Cosmos Bonded Proof-of-Stake is the first major implementation of a permission-less BFT protocol. The well thought out protocol features many nuances ensuring that the Cosmos Hub blockchain is performant and that the security of the system is economically guaranteed even in the presence of malicious actors. Yet, in our view, the design space of Bonded Proof-of-Stake has barely been scratched. It’s important to explore alternative designs that can improve the user experience and the economic potential of Proof-of-Stake.
During the Cosmos Hackathon (Hack4Atom) in Berlin, the Chorus One team in cooperation with Sikka implemented changes to the staking logic in the Cosmos SDK that would allow stakers to increase utilization of their staking positions and additionally allow for a more user-friendly delegation process. These changes will open up a wide range of use cases that, in the current implementation, can only be achieved through custodial counterparties (e.g. exchanges).
We achieve this by creating a representation of staking positions we call “Delegation Vouchers”; validator-specific fungible tokens that can be traded and used in decentralized finance (DeFi) products. The following post aims to lay out the details of our implementation, its advantages, and potential use cases. You can find our implemented hackathon code on Github and a recording from the hackathon presentation itself on YouTube.
We implement a delegation pool for each validator on a Cosmos SDK chain. Instead of directly delegating to a validator, delegators transfer their Atoms to their desired validator’s pool. The pool automatically delegates to the respective validator and accrues rewards on behalf of the collective of delegators. Delegators receive delegation vouchers representing their share of the pool in return. These vouchers are fungible tokens that can be redeemed with the pool to receive their share of the pool’s updated holdings (a fraction of the delegated Atoms + accrued rewards — slashings). This is achieved by tracking a conversion ratio (Atoms/vouchers) between delegation vouchers and bonded Atoms for each validator pool. Accruing rewards increase the conversion ratio, while slashings decrease the conversion ratio.
All staking operations can be modeled using delegation vouchers. The user experience of staking on such a Cosmos SDK chain improves because rewards don’t need to be manually claimed by delegators anymore. Instead, rewards accrue for each validator pool on a per block basis. Unbonding is modeled as the burning of vouchers and receipt of underlying Atoms (calculated as vouchers times conversion ratio) after the unbonding period. Redelegation is modeled as the burning of vouchers combined with the issuance of new vouchers corresponding to the validator that received the redelegation. Newly issued vouchers resulting from a redelegation are non-transferable (frozen) for one unbonding period to make sure delegators remain accountable for infractions that were committed by the validator they redelegated away from.
Delegation vouchers could be traded at a discount bringing liquidity to staked Atoms, e.g. allowing delegators to sell vouchers on a decentralized exchange instead of unbonding. Additionally, delegation vouchers can be used in decentralized finance applications, e.g. as collateral in a DAI-style stablecoin system or in a Compound-like money market protocol. In addition, we believe delegation vouchers could allow for a market-based mechanism of ranking validator quality because delegation vouchers will need to be priced based upon their liquidity and the slashing risk associated with validators. Pools of delegation vouchers can be implemented allowing the creation of diversified tokenized delegation indices such as a Decentralization Index (pictured below). An example would be a Decentralization Index voucher tracking the delegation pattern of the Interchain Foundation. Holders of the Decentralization Index voucher will be able to foster geographic and voting power decentralization without requiring them to pay the mental cost of researching and evaluating validators. These are just a few of the possible use cases. Since one will be able to easily transfer delegation vouchers to other chains via IBC, they will enable permission-less and unbounded innovation.
While delegation vouchers may increase the security of a PoS system because there is less need for unbonding or holding liquid staking tokens, there may also be emergent types of attacks, e.g. a validator shorting his own delegation voucher and double-signing. Implications of this model need to be researched in detail. The model also raises concerns about systemic risk that could potentially arise from multiple usage of collateral. It remains too early to definitely comment on the second and third order effects of such a design.
We will do a more detailed write-up and explore extending functionalities to enable products like staking indices. In the medium term, we would like to explore a proposal to change the staking model of the Cosmos Hub to increase the utilization of staked assets. If you have feedback on our design, please let us know! Reach out to us on Telegram with your comments or if you are interested in collaborating.
