FUJAN CRYPTO REPORTS
Whitepaper
Introduction
-
Blockchains have suffered from a number of drawbacks, including their gross energy inefficiency, poor or limited performance, and immature governance mechanisms
-
A novel blockchain network architecture that addresses all of these problems
-
Cosmos is a network of many independent blockchains, called zones
-
The zones are powered by Tendermint Core
-
The Cosmos Hub is a multi-asset proof-of-stake cryptocurrency with a simple governance mechanism which enables the network to adapt and upgrade
-
Cosmos network communicate with each other via an inter-blockchain communication (IBC) protocol, a kind of virtual UDP or TCP for blockchains
-
anyone can connect a new zone to the Cosmos Hub, zones allow for future-compatibility with new blockchain innovations
Tendermint
-
Validators
-
Validators participate in the consensus protocol by broadcasting cryptographic signatures, or votes, to agree upon the next block
-
Validators’ voting powers are determined at Genesis or are changed deterministically by the blockchain, depending on the application
-
-
Consensus
-
Tendermint is notable for its simplicity, performance, and fork-accountability
-
In benchmarks of 64 nodes distributed across 7 datacenters on 5 continents, on commodity cloud instances, Tendermint consensus can process thousands of transactions per second, with commit latencies on the order of one to two seconds
-
-
Light Clients
-
Tendermint’s consensus algorithm is simplified light client security, making it an ideal candidate for mobile and internet-of-things use cases
-
-
Preventing Attacks
-
Tendermint has protective measures for preventing certain notable attacks, like long-range-nothing-at-stake double spends and censorship
-
-
ABCI
-
Tendermint Core is an application-agnostic “consensus engine” that can turn any deterministic Blackbox application into a distributed replicated blockchain
-
ABCI is an interface that defines the boundary between the replication engine (the blockchain), and the state machine (the application)
-
ABCI allows for blockchain applications to be programmed in any language
-
ABCI application would be responsible for
-
Maintaining the UTXO database
-
Validating cryptographic signatures of transactions
-
Preventing transactions from spending non-existent funds
-
Allowing clients to query the UTXO database
-
-
Cosmos Overview
-
Cosmos is a network of independent parallel blockchains that are each powered by classical BFT consensus algorithms like Tendermint 1
-
The Cosmos Hub connects to many other blockchains (or zones) via a novel inter-blockchain communication protocol
-
zones allow Cosmos to scale infinitely to meet global transaction demand. Zones are also a great fit for a distributed exchange, which will be supported as well
-
Tendermint-BFT
-
The Tendermint open-source project was born in 2014 to address the speed, scalability, and environmental issues of Bitcoin’s proof-of-work consensus algorithm
-
The tendermint team was the first to conceptually demonstrate a proof-of-stake cryptocurrency that addresses the nothing-at-stake problem suffered by first-generation proof-of-stake cryptocurrencies such as NXT and BitShares1.0
-
Tendermint is designed to never fork at all, mobile wallets can receive instant transaction confirmation, which makes trustless and practical payments a reality on smartphones
-
-
Governance
-
Validators and delegators on the Cosmos Hub can vote on proposals that can change preset parameters of the system automatically (such as the block gas limit), coordinate upgrades, as well as vote on amendments to the human-readable constitution that govern the policies of the Cosmos Hub
-
By enabling interoperability among different policy zones, the Cosmos network gives its users ultimate freedom and potential for permissionless experimentation
-
The Hub and Zones
-
The Hub
-
The Cosmos Hub is a blockchain that hosts a multi-asset distributed ledger, where tokens can be held by individual users or by zones themselves
-
The hub is responsible for preserving the global invariance of the total amount of each token across the zones
-
Hub must be secured by a globally decentralized set of validators that can withstand the most severe attack scenarios, such as a continental network partition or a nation-state sponsored attack
-
-
The Zones
-
A Cosmos zone is an independent blockchain that exchanges IBC messages with the Hub
-
A zone may be designated as a “source” of one or more token types, granting it the power to inflate that token supply
-
Inter-Blockchain Communication (IBC)
-
if there are three blockchains, “Zone1”, “Zone2”, and “Hub”, and we wish for “Zone1” to produce a packet destined for “Zone2” going through “Hub”
-
This mechanism is similar to that used by sidechains, which requires two interacting chains to be aware of one another via a bidirectional stream of proof-of-existence datagrams (transactions)
Use Cases
-
Distributed Exchange
-
we can make exchanges less vulnerable to external and internal hacks by running it on the blockchain
-
For a decentralized exchange to compete with a centralized exchange, it would need to support deep order books with limit orders. Only a distributed exchange on a blockchain can provide that.
