Exploring the tech behind crypto one block at a time |
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Once a Pioneer, Cosmos Blockchain Project Faces ‘Existential’ Crisis |
Zaki Manian, the co-founder of Sommelier, is a key figure in the Cosmos blockchain community but worries about its future. (CoinDesk) |
The early days of the blockchain industry were defined by maximalists. A winner-takes-all mindset pervaded crypto Twitter and blockchain forums, with fans of each new project – be it Ethereum, Bitcoin, or Cardano – hell-bent on convincing others that its chain would be the chain to snuff competitors and take blockchains mainstream. In recent years, this absolutist mindset has fallen mostly out of vogue, with new blockchains launching every day alongside “bridge” infrastructure to help them communicate with one another. At the forefront of this shift was Cosmos – the blockchain ecosystem that helped to pioneer the “appchain” (blockchains dedicated to specific applications), shared security, and the proof-of-stake consensus mechanism that now powers Ethereum and most newer blockchains. Cosmos set out to create not one blockchain, but a family of them – each engineered for its own use case but set up to easily communicate and swap assets back and forth. Once considered a technical marvel in the world of blockchain infrastructure, the Cosmos SDK – the software development kit that allows anyone to build a Cosmos-based blockchain – was at one point the go-to toolbox for any developer looking to spin up a network. But among the blockchain ecosystems that have been hit hardest by crypto’s market meltdown, Cosmos sits near the top of the list. The spectacular collapse of Terra – at one point one of the largest Cosmos-based blockchains – left a liquidity hole in Cosmos’ decentralized finance (DeFi) ecosystem that it has yet to recover from. Politics and infighting – both a feature and a bug of Cosmos’ open-source development model – have been blamed for slowing development. Now, newer blockchain-in-a-box projects have proliferated, particularly in the Ethereum ecosystem, which put Cosmos at risk of becoming obsolete in a category it once monopolized. It also can’t help that the U.S. Securities and Exchange Commission thinks that ATOM, the crypto token most closely associated with the Cosmos ecosystem, is a security. According to Zaki Manian, a leading figurehead in the Cosmos community and the creator of Sommelier, the next year for Cosmos may well be “existential.” “Cosmos has, I would say, like eight to nine months, maybe a year at most, to kind of find a way to create something unique and distinctive, something that differentiates itself and makes it feel like some coherent thing that’s separate from Ethereum or separate from the rest of the blockchain space,“ Manian told CoinDesk this week. “I think we have the raw ingredients to have a shot.” |
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HAS THE AGE OF AI COME TO WEB3? Sam Altman’s latest project, Worldcoin, launched its token WLD and mainnet on Monday. The identity protocol uses a device known as an “orb,” which scans a user’s iris and creates a digital ID. The launch sparked interest across the Web3 world as well as some backlash, including from Ethereum’s Vitalik Buterin. He released a blog post in which he raised his concerns about the protocol’s use of “proof-of-personhood,” claiming that the user-authentication system gives room for centralization and security problems. FEDNOW’S FUTURE? The U.S. Federal Reserve denies that its new instant payments service, FedNow, launched last week, is in any way tied to the digital asset space. But there is plenty of speculation that the new system could ultimately lay the groundwork for a potential central bank digital currency (CBDC) in the U.S. Some lawmakers and political leaders, especially among Republicans, have expressed concerns that a CBDC might be prone to surveillance by authorities, or that transactions could be subject to censorship. Current Florida Governor and 2024 GOP presidential hopeful Ron DeSantis has repeatedly said that he would ban a CBDC if elected, casting a so-called digital dollar as a possible form of “government-sanctioned surveillance.” But there’s growing support among major world economies for CBDC development, with the Bank of International Settlements publishing a report this month that encouraged countries to consider eventual plans for adoption. |
Highlighting blockchain tech upgrades and developments. |
- Wormhole, cross-chain messaging platform, launches “Wormhole Gateway,” a new application-specific blockchain built with the Cosmos software development kit, connecting Cosmos ecosystem to more than 20 connected blockchains including Ethereum, Solana and Sui, for “deep interchain liquidity.”
- Zcash, privacy-focused blockchain exploring transition to proof-of-stake consensus mechanism from proof-of-work, proposes intermediate step of “trailing finality layer” that could allow ZEC staking to earn protocol rewards.
- The Avalanche Foundation, which is behind the Avalanche blockchain, allocated $50 million to purchase tokenized versions of traditional assets such as equities, credit, real estate and commodities minted on the blockchain.
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- Flashbots, an Ethereum-centric research and development startup tackling the issues around maximal extractable value (MEV), raised $60 million in a Paradigm-led round to further its Ethereum software product SUAVE.
- Radiant Capital, a decentralized lending protocol,raised $10 million from Binance Labs, the venture capital arm of the world’s largest crypto exchange by trading volume.
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Ethereum’s Supply is in a Clear Downtrend |
In some ways Ethereum’s metrics have slumped over the past year. But in other ways, the world’s second-largest blockchain is thriving. According to the newsletter Bankless, Ethereum’s network revenue fell to $847 million in the second quarter, down 33% from a year earlier. Daily active addresses slid by 6% to about 444,000. On the other hand, the amount of ether (ETH) staked – used to secure transactions on the blockchain – climbed by 59% from a year earlier to 20.6 million (worth $39 billion). And as the chart below reveals, the ether supply is now clearly in a deflationary pattern, following a series of changes in recent years to the project’s tokenomics, including the implementation of a change known as EIP-1559. In the second quarter the deflation rate was 0.8%, versus inflation of 0.7% a year earlier. “This growth rate turned negative as the EIP-1559 fee burning mechanism is now chugging along at full steam,” according to Bankless writer William Peaster. Lower supply theoretically would put upward pressure on the ETH price. |
The total supply of ether peaked in 2022 and now appears to be steadily decreasing. (Etherscan.) |
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