The Cosmos ecosystem is about to embark on a brave new journey, following the announcement of ATOM 2.0. The white paper, unveiled a few weeks back at a major Cosmos conference, is a radical redesign of the blockchain ecosystem’s value proposition. Or is it?
“The point of Cosmos is to be bigger than any one token, right? If Cosmos grows to be huge, and ATOM doesn't, that is completely fine,” Sunny Aggarwal, a longtime Cosmos developer and founder of Osmosis, the network’s largest app, said in an interview.
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Cosmos is a blockchain project conceived like almost any other, and it can be difficult to wrap your head around it. The central thesis is that we’re heading to a multichain world: That doesn’t just mean that Ethereum can be successful alongside competitors like Solana and Avalanche.
Cosmos is a foundational toolset that allows app developers to build bespoke chains and share network security. This is seen by dYdX’s recent decision to leave Ethereum to build its own native chain that’s part of Cosmos. Instead of being an app on Ethereum, it chose to attempt to capture value generated from users of the decentralized derivatives exchange on its native token and set of network validators.
Atom 2.0 has garnered a lot of buzz. In short, it’s an attempt to strengthen the ATOM chain and place it at the center of Cosmos – making it something like a reserve currency for the system. It changes the tokens issuance schedule, staking arrangement and makes the network-of-networks it supports, the Cosmos Hub, a center of multichain security.
Aggarwal thinks it’s a bold vision, but perhaps a step away from what Cosmos was meant to do. He presented his own model for interchain security using “mesh security” at Cosmosverse, the main Cosmos conference hosted this year in Colombia at the end of September.
Aggarwal thinks a better model for Cosmos’ future is one where each so-called “app-chain” runs their own sovereign state and contributes to a NATO-like defense of others.
“The whole point of mesh network communication is that there's no central chain. There's no central point of failure,” he said. (He made the announcement on-stage wearing a 40-pound suit of chainmail armor, “lugged across two continents … for a one-line joke,” he reportedly said.)
As mentioned, Aggarwal is also the founder of Osmosis, a decentralized exchange that is expanding far beyond that role on Cosmos. His team also built Cosmos’ most-used wallet. Like most other people that believe in Cosmos’ multichain future, Aggarwal believes it’s users that make protocols valuable, not the infrastructure.
If crypto is compared to the 1990s internet boom, betting on more centralized chains like Ethereum would be like betting on AOL or Compuserve. While Cosmos, a network of blockchains specifically-built for applications, would be like betting on Google or Amazon, he said in a recent podcast.
CoinDesk caught up with Aggrawal to discuss his views on the ATOM 2.0 announcement, Cosmos’ value proposition and political map memes. A deep thinker, Aggarwal will be speaking at CoinDesk’s I.D.E.A.S. conference later this month.
Osmosis had a bug. What exactly went wrong, and how did you guys fix it?
Yeah, it was just like a non-deterministic bug introduced after an update. We write in Go [a programming language]; it gives us a lot of power and flexibility but it comes with a couple of things you have to be careful about. We just paused the chain, which was actually an automated process, and we got it back up and running within three or four hours. No real big issue, just, like, normal growing pains.
Is there a bigger lesson here?
This is going to get a little technical, but Go uses a data structure called “a map.” If you iterate over the map, the native Go version is non-deterministic by default, so you have to actively make them work with other applications. That's not the case with a lot of programming languages, like Rust. We actually introduced a new model of maps about six months ago that are automatically deterministic. The takeaway here is we gotta go through the entire Cosmos SDK and find every instance of the old version of map and replace it with the new one.
There was a huge upgrade announced for Cosmos recently. How does this change ATOM’s value proposition?
So there wasn't a Cosmos [version] 2 that was announced, it was an ATOM 2.0 – the two are separate but interrelated things. A lot of new stuff was announced at Cosmosverse. I gave a talk on something called mesh security, which is how we see the future of shared network security. Whether it's Polkadot with [its] parachains or rollups, everyone's building out this hub-and-spoke model of sharing security from one base system to everything else, and that's just not how we see the world working.
The whole point of mesh network communication is that there's no central chain. There's no central point of failure. All chains are equal in the Cosmos, right? So we don't want a system where the Cosmos Hub is the security provider for everything in Cosmos – that would defeat the whole point. The proposal we put forward, on the offensive side, is called national security. It's basically a way of every chain being a security provider and consumer.
I call it the NATO model, where you have a bunch of sovereign countries all sharing security with each other, but all remain sovereign and have their own governance systems and don’t meddle in each other's internal politics. But an attack on one is an attack on all. If something malicious happens on Osmosis, that validator will also get slashed on dYdX and stargaze and Juno.
