If you believe that it’ll be a multi-chain world (which isn’t a controversial opinion nowadays), you need to care about interoperability (blockchains communicating and interacting with each other).
Today, let’s recap an approach that dates as far back as 2016, when the Cosmos white paper was released and IBC as an idea was introduced.
What’s Cosmos and what’s IBC?
Cosmos: when you think of Layer 1 blockchains, you probably think of one monolithic blockchain. Cosmos is not that. Cosmos is a network of many independent blockchains, think of a “multi hub and spokes” model where separate blockchains are spokes and the “router” blockchains are hubs
Why? Cosmos would argue instead of trying to make one monolithic blockchain work for every use case, why not have a specifically optimized blockchain for each use case, but benefit from the underlying security and interoperability of a greater network?
IBC (Inter-Blockchain Communication): is the protocol that lays out how these sovereign blockchains can interact and transfer data. The protocol was launched in April 2021
How does IBC work?
Let’s say we have two independent blockchains within the Cosmos ecosystem, chains A and B. Chain A and B have their own tokens, governance, etc.
IBC notably separates out two layers: the base layer handles transportation, authentication, and ordering which is separate from an app layer that would be built on top of the base layer (example app layer: swapping assets across chains)
In order to communicate, an IBC module would sit on chain A and chain B. In order to communicate, chain A needs to know what chain B’s state is and verify that, the component within the IBC module that does this is called the light client.
As part of the IBC modules, there are also functions for example to set up connections and channels to send and receive data between chains. Channels represent connected smart contracts that live on separate chains, they are established through a handshake similar to the TCP handshake protocol. So if one doesn’t already exist, a channel would need to be initialized between chains A and B.
The IBC protocol provides important guarantees such as what chains A and B say is the state of their ledger is actually the state, that data is delivered exactly-once, and that data is delivered in the order it was sent (if on an ordered channel), and that data is delivered to the right module
After a channel is established, a relayer (think of a mail carrier) actually creates the datagrams that are transferred between chains A and B. Relayers are off-chain but can be run by anyone that's trusted by the community.
The easiest app to envision being built on top of IBC includes transferring tokens between chains, however, the protocol is actually even more powerful than that since it allows for arbitrary data to be transferred, so let your imagination run wild about what interoperability can truly enable.
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