Translated by Rhea & LC
HackATOM, the Cosmos hackathon, was held from July 29 to 31, 2022.
It is the second time Cosmos’ HackATOM was hosted in Seoul and the first to be held offline and in-person since the outbreak of the COVID-19 pandemic. More than twenty teams of developers from all over the globe competed in this hackathon for a total prize of KRW 600 million. Above all else, this was the first hackathon held since the launch of the IBC protocol on Cosmos. That was enough to excite even the key figures in the Cosmos community participating in the event as judges to look forward to seeing who will take home the prizes and what kind of bright new ideas they will unfold.
The IBC protocol (Inter-Blockchain Communication Protocol) was proposed in Cosmos to solve the problem of communication between different blockchains and was officially launched in Q1 2021. It is actively running in the Cosmos ecosystem, with various teams working hard even as we speak to further the interoperability with other blockchains such as Ethereum, Near, and Polkadot. It can be said that the interest in the results of HackATOM 2022 was heightened as there was a wider range of tech stacks since Cosmos also announced early this year its launch of Interchain Accounts to provide compatibility.
While various teams – either predetermined or improvised on-site – participated in the hackathon, other events such as necessary workshops, as well as presentations on key projects in the Cosmos ecosystem, were also held on the stage in the front and center of the venue. After the results were handed in, projects gave brief presentations to introduce themselves before the judges. It was followed by panel discussions with projects active in the Cosmos ecosystem as key validators to share their thoughts, including the difficulties they faced as validators and the upside of the Cosmos ecosystem. The event was packed with practical and substantial information about what you need to know as you operate your projects post-launch, as the objective of HackATOM focused on introducing bright and new projects to bring in a breath of fresh air to the Cosmos ecosystem.
With a sizable prize pool spread over various prizes, it is sure to provide much-needed support for the many projects in their early operation. Among the winners were the Korean teams a41, Orange Pulp, and CodeStates. At the BUIDL Asia 2022, held last August 4-5, Team Orange Pulp took the stage as their representative and introduced MEPE, an interchain-based service that allows users to check their various wallets created on different chains on a single dashboard.
Interview with Zaki Manian, One of the HackATOM Judges
The Xangle Research Team sat down to interview Zaki Manian, one of the judges in this HackATOM. He was one of the main Tendermint developers and currently operates DeFi protocols such as Sommelier Finance. Today, Zaki continues to actively participate in the Cosmos community, and we were able to hear his thoughts on Cosmos.
Zaki stated that Cosmos continuously challenges itself with various possibilities based on its high interoperability and strong, time-tested community. He also added that the biggest competitive edge Cosmos has above all else was its developer-friendly environment. Zaki, who is also operating many projects in the Cosmos ecosystem himself, said that he hopes the gap between ATOM holders and Cosmos community participants in Korea can be closed.
The conversation below is an excerpt from our interview.
- Xangle: Hello and welcome. Please share your overall take on HackATOM 2022.
- Zaki: This HackATOM was the first in-person hackathon since the COVID-19 pandemic. At the same time, it was also the first one held since the launch of the IBC protocol. Many different teams participated in the event. I felt it was very special what diverse participants we had. There were first-time participants as well as seasoned veteran teams. They each had starkly different products.
For example, while the first-time contenders tended to focus more on creating their products based on the Cosmos SDK, most experienced teams presented IBC protocol-based services. It was very interesting.
- Xangle: An ideal hackathon would be one where many different teams propose a wide range of products. Which are the teams you are watching out for as favorites to win?
- Zaki: There really is no telling which teams will do what in the future. I believe that is precisely the charm. However, as widely-known projects like Osmosis were birthed out of previous Cosmos hackathons, I, of course, am looking forward to seeing if there would be anyone emerging as new major players in the Cosmos ecosystem.
- Xangle: At the site of HackATOM, we could see so many developers participating, and really feel their passion. What do you think are the strengths that Cosmos has?
