E'er since the launch of the inter-blockchain communications, or IBC, protocol in March, which enabled the communication and transfer of digital avails beyond dissimilar blockchains, development action seems to take picked up step on the Cosmos (ATOM) network.

Transaction volumes, the creation of decentralized applications and the number of chains continued via IBC have all been trending upward in recent months. Speakers at the Cosmoverse Briefing, which took place concluding week, presented many of the latest technologies under development on the blockchain. Its biggest-ever hackathon volition also have place in Lisbon tomorrow.

Tendermint is the core developer behind the Creation blockchain and serves every bit its gateway to the ecosystem. On Wednesday forenoon, Peng Zhong, the company's CEO, joined Cointelegraph in an exclusive interview to hash out the future of the Cosmos network.

Cointelegraph: What are some of the evolution highlights surrounding the Creation blockchain in terms of the decentralized finance, or DeFi, ecosystem?

Peng Zhong: I think the biggest highlight was early this year when Inter-Blockchain Communications (IBC) launched on the Cosmos hub for the commencement fourth dimension. Not much happened after that. People were like, okay, IBC is live, now what do I practise? But at present, we are seeing 22 blockchains that support IBC. They have all been able to connect to various decentralized exchanges (DEXs) available in the Creation ecosystem, such as Osmosis, Gravity DEX. So there's been a lot of cantankerous-concatenation activity, much more than than anyone expected. And we are seeing a very positive growth cycle with IBC enabled.

Total transaction volume on the Cosmos blockchain in the past 30 days. | Source: ATOMSc

CT: Interesting, and then where do yous run into the IBC ecosystem heading, say, five years from now?

PZ: That's very far in the future. I was going to present tomorrow that we are seeing 22 chains today, and next, nosotros'll see about 200 chains connected through IBC next year. I haven't thought about v years out, but my long-term vision running Tendermint and with our focus on bringing more users to Cosmos and a improve development experience to the Cosmos Stack. We'll see a million blockchains in the time to come. Five years from now, I would look that number to exist tens of thousands, if not hundreds of thousands of chains linked through IBC. And that'll exist admittedly spectacular, just we have a lot of work to practice on the infrastructure side to handle all that encrypted information.

CT: Regarding the recent Cosmosverse, an intriguing development that came upwardly was the concept of liquid staking. Would you mind providing more than data on that?

PZ: I believe at that place are at least three different implementations of liquid staking as presented at Cosmoverse. It was a fantastic conference; I met many people who've been working in this infinite during the pandemic and never got a chance to see them face up to face up until now. And then people working at Cosmos for over five years and are still around -- and information technology speaks to the forcefulness of the ecosystem. So liquid staking at a loftier level is the ability to allow users to double-dip with their assets. About commonly, in proof-of-stake (PoS) protocols, you need to stake your tokens to secure the network as a user. And past staking your tokens, you earn yields. For the Cosmos Hub, information technology's generally between 7% to 20% APY. But then you lot await at some DeFi protocols, for instance, Osmosis or other DEXs built on Cosmos, and y'all can see that during the launch of these DEXs, they [the developers] desire to increment liquidity.

So APYs tin be at thousands of pct within a few weeks or hundreds of percent for a few months. And they are much much higher than staking yield. So in that location is this constant battle, or tug of state of war, betwixt the incentives for staking, which is to secure the network and is skilful for everyone, just you lot earn minimal yield. This is compared to incentives provided by DEXs for interim as liquidity providers, which is very tantalizing. Then liquid staking is the power to allow you as a staker to pale your assets, but at the aforementioned time, you get a token that represents your staked position.

And then if you pale 100 ATOM, instead of receiving aught in return other than a steady stream of staking rewards, you would receive [both] staking rewards in ATOM, and you would receive a staked version of your ATOM, let's say sATOM. And that is only IBC-enabled, which means you lot get to permissionlessly transfer it to DEXs and use that to provide liquidity in pools. That's the general idea of liquid staking —Information technology'due south a big feature that's coming to multiple blockchains at once.

The version that's coming to the Cosmos hub is more standard, information technology's where you stake the assets, and y'all go a token that you lot tin apply interchain. The version proposed by Osmosis is called Superfluid staking, which is the ability to provide liquidity in a DEX while being issued liquidity provider tokens (LPs) dorsum, which you can use to stake on the blockchain. And so whether you lot LP start or stake start, you always get the representation you tin utilize across IBC, which is a lot of flexibility and liberty.