It seems like the two models have a lot in common. Would you say that your Mesh Network and ATOM 2.0 are complementary?
I think they will inevitably coexist. I think the ATOM system is a subset of the Mesh security system. I like my geopolitics analogies: Atom’s hub model is like Switzerland. Switzerland, historically, was one of the most powerful militaries in the world but it was always very neutral. It had feared mercenaries. The hub could be a similar neutral, pay to play kind of thing.
ATOM’s model can be used to bootstrap new chains. If you don't have a validator set at all yet, you can launch without even having to think about that. Eventually they can spin off onto their own chain once they hit a certain stride. The model we really have in mind [for Mesh networks] – like, a lot of app chains have a medium level of security right now, and they all have their own validator sets – so if they band together to build a security system that could be stronger than any layer 1 [blockchain]. But both models are working towards the same end, and that goal shouldn’t mean that everything relies on ATOM for security.
You’ve compared blockchains to a political map before. What’s the general theory?
It was a play on the “political compass.” There's a vertical axis which is authoritarian to libertarian. And then from the left to right it represents “left wing” versus “right.” It's become a little bit of a meme, a way to place ideologies. I put network structures on the political compass. The top-left quadrant, which was colored red, was the authoritarian left system – sort of like this one hub and spoke, one central leader that connects to all the nodes. It’s more hierarchical than the authoritarian left, where all the nodes are equal except for one which is the authority. Then the libertarian left is a fully connected graph system. There’s no central authority at all. The libertarian right has no central authority, but some nodes are connected to more nodes.
It reminded me of an organic mesh network: All things are connected to the places they need to connect to. It’s organic because those power law dynamics tend to play out if you let systems run. There's naturally going to be power laws and hierarchy. Certain nodes are going to be more well-connected than others.
But the point is, unlike the authoritarian system, it's not a structural point of centrality. There’s still no one point of center system in the libertarian right. And that’s my personal whole worldview on everything I build on Cosmos. That bottom-right quadrant, the libertarian right system, those are the systems that scale. You need high-level communication to make things like “the web of trust” work. Libertarian left systems, fully connected systems, work really well as democracies. But they don't scale.
In light of this, do you think the ATOM 2.0 announcement was a little top-down? It seems like a significant shift of the token’s value proposition, without necessarily having earned the community’s vote.
I think a little bit of the ATOM 2.0 stuff came off as “a decision” rather than as a proposal. It's always important to share ideas early and fast. And they could have done a better job at being a little bit more transparent – but I do think that what they intended was for this to be more of a proposal and to get feedback and start a discussion.
Any lessons you took from the Ethereum Merge as all of this unfolds on Cosmos?
From the Ethereum Merge itself? I mean, not really. I mean, I'm really happy that they did a lot of testing and everything went off really smoothly. We did take quite a bit of some inspiration from this project called EigenLayr that’s being built as a kind of research layer for Eth 2.0. We're pretty close with Sreeram [Kannan]. And I think we definitely took some inspiration from the stuff they built as well.
Messari wrote that ATOM has underperformed relative to Cosmos’ role in crypto. Do you agree, or have an understanding of why that is?
I mean, look, I'll be completely honest – I don't work on ATOM. The point of Cosmos is to be bigger than any one token, right? If Cosmos grows to be huge and ATOM doesn't, that is completely fine. It’d even be a success story of the entire thesis ‘cause we're not dependent on any one token. If you look at the ATOM chain itself, what it’s actually … up until now it hasn't actually been providing much value. Realistically, Osmosis has been the biggest provider of value and use cases in the Cosmos ecosystem right now.
Great answer. Where does Osmosis’ success come from? I read it began to break out after building a bridge to Ethereum.
The bridge to Ethereum is built on a chain called Axelar, which we work very closely with but [it] actually connects the entire Cosmos ecosystem to Ethereum. What are the things that make Osmosis successful? At the end of the day, it really comes down to product and building the best product that people like to use. You can’t necessarily look at liquidity. Liquidity is fickle, it will move elsewhere. What matters the most is your relationships.
Flipside Crypto did an analysis, two months ago or something, where it looked at users onboarding into different blockchains in, like, January, and then their six-months retention rates on chains like Polygon, Solana, Osmosis and a couple others as well. And it actually saw that Cosmos had the highest six-month user retention rate. I think that just kind of shows our point, that building products people want to use brings demand for your system and creates real value.
January – wasn’t that before Terra [part of the Cosmos ecosystem] blew up?
That was before. The analysis was released, I believe, in June or July, so [Flipside was] looking at, like, six months prior to that. So, basically, which users stuck around through the bear [market], through the crash.
OK, OK. Where did you buy the suit armor?
The same place I get everything, which is Amazon.com.
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