- Zaki: First and foremost, Cosmos is developer-friendly. Some of the mainnets are designed to allow only a very “one-size-fits-all” type of development when making a dApp or a related chain. That is not the case with Cosmos. Based on its well-established SDK, users can customize products and services to fit their needs. Also, since it has been around for quite some time, there is a wealth of use cases you can easily look up for reference, which I think is another upside Cosmos offers. This is how high “interoperability” can be reached.
- Xangle: As you mentioned, “interoperability” is the keyword that first comes to mind if we were asked to describe Cosmos in a word. What are some of the actions currently being taken by Cosmos for interoperability?
- Zaki: First, there is the IBC protocol, the communication protocol between different chains, already released last year and currently in commercial use. For now, its active use is limited to those based on Cosmos. However, various teams are working on enabling it for other chains such as Near and Polkadot. Of course, the efforts for connection with Ethereum continue as well.
The ICA or the Interchain Account is out as well. It is a form of an integrated account across various chains, and we look forward to welcoming various services leveraging it. Along with them, the ICS or the Interchain Security is also one of the key topics. Although we put a lot of work into retaining this strong and secure system, I do not think that we should be overconfident about it. The community considers the security issue with significant gravity and is preparing measures against various risks one by one.
- Xangle: As the crypto market grows, the competition among various mainnets is also fiercely heating up. What are your thoughts on Ethereum’s switch to Proof-of-Stake?
- Zaki: I am very excited about Ethereum changing to Proof-of-Stake. I think it will succeed and am sincerely rooting for it. I believe Cosmos will continue to evolve as they have been doing based on the advantages it possesses. I, myself, am also running many different projects in the Cosmos ecosystem, including Sommelier Finance, a DeFi protocol accompanied by off-chain strategies.
- Xangle: Lastly, please tell us what you think would be the next big wave in the crypto market and how you liked your visit to Korea.
- Zaki: Although the DeFi boom has settled down a bit in this bear market, I believe DeFi would continue to lead the ecosystem with new innovations. Of course, I am also excited to see NFTs and other types of utilities. The Korean market is highly interested in crypto and is growing at warp speed. However, when it comes to Cosmos, I felt a certain gap or distance in the sense that only a limited number of people directly participate in the community currently out of the many ATOM holders in Korea. I truly hope that we can change that.
The Core of Cosmos: Interoperability
As apparent even in the interview presented above with Zaki, interoperability is highlighted above all else in the Cosmos ecosystem. In fact, with its vision of becoming the “Internet of Blockchains,” Cosmos continues its various efforts to secure scalability via connection with other blockchains and attain all three elements of the blockchain trilemma – decentralization, security, and scalability.
Cosmos’ effort to secure scalability starts at the level of network structure, comprised of hubs and zones. “Hubs” refer to the key mainnets in Cosmos that act as the central ledger, and parallelly linked independent blockchains connect “zones” in the Cosmos ecosystem. There are largely two technical supports for the ecosystem participants: 1) SDK and 2) IBC protocol.
The Cosmos SDK is an open-source framework for building blockchain applications on top of the Tendermint Core. SDK-based blockchains are built out of composable modules, readily available for any developers to use. Anyone can create a customized app chain as it does not require a high level of understanding of blockchain technology.
The major Cosmos projects discussed below also utilize the Cosmos SDK. With cross-chain communication via the interoperability protocol called the IBC, exchanging information and asset is possible for all Cosmos blockchains.
Launched in Apr 2021, IBC is a protocol that allows the Cosmos Hub and heterogeneous chains (or dApps) and application layers to exchange value, particularly tokens. IBC plays a key role in building the Cosmos interchain, and there are currently 49 Zones connected to the IBC protocol, and the 24-hour trading volume is $9.7M.
In Feb 2022, Cosmos released the Interchain Accounts (ICA) that improve interoperability, allowing for a message to be sent across IBC that will forward the message to the associated ICA, which then is able to perform staking, participating in governance, and swapping tokens.
Interchain Security (ICS) is expected to officially launch on Cosmos sometime in 2H 2022. Enabling independent blockchains natively send assets directly to one another via IBC is very important for Cosmos. However, Cosmos’ architecture lacks shared security as IBC currently depends on each Zone’s security, making it more vulnerable compared to Polkadot’s XCMP, which allows the parachains to exchange messages with other parachains on the same Relay Chain. With Interchain Security, each Zone can rent the security of the Cosmos Hub, ultimately enhancing IBC’s security.