-
The transaction throughput capacity as well as commit latency can be comparable to those of centralized exchanges
-
-
Bridging to Other Cryptocurrencies
-
Sending Tokens to the Cosmos Hub
-
On the Ethereum side (the origin), a bridge-contract would allow ether holders to send ether to the bridge-zone by sending it to the bridge-contract on Ethereum
-
-
Withdrawing Tokens from Cosmos Hub
-
Ether on the bridge-zone (“bridged-ether”) can be transferred to and from the Hub, and later be destroyed with a transaction that sends it to a particular withdrawal address on Ethereum
-
-
Total Accountability of Bridge Zones
-
For example, all IBC packets, from the hub and the origin, might require acknowledgement by the bridge-zone in such a way that all state transitions of the bridge-zone can be efficiently challenged and verified by either the hub or the origin’s bridge-contract
-
We leave the design of the specification and implementation of this system open as a future Cosmos improvement proposal, to be passed by the Cosmos Hub’s governance system
-
-
-
Ethereum Scaling
-
Since Tendermint can commit blocks much faster than Ethereum’s proof-of-work, EVM zones powered by Tendermint consensus and operating on bridged-ether can provide higher performance to Ethereum blockchains
-
-
Multi-Application Integration
-
Such flexibility allows Cosmos zones to act as bridges to other cryptocurrencies such as Ethereum or Bitcoin, and it also permits derivatives of those blockchains, utilizing the same codebase but with a different validator set and initial distribution
-
This allows many existing cryptocurrency frameworks, such as those of Ethereum, Zerocash, Bitcoin, CryptoNote and so on, to be used with Tendermint Core, which is a higher performance consensus engine, on a common network, opening tremendous opportunity for interoperability across platforms
-
Cosmos may offer the best of both worlds for organizations looking to utilize blockchain technology but who are wary of relinquishing control completely to a distributed third party
-
-
Network Partition Mitigation
-
The Cosmos architecture can help mitigate this problem by using a global hub with regional autonomous zones, where voting power for each zone are distributed based on a common geographic region
-
For instance, a common paradigm may be for individual cities, or regions, to operate their own zones while sharing a common hub (e.g. the Cosmos Hub), enabling municipal activity to persist in the event that the hub halts due to a temporary network partition
-
-
Federated Name Resolution System
-
With Namecoin, we can verify that, for example, @satoshi was registered with a particular public key at some point in the past, but we wouldn’t know whether the public key had since been updated recently unless we download all the blocks since the last update of that name
-
This lets us prove existence, but not the non-existence of later updates to a name
-
With Tendermint, all we need is the most recent block-hash signed by a quorum of validators (by voting power), and a Merkle proof to the current value associated with the name
-
In Cosmos, we can take this concept and extend it further. Each name-registration zone in Cosmos can have an associated top-level-domain (TLD) name such as “.com” or “.org”, and each name-registration zone can have its own governance and registration rules
-
Issuance and Incentives
-
The Atom Token
-
Atoms are a license for the holder to vote, validate, or delegate to other validators
-
Like Ethereum’s ether, atoms can also be used to pay for transaction fees to mitigate spam
-
Fundraiser
-
From Genesis onward, 1/3 of the total amount of atoms will be rewarded to bonded validators and delegators every year
-
-
-
Limitations on the Number of Validators
-
Tendermint blockchain gets slower with more validators due to the increased communication complexity
-
On genesis day, the maximum number of validators will be set to 100, and this number will increase at a rate of 13% for 10 years, and settle at 300 validators
-
-
Becoming a Validator After Genesis Day
-
Anyone can become a validator at any time, except when the size of the current validator set is greater than the maximum number of validators allowed
-
When a new validator replaces an existing validator in such a way, the existing validator becomes inactive and all the atoms and delegated atoms enter the unbonding state
-
-
Penalties for Validators
-
There must be some penalty imposed on the validators for any intentional or unintentional deviation from the sanctioned protocol
-
-
Transaction Fees
-
Each validator can subjectively set whatever exchange rate it wants, and choose whatever transactions it wants
-
The collected fees, minus any taxes specified below, are redistributed to the bonded stakeholders in proportion to their bonded atoms
-
Of the collected transaction fees, ReserveTax (DEFAULT 2%) will go toward the reserve pool to increase the reserve pool and increase the security and value of the Cosmos network
