A quick look at INTEROPERABILITY CHAINS

Before the whole WSB fiasco happened and the cryptocurrency subreddit was flooded with new investors trying to learn the tech and veterans trying to warn them away from pump and dump scams, one of the big conversations going on was the sudden rise of Polkadot as a top 5 coin less than one year after its main net launch. This parabolic rise caught a few people by surprise as it seemingly came out of nowhere. There are so many things going on in the cryptoverse that having an all encompassing perspective of who is doing what is a probably near impossible task unless you are fledged full time to looking into this stuff. As a crypto noob, I would love to have a conversation about interoperability chains and hope to understand what they are doing and see if they deserve all the hype they are slowly building up.

Chains like Polkadot, although in many ways similar to the Ethereum smart contract platform, seem to argue thatthey offer something unique to the blockchain architecture which enables them to justify their place in the crypto space. While some blockchain communities view themselves or want to view themselves simply as better, shinier version of Ethereum (See Tezos or Cardano), and are explicitly competing with the current smart contracts platform king, these new players really stress the need for interoperability focused architecture which in their view has not been adequately addressed.

What I also find interesting is how these coins usually don’t market themselves as Ethereum competitors but rather as complimentary chains. Although this statement is not necessarily wrong, it is definitely one that needs to be examined. Why? Because it could simply be a marketing strategy and not an accurate reflection of the truth. When the big dog and its huge community finds out that there is another “Ethereum killer” on the loose, the coin in question draws a lot of attention to itself, sometimes very negative attention. By disguising itself as a non threat, the coin can hide from the mania and hope that it grows discretely on the sidelines until its time is right. Its not a bad strategy and it makes sense why someone would want to do that. It just means that statements like “We are not competing with Ethereum” shouldn’t be taken at face value.

So what I simply want to do here is take a quick glimpse at these chains, mainly Polkadot and Cosmos since they are the most hyped at the moment, and understand what it is they bring to the table.

What do we mean by Interoperability exactly?

Now while interoperability might seem quite obvious at first glance, it becomes less so when we obverse the way these new players are forming their own architectural base. When we think of interoperability in the blockchain world we think of two different ecosystems linking together by a bridge, facilitating transactions and data transfers between them. An atomic swap can be considered a form of interoperability for instance.

But interoperability chains take this idea a step further. See when you have an atomic swap, no value actually transfers from one blockchain to the next, only the value of the addresses doing the exchange changes. If I am doing an atomic swap between BTC and ETH, those coins remain on their respective chains. Interoperability chains want BTC to go onto the Ethereum chain and vice versa. The objective of Polkadot and Cosmos isn’t just about the seamless transfer of digital assets, it is also about wanting to create an ecosystem out of that seamless transfer. So when these chains view interoperability, the goal is not simply to bridge different blockchains together like Ethereum and BTC, but rather to create a chain that diverges into other blockchains, creating a blockchain of blockchains. So while Ethereum would be considered a layer 1 blockchain, Cosmos or Polkadot would be a layer 0. These interoperability chains would be the network that help facilitate the communication between all other blockchains. They can help you, the user, trade digital assets from one blockchain to another but they can also help you create your own blockchain if you feel like the current existing ones aren’t suited to your needs. Think of a tree where the layer 1 blockchains are the diverging branches and the layer 0 is the trunk (or the roots) maintaining the entire ecosystem. Cosmos even calls itself the “internet of blockchains” if that helps you visualize this. The whole things seems a bit grandiose, very much meta, and fairly cool to think about. The question remains; how necessary is it really?

What is the goal?

The existence of these chains is based on two of premises which I want to quickly address. The first premise being that in this survival for the fittest blockchain mayhem we are currently witnessing, we believe and claim that there will be more than one survivor. This one seems simple to accept. There are many blockchains in existence right now. Not all of them will make it, not all of them will survive, perhaps new ones will emerge and trump many of the ones we know currently exist. But if the decentralized and distributed utopia crypto evangelists dream about is to become a reality, it is easy to imagine it will be filled with many different types of blockchains co existing and functioning together to help maintain the new world. This ideal is often pushed around here on this sub. People will often make the claim that there is no need for tribalism because there will be many “winners” that can coexist.

But accepting this premise leads to an interesting thought. It begs the question; is it possible for the entire crypto/decentralized world with all of its applications, NFTs and currencies to be stuffed into a single blockchain? I think that the answer to this question in the immediate is a pretty clear NO. There is no existing blockchain right now that has the capacity to sustain that much transactions without crawling to halt or being subject to insanely high speeds. Personally, I think and would love to witness a time where all data is sourced from on one singular decentralized system that connects the entire world, but if that were to happen I don’t believe it will be during my lifetime.

But right now, we consider this to simply be a scalability issue, and although Interoperability chains do claim to address scalability, the main highlight for them isn’t just about speeds but about Governance.