Top DeFi Projects Built on Cosmos
Cosmos is an expanding ecosystem of interoperable blockchain applications. Although the whole Terra debacle tested the platform as the sell-off of LUNA, a stablecoin that once held the number 2 position in terms of TVL on DeFi Lama, took a hit on the Cosmos ecosystem, the technology held up. Despite the Terra crisis, Cosmos is still the launching pad for new and existing projects, including dYdX, an Ethereum Layer 2-based perpetual futures exchange that announced DYDX the launch of its own Cosmos-based blockchain called the "dYdX Chain." Cosmos has a great potential in the app-chain world as the platform continues to develop technologies, such as the launch of IBC, to improve interoperability.
Major Cosmos ecosystem projects participated in HackATOM Seoul 2022, during which many Cosmos projects held free and educational workshops provided by Osmosis, a DEX built on Cosmos, and CosmWasm, a smart contracting platform. Some of these speakers also participated as panels during the HackATOM event.
Osmosis, the first DEX on the Cosmos network launched in late 2021, serves as a liquidity hub connecting assets within the Cosmos ecosystem. Osmosis is unique in that it deploys i) custom AMMs and allows ii) superfluid staking.
Osmosis is focused on a deep level of customization, enabling developers to build their own AMM algorithm with the freedom to change key parameters like token weights and swap fees. Also, Osmosis uses superfluid staking to contribute to the security of the blockchains in the Cosmos ecosystem as Cosmos app chains are unable to rent the security of the Cosmos hub. Superfluid staking is designed to allow users to both stake tokens while simultaneously using them to provide assets to the liquidity pool. This means users are rewarded for helping secure the blockchain while staking and receiving reward fees.
Osmosis had once reached over $1.5B in TVL based on its unique features, and when Cosmos-based Terra’s LUNA and UST prices surged. However, the demise of LUNA and UST in May 2022 took a major hit on the Cosmos-based token economy, causing Osmosis’ TVL to plummet. As of writing, Osmosis’ TVL sits at $185M (as of Aug 3, 2022).
Crescent, a network initially based on the Cosmos hub blockchain, offers a hybrid decentralized experience by combining the previous Gravity Dex AMM with lending and order books. The Cresent network provides cross-chain collateralization of DeFi positions allowing re-utilization of DeFi assets in other chains. Crescent aims to provide more investment opportunities for users by leveraging IBC that would allow users to move their assets to the Crescent Hub from other blockchains. Crescent mainnet went live in Apr 2022, and users can exchange token pairs on Crescent DEX without swap fees.
Provalidator is a professional PoS validator and a decentralized infrastructure provider that support over 20 projects, including many major projects in the Cosmos ecosystem, such as Cosmos, Evmos, Crescent, Osmosis, Juno, and Agoric. Provalidator continuously improves the infrastructure and node architecture as safeguarding the network is the essence of validating. Moreover, it encourages community activities such as hackathons, conferences, and meetups to expand ecosystems.
Cosmostation is a PoS network validator node infrastructure and user application provider based in Korea. It supports 45 network nodes built with the Cosmos SDK, including Cosmos Hub, Crescent, Evmos, Juno, Konstellation, and Osmosis. As of writing, roughly $134 of assets are staked in Cosmostation. Cosmostation is highly committed to empowering the Cosmos ecosystem, offering a wide range of services, including the Mintscan Explorer and Cosmostation Wallet for iOS and Android.
3. Smart contracts
Evmos is the first mainnet blockchain “fully compatible with EVM on Cosmos’ interoperability network.” Evmos uses Ethereum’s Solidity coding language, creating a familiar experience for Solidity developers. Evmos is interoperable with any other IBC-enabled Cosmos chains (non-EVM compatible). Evmos’ tokenomics is designed to reward all network participants, including developers, users, and validators. Block rewards allocated for usage incentives can be distributed to developers and users as a reward for network activity deemed as valuable for the Evmos ecosystem. The crypto community was hyped by the news about Evmos’ scheduled launch in Mar 2022, and the price of Cosmos projects surged after Evmos airdrop.
