Despite the addition of ever more sidechains, I believe Ethereum will continue to lose market share to natively scalable blockchain ecosystems.

In this post I want to describe the benefits of the Cosmos ecosystem, and briefly cover three interesting projects which I think have the potential for massive growth in the future.

Background

In 2015, Ethereum launched as the first blockchain capable of smart contracts. It was essentially a computer science experiment, similar to Bitcoin, which turned out to be wildly successful. However, being the first of its kind, it suffered from significant limitations.

In 2016, when the DAO smart contracts got hacked, we witnessed a fight break out between the community members who wanted to fork the chain, and those who wanted it to remain immutable. This demonstrated the need for a built-in governance mechanism, where token holders could transparently vote on major changes to the protocol.

Then, in 2017, it became painfully clear that Ethereum wouldn't be able to scale natively as the network nearly grinded to a halt thanks to Crypto Kitties NFT trading.

The team behind Cosmos recognized the limitations of Ethereum, mainly in terms of its scalability and governance, and began developing a framework for an interoperable blockchain ecosystem.

Cosmos is able to scale in a modular way, meaning that each team behind a decentralized application (dApp) can use the Cosmos-SDK to launch their own interoperable blockchain. In this way, dApps are able to communicate with one another, but don't need to compete for blockchain resources.

The various Cosmos blockchains interact with one another using Inter-Blockchain Communication (IBC), and send messages to each other using the Cosmos Hub as a bridge. The Cosmos Hub is powered by the $ATOM token, which is used to pay for transaction fees, and participate in governance.

You can stake $ATOM on the Hub to earn interest on your tokens, in the form of more ATOM tokens. Stakers are also able to vote on governance proposals to change the Hub's protocol.

Since the Cosmos Hub launched in 2019, dozens of blockchains have taken advantage of its interoperability, and launched alongside it. Here are three that I think have a bright future:

1. Injective (INJ)

One project that's been making a lot of headway in the Cosmos ecosystem is Injective, a finance-focused blockchain that provides a framework for prediction markets and derivatives exchanges, such as perpetual swaps.

Injective's order book is on-chain, and features primitives that make it resistant to front-running. It's interoperable with other blockchains within the Cosmos ecosystem, and Ethereum as well.

In addition to supporting Ethereum, they recently launched a layer 2 solution that allows Solana smart contracts to be migrated over to the Injective ecosystem.

INJ tokens can be obtained by converting some $ATOM on the Osmosis exchange, using Keplr wallet.

2. Secret (SCRT)

While it could be argued to be either a benefit or disadvantage, a major issue with public blockchains is that all transactions are visible for the entire world to see.

Another project that is rapidly developing in the Cosmos ecosystem is called Secret, and its objective is to offer users the ability to trade tokens privately.

You probably know of some privacy coins like Monero, zCash, and others that allow users to transfer coins with each other in private. The Secret Network aims to add this type of privacy to smart contracts.

SCRT tokens are used to govern the network and pay for transactions on the network, and can be obtained the same way as INJ tokens, via the Osmosis exchange.

3. Akash (AKT)

Another up-and-coming project in the Cosmos ecosystem is the Akash network, which aims to provide a decentralized, peer-to-peer marketplace for computing resources.

By using containerization technology, the Akash network can afford to offer scalable cloud computing services at a better rate than major providers such as Amazon Web Services or Digital Ocean.

Data centers are able to lease out their spare capacity in exchange for AKT rewards, providing a form of passive income. The AKT token can also be obtained via the Osmosis exchange, just as the aforementioned tokens.

Conclusion

The above is just a small sample of the projects currently being built in the Cosmos ecosystem.

We can expect the number of application-specific blockchains within Cosmos to grow, because the ecosystem has been engineered from the ground-up to provide scalability, governance, and interoperability between blockchains.

While Cosmos may have lost the spotlight for the time being to sidechains like Arbitrum on Ethereum, we'll likely see this ecosystem garnering more attention in the future. Thanks to its efficient and well thought out design, it will attract more developers and users, and eventually more capital.

Apart from those mentioned in this article, have any Cosmos blockchains caught your eye?

Sources

Cosmos logo 1