-
-
Incentivizing Hackers
-
In order to encourage the discovery and early reporting of found vulnerabilities, the Cosmos Hub encourages hackers to publish successful exploits via a ReportHackTx transaction that says, “This validator got hacked
-
-
Governance Specification
-
Cosmos Hub is operated by a distributed organization that requires a well-defined governance mechanism in order to coordinate various changes to the blockchain, such as the variable parameters of the system, as well as software upgrades and constitutional amendments
-
A strict majority of Yea or YeaWithForce votes (or Nay or NayWithForce votes) is required for the proposal to be decided as passed (or decided as failed), but 1/3+ can veto the majority decision by voting “with force”
-
Related Work
-
Consensus Systems
-
Classic Byzantine Fault Tolerance
-
PBFT became the standard algorithm, spawning many variations, including most recently one created by IBM as part of their contribution to Hyperledger
-
Tendermint has an improved and simplified underlying structure, some of which is a result of embracing the blockchain paradigm
-
allows for faster provable transaction commits for light-clients and faster inter-blockchain communication
-
the blocks proposed by validators are split into parts, Merkle-ized, and gossipped in such a way that improves broadcasting performance
-
Tendermint Core doesn’t make any assumption about point-to-point connectivity, and functions for as long as the P2P network is weakly connected
-
-
BitShares Delegated stake
-
BitShares, stakeholders elect “witnesses”, responsible for ordering and committing transactions, and “delegates”, responsible for coordinating software updates and parameter changes
-
BitShares2.0 aims to achieve high performance (100k tx/s, 1s latency) in ideal conditions, with each block signed by a single signer, and transaction finality taking quite a bit longer than the block interval
-
there is no significant collateral of witnesses or delegators in the likeness of Tendermint PoS that get slashed in the case of a successful double-spend attack
-
-
Stellar
-
Stellar [13] refined a model of Federated Byzantine Agreement wherein the processes participating in consensus do not constitute a fixed and globally known set
-
The security of the Stellar mechanism relies on the assumption that the intersection of any two quorums is non-empty, while the availability of a node requires at least one of its quorum slices to consist entirely of correct nodes, creating a trade-off between using large or small quorum-slices that may be difficult to balance without imposing significant assumptions about trust
-
the only provided strategy for ensuring such a configuration is hierarchical and similar to the Border Gateway Protocol (BGP), used by top-tier ISPs on the internet to establish global routing tables, and by that used by browsers to manage TLS certificates; both notorious for their insecurity
-
The advantage of Tendermint-based proof-of-stake, then, is its relative simplicity, while still providing sufficient and provable security guarantees
-
-
BitcoinNG
-
BitcoinNG is a proposed improvement to Bitcoin that would allow for forms of vertical scalability, such as increasing the block size, without the negative economic consequences typically associated with such a change, such as the disproportionately large impact on small miners
-
-
Casper
-
Casper [16] is a proposed proof-of-stake consensus algorithm for Ethereum
-
By letting validators iteratively bet on which block they believe will become committed into the blockchain based on the other bets that they have seen so far, finality can be achieved eventually
-
The challenge is in constructing a betting mechanism that can be proven to be an evolutionarily stable strategy
-
-
-
Horizontal Scaling
-
Interledger Protocol
-
It provides an ad hoc interoperation between different ledger systems through a loosely coupled bilateral relationship network
-
Like the Lightning Network, the purpose of ILP is to facilitate payments, but it specifically focuses on payments across disparate ledger types and extends the atomic transaction mechanism to include not only hash-locks but also a quorum of notaries
-
-
Sidechains
-
Sidechains [15] are a proposed mechanism for scaling the Bitcoin network via alternative blockchains that are “two-way pegged” to the Bitcoin blockchain
-
Sidechains allow bitcoins to effectively move from the Bitcoin blockchain to the sidechain and back and allow for experimentation in new features on the sidechain
-
since Bitcoin uses proof-of-work, sidechains centered around Bitcoin suffer from the many problems and risks of proof-of-work as a consensus mechanism
-
-
Ethereum Scalability Efforts
-
Ethereum is currently researching a number of different strategies to shard the state of the Ethereum blockchain to address scalability needs
-
-
Cosmos vs Ethereum 2.0 Mauve
