same form as DeFi staple Uniswap. Multicoin’s Tushar Jain wrote in an email to CoinDesk about the latest upgrade from Cosmos:
“It’s a big deal. Through things like IBC and Thorchain’s bridge to non-cosmos protocols and other bridges like Solana’s wormhole bridge, we will bring the cross-chain future to life, ”Jain said.
Disclosure: Brady Dale has a very small inventory of ATOM tokens.
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