Originally published at https://blog.chorus.one on June 20, 2019.
This is Part 3 of a series of posts on the Chorus One blog. Part 1 and Part 2 can be found here and here.
In Part 2 we discussed network effects in the context of the Cosmos Hub. In this post, we will focus on a key innovation in Proof of Stake networks: a mechanism that creates incentives for communities to build network effects.
The NFX venture fund estimates that 70% of the value created by technology startups since 1994 was driven by network effects! So it (a) pays to understand how they work and (b) pays for all stakeholders to go to every effort to nurture them. But network effects are notoriously hard to build. That is why successful startups are known as unicorns: the failure rate is extremely high. For every Uber, there are tens of thousands of “Uber for X” startups that never achieve critical mass, where they can match supply and demand across geographies, offerings etc. When a network effect scales to its full potential, hundreds of billions of dollars of value can be created. But the probability of this happening is very low. The good news is that the expected value across a well-chosen portfolio of networks can deliver great returns (just ask Union Square Ventures).
So what is the connection between Proof of Stake (PoS) networks and network effects?
Last week when I explained the staking economics of a Proof of Stake (PoS) network to a banker friend of mine, he was a little bemused. His intuition of money comes from the “time value of money”. It is the basis for almost everything they do. For bankers, money is created as debt. The person who borrows pays interest. The person who lends gets interest. Money today is better than money tomorrow. So to find out what a future income stream is worth today, you “discount it” by a factor based on the risk involved i.e. by how likely are you to actually get the money. This is at the heart of trillions of dollars of trades every day: bonds, treasuries, repos, CDs, etc. Even stocks are priced based on future income discounted back to today.
The banker’s intuition told him to find out where the interest payment is being made (or more specifically what interest rate — the price of money — was being paid), as this would explain the nature of the transaction and shine some light on the risks being exchanged. But this worldview doesn’t work for a Proof of Stake network and the intuition of the “time value of money” is fundamental to this misunderstanding.
To see why let’s shift back to the tech investor mindset above. Here money is earned based on a principle that we might call “the network effects value of money”. In this worldview, money is not created as debt, nor is the value captured as interest. Wealth is instead created by building a network that provides value to its users and capturing some of that value. As network effects grow according to the square of the user base (or maybe n log n at scale, see Metcalfe’s Law) the best way to build wealth is to scale a network globally. This effect is most mostly clearly visible with centralized networks, e.g. Google Adwords connecting publishers to advertisers, Uber connecting commuters to drivers, and so on.
The reason why crypto is getting so much attention in technology circles right now is that it has the potential to meaningfully reduce the high failure rate of these networks. As we have seen, scaling networks is hard. Anything that reduces this failure rate will increase the expected returns of investing in this space. If it turns out that crypto-powered networks are easier to scale than a typical (non-crypto) two-sided markets like Uber or Airbnb, then crypto networks will out-compete (and eventually take over from) non-crypto networks.
Proof of Stake networks utilize rewards to build network effects. Recognizing that network effects are hard to build, they reward community members that contribute to the network. They ask token holders (aka delegators) to make decisions about who runs the network nodes, via the validator marketplace we discussed in Part 2. By engaging token holders in this way, they incentivize attention through the mix of rewards and slashing. This is interesting from a psychological perspective: ongoing dopamine hits as gains accrue, loss aversion associated slashing risk, an IKEA effect as they are now actively contributing to the running the network. Together these things create a deeply engaged community, who then wants to spend more time on governance, evangelizing the network and contributing to the codebase. Validators, aware that they are being measured by these highly engaged delegators, now compete on the value they can add. So they write blogs and research reports, record podcasts, organize events, and get involved in governance. They build Dapps and tools like block explorers and wallets and contribute to the codebase and protocol specifications.