-
Cosmos is specifically about tokens. Mauve is about scaling general computation
-
Cosmos is not bound to the EVM, so even different VMs can interoperate
-
Cosmos lets the zone creator determine who validates the zone
-
Anyone can start a new zone in Cosmos (unless governance decides otherwise)
-
The hub isolates zone failures so global token invariants are preserved
-
-
-
General Scaling
-
Lightning Network
-
The Lightning Network is a proposed token transfer network operating at a layer above the Bitcoin blockchain (and other public blockchains), enabling improvement of many orders of magnitude in transaction throughput by moving the majority of transactions outside of the consensus ledger into so-called “payment channels”
-
The main benefit of the Cosmos network described here is to enable such direct token transfers
-
-
Segregated Witness
-
Segregated Witness is a Bitcoin improvement proposal link that aims to increase the per-block transaction throughput 2X or 3X, while simultaneously making block syncing faster for new nodes
-
The brilliance of this solution is in how it works within the limitations of Bitcoin’s current protocol and allows for a soft-fork upgrade
-
Tendermint uses a BFT round-robin algorithm based on cryptographic signatures instead of mining, which trivially allows horizontal scaling through multiple parallel blockchains, while regular, more frequent block commits allow for vertical scaling as well
-
-
Roadmap
Team
Jae Kwon – Board Member, CEO, and Founder
-
Founder & CEO of Tendermint – 4 years 2 months
-
Cofounder of iDoneThis – 8 Months
-
Lead Mobile Developer for Yelp – 2 years
-
Webservices Engineer for Alexa Internet – 2 years
-
Computer Science from Cornell University
Ethan Buchman – Board Member, CTO, and Cofounder
-
Co-founder and CTO of Tendermint – 2 years 5 months
-
Core Developer for Eris Industries – 1 year 8 months
Ash Han – Advisor
-
Advisor to OmiseGo – current
-
Angel Backer of Qtum – 1 year 3 months
-
Board Advisor at Tendermint – current
-
Advisor to CyberMiles – current
-
Strategy Advisor to Chronobank – 8 months
Jim Y – Advisor
-
Startup Helper for Tendermint – current
-
Early Investor in Refinery29 – 1 year 9 months
-
Engineering Manager for Red Hat – 1 year 6 months
-
Founder and CEO of Identyx – 2 years 7 months
-
Advisor to Mobicents – 2 years 6 months
-
Computer Science from University of Texas at Austin
Thomas Greco – Advisor
-
Special Advisor to Omise
-
Special Advisor to Ethereum Foundation
Arianne Flemming – VP of Finance
-
Finance for Tendermint – current
-
Sales and Trading Analyst, Fixed Income for Credit Suisse – 3 months
-
Buying Intern for Holt Renfrew – 4 months
-
Master in Finance from Princeton University
Christine Chiang – Head of Communications
-
Contributor to BTCMANAGER – 7 months
-
Pricing Analyst for NASA Jet Propulsion Laboratory – 1 year 10 months
-
Data Analyst for Encore Capital Group – 10 months
-
Management Science from UC: San Diego
David Braun – Software Engineer
-
Software Engineer for Monax Industries – 2 years 5 months
-
Software Engineer for Handspring – 1 year
-
Software Developer at Center for Advanced Medical Informatics at Stanford University – 6 years
Greg Szabo – VP of SRE
-
Windows Production Engineer, Team Lead for Morgan Stanley – 5 years 3 months
-
System Engineer, System Administrator, IT Lead for Noerr LLP – 4 years 10 months
Partners & Backers
Nothing is confirmed but it is clear that they have communication with ETH and OMG
Articles
https://www.reddit.com/r/cosmosnetwork/comments/8c6zwz/cosmos_vs_aion_vs_wan_vs_icon/
Videos
https://www.youtube.com/watch?v=wq1fXPLktUQ
https://www.youtube.com/watch?v=t885QSY0sNQ
https://www.youtube.com/watch?v=QExyiPjC3b8
https://www.youtube.com/watch?v=_cVxaUMm5Po
https://www.youtube.com/watch?v=b-ytzLX-2EE&list=PLdQIb0qr3pnBPpNmYv3PtY8aJJng2nn44
CoinCheckUp
Conclusion
I would give Cosmos a B+ rating. This is a very hard decision to make, because of several different reasons. Their whitepaper was very detailed but focused a lot on Tendermint compared to cosmos. Now yes Tendermint is the core tech behind cosmos but I still wanted to know more about the external factors of cosmos. Their team is loaded, they have a full business team, yet most of them with very little to not huge experiences. This is a decent team but we have seen better. Now this project is working closely with ETH, OMG, and all of those companies in their little circle. It makes me feel like all of them are going to create something really great. I would say this is a close competitor to Aion and have as good if not better team, however, it makes me feel like Aion is more futuristic and connected then Cosmos. They don’t have any confirmed partners, however, it is pretty clear who they are connected to and working with. In conclusion, when this comes out I think it will be smart to hold some of this, but until we hear a lot more I wouldn’t make this a top 10 holding.
