Concluding Thoughts & Current State of Cosmos

As of September 2018, the Cosmos team has proven that Tendermint consensus works, launched the Cosmos-SDK, and are on track to launch the Cosmos Hub by the end of 2018. However, this launch will be without the IBC, meaning that other Tendermint-chains cannot connect to the Cosmos Hub just yet, to ensure that the Hub works first. Soon after launch, they will be rolling out the IBC and Ethermint, allowing Ethereum developers to port over to Cosmos with ease. The team also already has a specification for making Cosmos interoperable with Proof-of-work Ethereum, but that will be rolled out a few months after the IBC is released.

Having done a deep dive into Cosmos, it is clear that the success of the Cosmos Network relies on 3 big components:

• Proliferation of Tendermint-based blockchains
• Reliability and effectiveness of Cosmos Validators
• Speed of deployment & out-executing the competition

Although this list says that there are over 60+ projects in the Tendermint & Cosmos ecosystem, the number is probably overblown — 

Secondly, there lies a huge responsibility on the shoulders of Cosmos validators. Other than maintaining the integrity of the blockchain, they control the direction of the Cosmos Network. If the incentive structure of running a Cosmos validator is broken, we may see a lack of engagement from validators, and hence a poor governance structure. However, so far this has proven to be false, where validators in the Testnet are super active to make sure that their setup works properly once the Cosmos Hub launches.

Finally, and most importantly, is the question of how quick Comsos will be able to deploy the Cosmos Hub, IBC, and further developments to connect non-Tendermint chains. Building these technologies are hard, and the team has been pushing back their deadline for launching the Cosmos Hub multiple times in the past. Jae has delivered on his promise to shave his head after missing the deadline for launching in May 2018. Shipping code quickly is particularly crucial at this time, as the scaling problems of Ethereum have given teams an opportunity to compete with it. There is a race to build out smart-contract platforms that are able to win the hearts and minds of developers through scalability, privacy, interoperability, and other features.

Other than interoperability, Cosmos also has a compelling scalability story. Instead of being beholden to a blockchain that can be clogged up by digital cats, Cosmos gives developers to have control over their own applications, where bottlenecks in other applications will not slow down theirs. This is similar to Plasma, where each Plasma application on Ethereum can have it’s own set of validators and scales well. However, there is a lot of complexity in building a Plasma application, having to encode custom “exit transactions” and “fraud proofs” to leave the Plasma chain and interoperate with the main Ethereum chain. Cosmos’ simple SDK makes this part much simpler, yet preserving the scalability aspects of Plasma. While DFINITY needs thousands of transactions per second to support hundreds of different applications, we can think of the Cosmos Network as a blockchain which is sharded by application — meaning each shard supports a single application, and needs to have much less throughput capability per shard on average.

It is still unknown how majority of dApp developers will choose to build their applications over the next few years — on large blockchains or on their own blockchains. If we see the latter, we can expect the Cosmos Hub to be extremely valuable, being the channel by which all these applications talk to each other. A valuable Cosmos Hub will naturally lend towards a valuable governance token (Atom), as these governance tokens can dictate future changes in the network such as new fee structures paid to Cosmos Hub validators and so on. As a result, we can also expect value to accrue to these Atoms if the inflation rate makes sense.