That is why trying to map crypto rewards in a PoS network to banking terms like interest is doomed to failure. It misses where the value is created and how it is captured. Inflation of PoS token supply is not about interest or yield. Instead, it creates a mechanism to fund public goods and community building on a massive scale. As the value of a network grows faster than the number of participants, this can have a very significant impact on the probability of success. It allows decentralized networks to grow faster with much lower failure rates than any other business model we have seen before.
This is the reason why smart investors have stayed in crypto. With 70% of the value created in the last quarter of a century being attributed to network effects, there are many reasons to believe that crypto-powered network effects will drive much of the growth in the next 25 years.
Stay tuned for more insights into the Internet of Blockchains in Part IV.
We have curated a list of the current top wallets to store and delegate your Cosmos Atoms from. Before diving into the options, I would like to remark that the safest way to store larger amounts of Atoms is on a hardware wallet. There are multiple wallets and tools that allow you to send, delegate, and participate in governance using a Ledger device. But let’s start with our list:
Lunie is the official wallet that was first developed by part of the Cosmos team (then called Voyager). The Lunie team has now spun off as a separate company.
Lunie is available as a web and mobile wallet (in development). There’s also a Lunie browser extension that allows you to securely generate keys. Lunie enables you to safely perform every operation from sending to participating in governance through your Ledger device without having to download additional software.
Find out more at: https://lunie.io/
Evaluation
+ Security audit
+ Web wallet usable with Ledger devices and browser extension
- Mobile wallet can’t store keys yet (in development)
The popular multi-asset mobile wallet with support for ETH, BTC, EOS also has a Cosmos wallet. imToken supports a lot of functions like exchanging tokens, using DApps and now also storing and staking your Cosmos Atoms!
+ Multiple Assets (BTC, EOS, as well as Ethereum and Cosmos assets)
+ Many functionalities (token exchange inside the wallet, DApp support,…)
+ Available on both iOS and Android
+ Security audit
Trust Wallet, the open-source multi-currency mobile wallet, has its own staking platform that also includes Cosmos. The platform allows you to stake from the mobile Trust Wallet application (iOS and Android), as well as from Ledger devices or other wallets that support WalletConnect.
Evaluation
+ Multiple ways to access (Ledger, Trust Wallet, WalletConnect)
+ Support for multiple currencies and applications
- Only supporting a subset of validators and features
This slick mobile wallet is developed by the Korean team at Cosmostation, who also run their own validator and block explorer. The wallet is available as a web wallet, as well as on the Apple App Store and Google Play.
+ Great design and UX
+ Amount of information and features
+ Available on desktop as well as mobile (iOS and Android)
- No security audit
Another mobile wallet from the Chinese team at WeTez, who are already experienced in staking on Tezos. They also operate a validator on the Cosmos network and educate the Chinese community around the staking ecosystem.
+ Support for Cosmos, IRISnet and Tezos
+ Available on both iOS and Android
- No security audit
- No governance features and little information in the interface
There are a variety of tools build by validators to allow for easy staking and governance participation using a Ledger device. These include delegating through the Hubble and Stargazer block explorer and the delegation tool from our colleagues at Staking Facilities, as well as our own tool. The Chorus One tool additionally allows delegators to participate in governance themselves.
+ Easy to use
- Limited features and only Ledger devices supported
There are a variety of wallet options available already today. We recommend storing large Atom amounts on a Ledger device. To do so you will need to have the Cosmos application installed on your Ledger device using Ledger Live. There are also some other wallets in development (e.g. IOV and Lunagram). We are looking forward to trying these out and seeing the wallets and tools mentioned in this article evolve.
Originally published at https://blog.chorus.one on April 26, 2019.
In a post on the Loom blog, I recently wrote about the disruptive potential of crypto in gaming. Loom is not alone in making the realization that gaming is the perfect match for crypto. There are many other teams that aim to achieve what Loom does in different ways. Additionally, Loom faces competition from general purpose blockchains and specialized marketplace platforms for NFT assets.
On the other hand, Loom has already delivered a lot of value and many developers have started to build their decentralized gaming and other applications using the Loom framework. In many ways there are also synergies between “competing” projects.