Still, information technology adds a lot of added adventure because this is now like a second-level derivative of your original token. So if anything breaks down forth the way, you might exist in trouble. But for those of you who have a big appetite for chance, liquid staking offers more than than what yous can become off traditional yields.

CT: Is this engineering theoretically applicable to all kinds of pools? For example, can I receive a lending token to back deposit into a staking pool to earn yields if I lend out my crypto?

PZ: Exactly, you lot're on the right rail. And there tin be many levels of this, and each level gives added take a chance to your portfolio, so it'due south a thing of figuring out how much risk you are willing to take. A lot of this [liquid staking] has happened in Ethereum due to the ability of ERC-20 tokens, but it's only started to be developed in the Cosmos ecosystem. And of grade, in Cosmos, there is an added layer of complexity on top due to the differences in the level of security. And then part of the proposed benefit of liquid staking is the power to share security between multiple chains at once. Which is sort of a looser version of Ethereum where everything is secured by the token.

CT: Another recent development discussed at Cosmoverse is ABCI++ and how it tin help ameliorate cross-chain functionality and oracles. Would y'all mind elaborating more on that?

Then the Tendermint Cadre protocol hasn't been updated in quite a long time in terms of new features. And ABCI++ is a very big new feature. What it does is that it increases the features that Tendermint Core tin can back up. So correct at present, a function tin be run at the stop of every single cake, which is what all Cosmos blockchains use to do their business logic. At the end of every single block, which on Cosmos, is unremarkably half-dozen to seven seconds, some activity tin happen. But the Tendermint Core Consensus, while information technology does create consensus around new blocks, it's not a single-stride process; in fact, it'due south a five-step process of block consensus creation.

There's, in fact, a built-in block explorer in the past, which hasn't been updated much, but actually shows every pace of Tendermint block consensus. What ABCI++ is, is that it allows a developer to tap into each one of these v steps. You lot tin can imagine them. Instead of just admitting i event for every cake that's consummate, it admits now v events, and now you can option and choose which footstep you want to acknowledge to a consensus that you lot desire to run for that function. And that introduces a lot of potential for more efficient calculations.

CT: Is Tendermint taking whatsoever steps to introduce Creation into the Metaverse?

PZ: Yep, so I think the Metaverse is quite undefined right now. It'southward everyone building things equally Web 3.0. Of course, Facebook can take a merits that they're building the Metaverse, but information technology's simply going to be Facebook's wall garden Metaverse. There'south going to be Google's wall garden Metaverse and Apple's version of that. I would presume Steam and Epic Games have their ain version. But the version that virtually of usa desire today is open-ended and permissionless.

CT: What are some of the highlights of the upcoming hackathon?

PZ: And then it's the biggest Cosmos hackathon. And I remember Cosmos is the second largest crypto ecosystem in the world, with over $170 billion [of assets] congenital on the Cosmos infrastructure. It's a very significant event for the earth at large. Zooming out a little bit and looking at what happened last yr, which was on a much smaller scale. That was when this proof of concept DEX projection called Osmosis won the biggest prize. And today, Osmosis is a live blockchain with over $700 1000000 in TVL [total value locked]. Perhaps it'due south a fluke, merely I'chiliad hoping to see projects of this caliber this year. This fourth dimension effectually, we take far more than prize categories — I believe information technology'southward 7, each with over $200,000 worth of prizes. This broad array of prizes is our way of making sure people are solving a diverse set of problems. There's so much unbuilt infrastructure, and information technology doesn't make sense to award only one prize.

Growth of TVL on the Osmosis DEX. | Source: DeFi Llama

CT: Would you like to share whatever other comments or visions regarding Tendermint and the Creation blockchain?

PZ: Yes, I believe that Cosmos is the only ecosystem that tries to democratize access to finance, more and then than any other ecosystem. Because in Cosmos, you don't need to buy a token to become involved in the ecosystem. When you build on Creation, you don't have to buy anything. You lot don't take to pay for gas, and that I believe is something very valuable in economies where you lot tin't really afford expensive transactions, and when you don't really have the capital to really experiment with these hybrid ecosystems, like Polkadot or Avalanche or Polkadot or Ethereum, and appealing to people with time. Young people with time but no capital are out of Spider web 1.0 today, and Cosmos will win Web iii.0. And that's really the core mission of Tendermint, to bring newcomers, make information technology as like shooting fish in a barrel as possible to build things, and we welcome anybody.