So this question leads us to the second premise we need to address here that is often put forward by these interoperability chains. For them, blockchains are themselves specialized and having multiple blockchains is necessary for a decentralized world to thrive. Interoperability chains have a very clear vision as to WHY there will be different blockchains; because it is fundamentally necessary to organic growth. In this interview with Cosmos developer Sunny Aggarwal, he claims that one of the handicaps of the Ethereum blockchain is its lack of **social scalability**. The problem of a single blockchain is that it is bound to a singular governance model which may not suit all of the diverging interests. It is implied that Ethereum’s focus on Defi makes it unsuitable for other assets, hence the need for other blockchains. It is easy to see the connection between the first and the second premise. If we need blockchain technology for a multitude of different societal functions, then we will need a multitude of specialized blockchains to operate them. So being able to write your own blockchain from scratch gives you flexibility to design the architecture of the blockchain to fit your application’s needs specifically. The idea here is that many applications will require many governance protocols so one blockchain with only one governance protocol simply isn’t enough. It is a very compartmentalized view of blockchain.

And vice versa; the more blockchains there are, the more we will be able to do using them and the stronger the decentralized world becomes. So not only do we need to have many blockchains, we also need for them to communicate with each other as seamlessly as possible.

Whether this is true or not remains to be proven in the long run and requires a lot of technical know how that I unfortunately do not have. If that approach is correct then the existence of these interoperability chains will be beneficial to Ethereum and the crypto world as a whole. I suppose to this remains to be seen.

Cosmos and Polkadot:

Now onto examining these coins a little closer and seeing what the differences are between them (at a very superficial level).

Cosmos:

Cosmos is a non profit attempt at being network of many independent blockchains each powered through its BFT protocol called Tendermint. Anyone on the Cosmos network can easily create custom application specific blockchains, called Zones, using what they call the Software Development Kit (SDK). These Zones connect to Hubs, which are specifically created to help zones communicate and link with one another. The vision of Cosmos is to have thousands of Zones and Hubs that are Interoperable through the Inter-Blockchain Communication Protocol (IBC). Cosmos uses proof of stake as its consensus mechanism

The Cosmos maintnet is live.

Polkadot:

Polkadot is a blockchain protocol that connects multiple specialized blockchains into one unified network. It works by having many blockchains running in parallel, called Parachains, that connect to a central chain called the Relay Chain. These blockchains depend on this singular Relay Chain in order to exist and for security measures. Developers can easily build custom application specific Parachains through the Substrate development framework. Polkadot uses proof of stake as its consensus mechanism.

The Polkadot mainnet and some of its key components are still being built.

Differences:

The key difference to take away from all of that jargon above is the difference between a singular Relay Chain and the numerous Hubs. So what does this mean?

For Polkadot,

It means that the Relay Chain holds the final decision over any state change made on a Parachain. If the relay chain is very secure and has many validators then this shouldn’t be a problem and Parachains can benefit from this security. Not having to worry about maintaining your own security can be a big advantage for certain developers. But, if the relay chain is not secure then all Parachains risk being affected.

Polkadot has a fixed number of Parachains and owning a Parachain can be an expensive process. For now that number is 100, though it may change in the future.

For Cosmos,

It means that there is no global means of security. Every blockchain is independent and has the personal responsibility to secure itself. This can be a lot harder to achieve when you don’t have a global system to rely on like in Polkadot. But it also means you retain more freedom. Each blockchain can have its own consensus model and needs to find its own validators. The Hubs have only one goal; to help Zones communicate with one another.

Cosmos has no fixed number of Zones or Hubs, anyone can build one of they so choose.

So are Interoperability Chains competing with Ethereum?

I think its safe to say that yes these new blockchains are in fact competing with Ethereum AT THE MOMENT and for the simple reason that Ethereum is NOT a Zone nor a Parachain on their network.

For example, if Cosmos wants to create a link between its ecosystem and Ethereum’s it has to create a peg zone which is essentially a bridge that mirrors activity from one chain to the next without actually transferring any asset. Ethereum is an outsider to these systems and in no way shape or form does it really benefit from it nor from their native tokens unless it decides to move on of these chains.

There is a current project on the Cosmos network right now called Ethermint which proposes to duplicate the ethereum network onto the Cosmos Network and shifting the account balances of ETH users over on the Cosmos platform. Users who hold ETH will be able to use the Ethermint coin in the same way they could use ETH. This comes off as a cool idea but it does not seem like the Ethereum community is scrambling to make the transition. Right now, it seems Cosmos needs Ethereum much more and Ethereum needs Cosmos.

I am not saying that these coins can’t benefit from each others existence in the long run but I do think it is a bit disingenuous to think they aren’t competing either.

Conclusion

I’m honestly not sure how to conclude this. The nuance behind these two coins are way way more complicated than I am letting on with this small rant and I encourage anyone just hearing about these coins to DYOR. I think what Polkadot and Cosmos are trying to do seems awesome, I just have a hard time understanding how essential it is. It is also worth noting that that Cosmos and Polkadot are not the only interoperability chains out there and others like Avalanche are also trying to build their platforms and their community. If anyone has any feedback or would like to add something to the conversation I would be eternally grateful as I am simply trying to learn more!