In this post, I will shortly introduce a few of the main adjacent projects and games that are building on Loom. The whole list of companies in our crypto gaming ecosystem map (pictured below) can be found in our full thesis document on the Loom Network.
The main competitors to Loom are other projects that aim to cater to the same use case as Loom: enabling scalable blockchain gaming. One of the main competitors here is the team at Fuel Games, the creators of games like Gods Unchained that is also building a platform to integrate decentralized assets in games at scale, leveraging state channel technology to ensure high throughput while maintaining low transaction costs.
Another area where Loom is competing in is the area of marketplaces for collectibles and in-game assets (NFTs). E.g. Enjin, who is also starting to compete with Loom on the platform level with their SDK and sidechain network Efinity, is known for their marketplace of in-game assets. Enjin already managed to foster a large community through their wallet and token.
Other competitors of Loom’s marketplace notably include OpenSea and RareBits, both of which provide an interface to browse and trade digital items.
More broadly, the Loom Network as a scaling solution competes with any other project that aims to bring scale to decentralized applications. These include other Ethereum layer-2 solutions that take similar approaches, e.g. Plasma-based efforts like those by SKALE, Matic, or LeapDAO. Any general purpose blockchain implicitly competes with Loom in a way, including Ethereum itself.
Additionally, well-funded general purpose blockchains are also involved in the gaming ecosystem. Examples include EOS and Mythical Games and TRON Arcade, a $100 million commitment by the TRON Foundation to fund blockchain gaming.
Loom is trying to establish as a hub in the emerging network of blockchains by enabling interoperability between their and other major blockchain ecosystems, such as EOS, TRON, and Cosmos. In our interview with Matthew Campbell, this topic was discussed at length. I recommend giving it a listen if you’re interested in hearing about Loom’s strategy from the CEO himself.
Overall the blockchain gaming field is highly contested, and many of the first decentralized applications that saw some adoption have been games ( CryptoKitties). In the face of the alternatives mentioned above, the Loom Network has managed to attract many interesting projects to their platform. Part of this can be traced back to their commitment to build educational resources and tools that they themselves use to develop their own blockchain games. This strategy of the Loom team and their technologies will be covered in detail in another post, in the following I will introduce four games that are currently being built on the Loom Network:
This trading card game is developed by Loom’s in-house game studio utilizing the tools and running on the technologies built by the team itself. As the name suggests, the game plays in a setting where undead creatures battle each other.
The game features Hearthstone-like mechanics with players using decks consisting of (NFT) game cards to defeat their opponents in short, round-based battles. The game is available on iOS, Android, and Steam.
One of the most well-known games being developed on Loom. The game allows you to breed, level up, and equip fantasy creatures (Axies). Axies can also battle other players in the Arena, or go on an adventure together in the story mode.
The world in which Axies live (Lunacia) is controlled by the players. There’s a land sale going on currently in which 25% of the land in Lunacia and various items will be distributed to players.
This strategy game is developed by Experimental and lets players build an empire and an army to try and conquer other players’ empires. The game is completely browser-based with little animated graphics. Players earn resources by building mines and other structures, which can then be used to recruit soldiers to fight.
They are frequently hosting competitions where the best players receive a price, check here for more info.
Neon District is a cypherpunk RPG developed by Blockade Games in which players collect and craft items to fight against evil in a dystopian setting.
Learn more about the game and the “Founder’s Sale” here.
Chorus One is operating a validator on the Loom Network. You can support us by staking your Loom tokens with us and be rewarded for helping to maintain the network. If you’re interested in staying informed about our content around staking and the networks we validate on, follow us on Twitter or join our mailing list below.
Originally published at https://blog.chorus.one on April 16, 2019.
This is Part 2 of a series of posts. Part 1 can be found here.
We often see the term “network effect” in technology discussions. In common usage, the term can be misused to imply a natural tendency for networks to add value to all users as they grow. But this is not always the case.