Having a proposal to deploy Aave V2 on Evmos to be passed with 99.56% of users in favor and being the first EVM mainnet to be built on Cosmos, the Evmos ecosystem was expected to expand fast. However, the current TVL sits at $1.3M (as of Aug 6, 2022, source: DeFi Llama), which is lower than anticipated. At present, EvmoSwap (TVL: $0.4M, source: DeFi Llama), a DEX on the Evmos Chain, and Diffusion (TVL: $0.3M, source: DeFi Llama), a Uniswap v2 fork, are the main DeFi dApps built on Evmos.
Meanwhile, the Evmos team is working with Chainlink to deploy Aave v3, which currently has $6.93B in TVL (as of Aug 6, 2022, source: DeFi Llama) to the Evmos blockchain to expand lending not just to Evmos, but the greater Cosmos ecosystem as well.
CosmWasm is a smart contracting platform built for the Cosmos ecosystem. CosmWasm is written as a module that can plug into the Cosmos SDK, meaning that anyone currently building a blockchain using the Cosmos SDK can quickly and easily add CosmWasm smart contracting support to their chain. While CosWasm development has a steeper learning curve than Solidity, it is designed to eliminate the possibility of reentrancy (the attacker executing malicious code within a single transaction) and offer enhanced security.
About 18 projects, including Juno and Osmosis, are currently utilizing the CosmWasm. Among these, 2 or 3 projects have already integrated into Cosmos from Ethereum, indicating that CosmWasm is a smart contract platform drawing attention from Cosmos.
Juno is a layer 1 blockchain built using the Cosmos SDK and serving as a cross-chain smart contract platform. Juno mainnet went live in on Oct 2021, and the network adopted CosmWasm to enable highly performant and secure smart contracts on the Cosmos SDK. There are currently more than 30 projects built on Juno. These include the native AMM DEX JunoSwap, DAO creator DAODAO, and NFT marketplaces.
So far, Juno has suffered two malicious attacks that have put the network out of commission for some time. The Juno core development team continues to apply improvements to make the network secure.
Konstellation is a DeFi infrastructure platform built on Cosmos SDK. Acknowledging that Cosmos is the future of DeFi, Konstellation has decided to transition its entire token supply from the NEM blockchain to the Cosmos ecosystem in 2019.
Konstellation kicked off with a mission to create various investment opportunities for sophisticated and new investors in the DeFi and cryptocurrency market. Konstellation develops sophisticated financial products through network development and ecosystem expansion. The different projects in the Konstellation ecosystem that use DARC token as fuel for operations are VegaX, a digital asset management firm, and Taebit, a DeFi platform, and all services are organically connected.
Stargaze is the first NFT marketplace in the Cosmos ecosystem. Unlike other NFT marketplaces, Stargaze is a Layer 1 NFT marketplace that provides a high level of flexibility in terms of scalability, allowing interoperable NFT trading in the Cosmos ecosystem via IBC. Stargaze introduces a membership-based DAO called the CurationDAO. The decentralized DAO ensures the quality of NFTs by curating what artwork can be traded in the marketplace. The protocol features an NFT launchpad, NFT marketplace (beta version), and airdrop.
The long-awaited, action-packed BUIDL Asia Week kickstarted in Korea, an event comprised of Cosmos’ HackATOM, BUIDL Asia 2022 conference, and ETH Seoul 2022. Following BUIDL Week, Korea Blockchain Week (KBW 2022) will kick off. As emphasized in the previous Xangle reviews of other overseas blockchain conferences, the current crypto bear market is actually fueling a season of building and innovation. The HackATOM event was an opportunity to witness the enthusiasm and excitement of the crypto community even during the “crypto winter.” The Xangle research team is excited to attend the remaining events to interact with the crypto community. Please stay tuned for the upcoming reviews on these events as well as the reports on the latest insights and perspectives of major market participants of the crypto industry.