Firstly, there are many different types of network effects, each with different characteristics and differing strengths. One thing that is often overlooked is that network effects can sometimes be negative and, in fact, sometimes both positive and negative effects can co-exist in the same network. An effect is positive when more people using the network gives everyone access to more value. But a broadband or mobile network may have negative network effects, where more users may lead to more congestion. We see something similar in a social network, where noisy content feeds caused by user growth can make it harder to find quality content. In a marketplace, more sellers result in more competition for other sellers (negative), but more products for buyers (positive), which in turn leads to more buyers which is good for all sellers (positive). This specific example is called an indirect network effect. The NFX venture fund has an amazing collection of essays on network effects here: https://www.nfx.com/essays.
In this post, we’ll show why network effects are so important in Cosmos. The main reason is that Cosmos is not just a network: it’s a network of networks. Each sub-network has its own network effects which will interact with each other. When Ebay started they could focus on one network: buyers and sellers in a marketplace. Likewise for Uber: drivers and commuters. The Cosmos Hub has at least three types of network effects at launch.
NFX defines two-sided platform network effects as follows:
“… 2-Sided Platform nfx … the supply side actually engineers products that are only available on the platform. The supply side has to do work to integrate to the platform. The products created and sold by the suppliers are a function of the platform, not independent of it.”
At first glance, it may seem that Cosmos SDK fits into this classification. Developers build apps as the supply side, with app users as the demand side. And these apps are “not independent of the platform”. So this looks like a typical developer platform such as iOS, Windows, or Xbox. Here we can see that Cosmos is a platform.
But… NFX also define protocol network effects that “arise when a communications or computational standard is declared and all nodes and node creators can plug into the network using that protocol”.
When we look at Cosmos this way our focus is on its ability to become a global standard for inter-blockchain communication, much like TCP/IP powers the internet or VHS became the video standard. So Cosmos is also a protocol.
Another perspective on Cosmos focuses on resource provision. We can look at Cosmos as having two-sided marketplace network effects, with validators providing computational resources on one side and app developers paying for these resources (either directly or by passing the costs onto their end users) on the other side. In fact, we can also see a second two-sided marketplace, with delegators as resource providers providing capital and validators as the demand-side, providing security and a safe return on that capital. So, from this perspective, Cosmos consists of two back-to-back two-sided marketplaces.
For Cosmos to succeed, each of these three classes of network effects (platform, protocol, and marketplace) need to strongly reinforce each other. They will each come into play at different phases in the growth of Cosmos.
As a platform, the focus needs to be on growing the developer community. The Cosmos community will need to build out the best tooling for developers to build, deploy and support applications. It will need to be cost-effective for developers to get their apps into production and in use. The community needs to create the best forums for the community of developers, sharing sample code, supporting each other, updating documentation etc.
But it’s also important that the validators and delegators help to build developer and user confidence in the network, by securing the infrastructure, avoiding network downtime and improving overall resiliency. Cosmos validators will need to work together to ensure that as the first apps take off, the user experience is on par with centralized services like AWS and other centralized networks. The network must also remain cost-competitive so that developers and users are not put off by high fees, while maintaining high enough rewards to support world-class infrastructure providers and to provide competitive risk-adjusted yields for delegators, especially in light of competing investment opportunities in the decentralized finance (DeFi) space. This is why the effectiveness of the marketplace mechanisms are so important.
But the Cosmos vision of multi-token services and the interoperability of chains will become increasingly important over time. This is where protocol network effects become increasingly important. While each effect can be built up over time, all three are mutually self-reinforcing. An early win with a multi-token service, even one with low transaction volumes, could have a meaningful impact on the long-term chances of the Cosmos Inter-Blockchain Communication (IBC) Protocol becoming the de facto standard for token exchange. But if there were weak rewards for validators or a high number of slashing events (causing weak delegator returns), this could start to negatively impact the quality of the network infrastructure thus damaging the long-term potential of IBC and weakening the attractiveness of Cosmos as a developer platform.
What is especially interesting is the relative strength of each network effect. Platform effects are weaker than protocol network effects. This is because developers love nothing more than trying out new tools and platforms, as is evidenced by the huge number of developer libraries and frameworks. Right now this is a strength for Cosmos, as Ethereum developers are more likely to experiment with a new platform. But even though platform effects are weaker, they can still provide an advantage, so it’s important for Cosmos to build an effective community of developers helping each other, contributing to tools, videos, Q&A forums etc. This will serve to strengthen the overall proposition, giving itself more time to build out the stronger protocol effects.
In summary, Cosmos is a network of network effects. If these network effects can reinforce each other, this could make Cosmos more powerful than any protocol, platform or marketplace that has previously existed. But it requires a delicate balance. It will be an exciting experiment!
Stay tuned for more in this Internet of Blockchain series, where we dive into staking economics, value capture, governance and more.
Follow us on Twitter and join our Telegram and mailing list to find out more.
Originally published at blog.chorus.one on April 8, 2019.
Stable Cosmos Hub mainnet without transfers
Clearly specified and decentralized upgrade process
New release for testnet with transfer feature enabled and other parameters such as the block size updated
Stable testnet with new release software
Phase I: a vote on a proposal specifying a plan and the criteria that need to be achieved for transfers to be enabled
Phase II: an expedited vote on the exact git hash for the updated software and block height for when the upgrade will take place
Chorus One is in favor of enabling transfers as quick as possible, as this is an essential feature of any blockchain network and because we want to encourage a wider distribution of Atom holders that isn’t limited to fundraiser participants. We believe the state of the mainnet proves the readiness of the network to enable transfers.
At the same time, we are aware that a new software release that will change parameters like the block size needs to be tested before migrating to mainnet. Additionally, we support a clearly defined process that allows for a decentralized upgrade to happen. Finally, we believe the integrity of the chain and the decision-making needs to be independently verifiable in the future, which is why a formalized governance process should be followed and the state of the old chain (cosmoshub-1) needs to be preserved adequately.
These requirements call for a two-step upgrade process where the first proposal is there to decide on what is planned and the second one is targeting a specific release that should match what was described in the first proposal.
The proposal at hand describes such a two-step process and it also plans to modify the parameters needed for the second proposal to pass. We support the current proposal including the 24-hour expedited governance rule for the second stage.
Some validators have suggested that there should be separate proposals: One on the general governance process and another one on the specific issue. We view the governance process of this proposal as an experiment and limited for this particular proposal. After this, we will have data to see whether this process is sound or a different governance process should be adopted. At that time, it will make sense to have a separate governance vote to decide on a general governance process. But to hold off enabling transfers at this point would be misguided, in our view.
The expedited governance rule states that a proposal may be deemed to have passed if ⅔ +1 of the bonded stake has voted in favor of the proposal for a continuous duration of 24 hours (after a buffer period of 24 hours passed). We think this is a reasonably secure way of ensuring that the plans from the first phase of an upgrade have been met in the second phase of the upgrade and that the proposal is actually supported by a majority of both validators and Atom holders delegating their stake.
We think the data from an abandoned chain should persist in an independently verifiable way in the genesis file of the new chain. The current proposed solution relies on trusting external identities to provide this data, which we believe is not sustainable. Chorus One will store cosmoshub-1 state data and encourages other validators to do the same to have as many entities as possible verifying the data that will be included in the genesis file of a future upgrade.
Chorus One is voting “Yes” on this proposal to enable transfers on the Cosmos Hub. We do view it as a desirable guideline that most proposals should cover only a single issue in the future.
Should the testnet with the new software release be unstable, or other problems emerge, we may vote no for the second proposal. We will follow the development of the testnet closely and will provide updates on our social channels.
If you want to vote yourself because you disagree with the voting choice of your validator(s), you can use the governance tool available on our website which allows you to cast your own vote that will overwrite all your validators’ decisions. Join our Telegram to discuss this issue further and make sure to subscribe to our social channels to be informed about future proposals and our evaluation of them.
An Overview of Cosmos Hub Governance
Transfer Enablement Proposal #1 & #2
Tendermint Recommendation to Decline Proposal #1
Forum Discussion on Proposal #2
Originally published at blog.chorus.one on April 4, 2019.
There is a tangible feeling that the gloves are coming off in crypto. When crypto was growing fast and valuations hit peak bubble, it was easy to argue that crypto was such a big transformation that all the early movers could be winners. As crypto winter befell us, the focus turned to survival and on buidling. Crypto took a hit, but the smart money stayed in and the crypto ecosystem is in much better shape to disrupt the global economy. But now some people’s minds are turning to the impending battle of the chains.
In this article, the first of a series of posts, we’d like to argue the opposite point of view. We believe that it’s much too early for crypto infighting. When markets mature, competition will get intense. But we are nowhere near a mature market. Right now, it’s in everyone’s interest to focus on growing crypto into a rich, diverse ecosystem of projects that can thrive together.
Throughout the blog post series, we will work to reclaim the “Internet of Blockchains” (IoB) vision from the many projects that have claimed it as their own. When we speak about IoB, we mean a vision of the decentralized web that is made of tens of thousands, maybe even millions, of interconnected blockchains. This vision may include a range of general-purpose smart contracts platforms, each with their own features that create differentiated value propositions. There may be competing inter-chain protocols that allow value to flow across the IoB, potentially through decentralized hubs that can securely route these flows. Data will be dispersed across a range of private and public repositories. Much of the business logic will sit in application-specific chains.
We want this reclaimed Internet of Blockchains vision to serve as a catalyst for a renewed focus on positive-sum thinking within the wider crypto community. Maybe we can even call it Interoperability Maximalism 😁.
When Chorus One selects a network to support, interoperability is a key requirement. You could say it’s our central investment thesis. The two projects we run validators on today (Cosmos Hub and Loom Network) both reflect this interoperability bias. Both the Cosmos Hub and Loom’s PlasmaChain are two very important pieces in the IoB vision. They are both, in their own ways, interoperability hubs. Loom is a Layer 2 network built on Ethereum, so ETH and ERC20 tokens can be used by apps running on the chain. Loom has also announced interoperability with Cosmos Hub, Tron, and EOS (and we’re guessing there might be more network integrations to come). Cosmos has announced plans to bridge their hub to Bitcoin and Ethereum. They also provide an SDK for developers to build their own application-specific blockchains or “zones” (as they are known in Cosmos terminology). Cosmos are also working on their Inter-Blockchain Communication (IBC) Protocol, which could become the global standard for inter-blockchain value exchange, allowing digital assets to be moved across chains.
So instead of thinking what <insert your favorite blockchain> should be doing to out-compete the rest of the community, why don’t we try to reframe these strategy discussions and try to figure out where each blockchain fits into the Internet of Blockchains? What special value does each chain add? Does it differentiate by providing unique value? Can it identify a niche to fill and then look to build network effects within that niche?
For general-purpose smart contracts platforms, this might mean some form of specialization i.e. identifying key use cases to focus on and adding features that uniquely enable those use cases. What attracted us to Loom, was their decision to focus on features for the gaming industry, by building the essential elements required by the game studios who are lined up to capitalize on the great disruption that crypto brings to their industry. Once a niche is identified, each project can then try to figure out where the network effects are. In gaming, marketplaces for trading in-game assets are the best places to build sustainable competitive advantage.
Other networks we are speaking with are a looking to drive down the cost per transaction on smart contract networks to give them a unique advantage in verticals that require massive transaction volume e.g. micropayments. Others are focusing on developer productivity, through great tooling and new paradigms for code reuse.
Another approach is to build specific protocols. The Cosmos IBC protocol takes a siloed network and makes it more useful by making it interoperable with other networks. When protocols become global standards (think HTTP, TCP/IP) they become irreplaceable. Protocols have very powerful network effects. So Cosmos Hub with IBC has identified its niche. But more importantly, the Cosmos community have a clear strategy on how to succeed in this niche i.e. to make IBC the global standard. In later posts we’ll show how Cosmos SDK, Ethermint, pegged zones etc. all come together to maximize IBC’s chances of success.
So stay tuned. This interplay of differentiation and strategy is at the heart of how we think about interoperability. Over the series of posts, we’ll dig deeper into a range of topics that will hopefully start a wider conversation about how we deliver on the Internet of Blockchains vision.
Follow us on Twitter and join our Telegram and mailing list to find out more.
The Cosmos Hub has launched and one of its core features is the ability for Atom holders to collectively govern the blockchain. Atom holders can submit proposals and signal their approval or disapproval to proposals submitted to the network by signing a special type of transaction. The following article will cover the governance procedure on the Cosmos Hub and introduce our governance tool that allows any Atom holder to participate in the on-chain governance mechanism.
In the current Cosmos Hub governance implementation anyone can submit a text proposal to the system. A minimum deposit is required for a proposal to enter the voting period during which Atom holders will be able to vote on whether the proposal is accepted or not. The numbers used in the following are based on the parameters implemented on the Cosmos Hub at the time of writing (25th March 2019).
For a proposal to be considered for voting, a minimum deposit of 512 Atoms needs to be deposited within 2 weeks from when the proposal was submitted. Any Atom holder can contribute to this deposit to support proposals, meaning that the party submitting the proposal doesn’t necessarily need to provide the deposit itself. The deposit is required as spam protection, Atom holders that contributed Atoms to a proposal will be able to collect their deposit when the proposal was accepted or when it did not reach the minimum threshold after 2 weeks.
When the minimum deposit for a particular proposal is reached the 2 week (336h) long voting period begins. During this period, Atom holders are able to cast their vote on that proposal. There are 4 voting options (“Yes”, “No”, “No with Veto”, “Abstain”).
Important details in the governance implementation of Cosmos are:
If a proposal is accepted depends on the result of the coin voting by Atom holders. The following requirements need to be satisfied for a proposal to be considered accepted:
If one of these requirements is not met at the end of the voting period, e.g. because the quorum was not met, the proposal is denied. As a result, the deposit associated with the denied proposal will not be refunded and instead be awarded to the community pool.
An accepted proposal will need to be implemented as part of the software that is run by the networks’ validators. A future blog post will cover different types of proposals and how exactly validators coordinate to implement a proposal that passed the procedure described above.
For an exemplary governance vote, check out the first governance proposal from validator team B-Harvest about adjusting the block time rate used to calculate network inflation to mirror actual conditions in the network (Note: Chorus One is supporting this proposal because it aligns staking rewards paid out by the live network with what was described in the Cosmos whitepaper).
At Chorus One, we aim to enable token holders to exert influence on network governance. For this reason, we created a tool that allows Atom holders to effortlessly cast their own governance vote from their Ledger device. You can find the tool on our Cosmos page:
https://chorus.one/networks/cosmos
Another part of our effort in terms of network governance is informing and discussing governance procedures and proposals with our community of delegators and the wider Cosmos ecosystem, join our Telegram and follow our social media channels to stay informed about our stance in matters of blockchain governance!
We believe the governance implementation of Cosmos with delegators inheriting validator votes, but delegators being able to overwrite validator choices and make their own decision is a great solution to the low governance turnouts that can be observed in other blockchain networks. We think this approach does good in striking a balance between a representative democracy (“proxy voting”) for less interested holders, while still allowing for direct influence for token holders that want to directly engage in network governance.
Cosmos Hub governance is still in its early days and we aim to provide our input into how the system could be improved, as we believe a well-functioning governance mechanism will increase the likelihood of success of the Cosmos Network, feel free to chat with us about your ideas!
Chorus One Governance Tool:
https://chorus.one/networks/cosmos
Cosmos SDK Governance Documentation: https://cosmos.network/docs/spec/governance/
Cosmos Network Governance Forum: https://forum.cosmos.network/c/governance
Governance Proposals Statistics:
https://bharvest.io/wallet_en
https://hubble.figment.network/chains/cosmoshub-1/governance
Gaiacli Instructions:
List of query commands (in gaiacli):
gaiacli query gov -h
Participation (through gaiacli):
https://cosmos.network/docs/gaia/delegator-guide-cli.html#participating-in-governance
Originally published at blog.chorus.one on March 25, 2019.
