The promise of an open and decentralized internet is being challenged by the performance, usability, and energy efficiency issues of the first-generation encrypted networks Bitcoin, Ethereum, and their variants. While new versions of Ethereum and its Layer 2 solutions were developed to address current performance issues, new generation projects Cosmos, Polkadot and Avalanche have released infrastructure with extraordinary capabilities. Their goal is to scale horizontally through an asynchronous heterogeneous network model, where application-specific blockchains coexist and interoperate when needed. They have their own design choices and trade-offs when it comes to cross-chain economic security, which will have different impacts, which we will discuss one by one in this article. Their goal is to create an internet of blockchains that can reach web scale that can accommodate hundreds of thousands (like today) or even millions of active users every day, and realize the Web 3 vision of user ownership and control. This article aims to help developers, researchers, entrepreneurs, investors, and anyone who aspires to a decentralized future understand this paradigm shift in crypto networks.
Interchain Economic Security Topology in Cosmos, Polkadot, Avalanche
It’s common sense that Bitcoin opens a Pandora’s box and is becoming “digital gold” over time. Ethereum introduced programmable internet money and became a platform for cryptoeconomic innovation. However, Bitcoin, Ethereum and their variants have key issues preventing mass adoption of the crypto network. We will first look at these questions and then use these points to compare the new generation of blockchain platforms.
Energy Efficiency : For an open decentralized computer network to function properly, its independent participants need to agree on a shared state. While doing so, the network should maintain effective consensus fault tolerance (Byzantine Fault Tolerance) despite imperfect information or malicious actors. Consensus that allows participation in an open network while preventing the same entity from operating on multiple identities (Sybil attack) is handled through an admission method called Proof of Work (PoW) (first introduced by Cynthia Dwork in 1992, using to combat spam). This approach requires participants to use enormous computing power, which warms the planet and transfers some value to the power company.Clearly, there is an economic cost to securing a distributed computing network, and the new project uses an alternative proof-of-stake (PoS) mechanism to implement validator access, i.e. by locking token deposits to become participants. This deposit must be expensive enough to sufficiently inhibit malicious behavior or go offline. In fact, similar economies of scale apply to Proof-of-Stake (PoS) and Proof-of-Work (PoW): the cost of running a validator node is shifted from OPEX (the operating expense of the mine) to CAPEX (the opportunity cost of capital).
Transaction delays : Bitcoin, Ethereum, and their variants use Nakamoto consensus, which requires waiting for multiple new blocks to be created to ensure transactions cannot be recovered. Therefore, the Nakamoto consensus chain has high availability but lower transaction speed due to its probabilistic transaction finality guarantee, which requires waiting for the chain to be long enough. To achieve faster transaction finality, many blockchain projects use the classic Practical Byzantine Fault Tolerant (PBFT) consensus, which has its own weaknesses, including how large the validator set can be to not slow down the network, and the Uptime or activity aspects can be beneficial for security.
3. Computational throughput : The amount of computational work that can be done per second in a distributed computer network is throughput, which defines how much the network can scale. A commonly used metric, “transactions per second,” is misleading because transactions can refer to simple transfers or complex financial calculations; they require varying amounts of computing power. Actual throughput is the amount of computational work the network can handle per second as a function of network participants. To achieve high overall throughput, projects either employ a vertical scaling strategy, which requires high-performance computing on nodes and optimization of node software, or a horizontal scaling strategy, which involves parallel processing by dividing the network into multiple parts.
Transaction costs : Blockchains must find a way to limit their execution, otherwise the network of nodes running the blockchain is vulnerable to denial of service attacks (DOS). To enforce this restriction, Bitcoin allows the use of a fairly limited scripting language, and Ethereum charges transaction fees based on gas metering executed by smart contracts.The problem is, whether you’re doing a simple transfer or a complex calculation in a transaction, it’s all processed on the same network. As a result, when network traffic increases, transaction fees increase for even simple operations, so using the chain becomes exclusive to those with large wallets. Fees are paid to miners as an incentive to prioritize transactions.While Bitcoin transaction fees will serve as the only incentive for issuance once the 21 million cap is reached, in Ethereum their sole purpose is to prioritize transactions. Burning transaction fees is a mechanism to gain traction in new projects, and recently Ethereum has also started burning some fees, so all token holders benefit from increased scarcity as network activity grows.
Degree of decentralization : Contrary to popular belief, Bitcoin and Ethereum actually achieve very little decentralization due to the centralization of mining pools (90% of Bitcoin’s computing power is controlled by 11 mining pools as of November 2021) , 90% of Ethereum’s computing power is controlled by 16 mining pools). As mining costs increase in Nakamoto Consensus, it becomes more difficult to successfully produce blocks, and the power to run the network is pooled so that it is concentrated in a small number of aggregated miners. The new generation of blockchain addresses this problem through various solutions that we will explore below.
Fair distribution : How do blockchain projects distribute ownership shares (tokens) as the network grows? Bitcoin’s token distribution creates a chain of interdependencies in the security of the blockchain, the mining ecosystem, and exchanges.This became the pattern for many projects: as miners joined the network for token rewards, the network became more decentralized and more secure, attracting more people to use it. As demand increases, prices rise, attracting more miners to secure the closed-loop network. However, as the cost of mining increases, it becomes harder and harder to successfully mine a block; therefore, the distribution of the tokens or power that runs the network is centralized so that miners are run on a few aggregated entities. Ethereum employs a different strategy: they pre-mine the tokens, remove the total supply cap, sell a portion of the tokens to early investors and public sale participants, allocate a portion to their foundation for running grants and bounty programs , and start rewarding miners over time just like the Bitcoin model. Soon, Ethereum token issuance was concentrated in a handful of mining pools, and the largest token holders became exchanges.Ultimately, fair distribution defines who has power in the network over time: the power to produce blocks (order, accept or review transactions), the power to fork the network, the power to decide on protocol upgrades, and investment and staking applications power.
Governance : Changes to network protocols can have a significant impact on all existing and future users, whether they realize it or not. In Bitcoin and Ethereum, improvement proposals result in protocol upgrades and parameter changes that are discussed, decided, implemented, and applied by a core community of experts. If a group of miners is interested in going in a different direction than the majority, they can fork the protocol and start a new network, painfully leaving most of the network effects behind. Additionally, R&D funding allocations are often managed by a central foundation, and alternatives are emerging as communities gather around funding coordination DAOs (Decentralized Autonomous Organizations). Larger groups of token holders or users do not really have a voice in governance decisions, as they may not have expertise, interest or awareness of the decision-making subject. Even if they did, they might have a little impact compared to large token holders, since votes are usually token-weighted. As new projects adopt fairer on-chain governance that allows more token holders to participate (i.e. quadratic voting, time-locked voting, adaptive quorum bias, voting delegation, decentralized identity schemes to achieve one-person-one-person tickets) and off-chain signaling mechanisms, this is changing.
These issues not only limit the mass adoption of decentralized networks, but also drive existing users to continue to rely on centralized exchanges and custodial wallets. It is difficult for non-technical people to use truly decentralized applications on a regular basis. On the other hand, existing users continue to use Ethereum and Bitcoin because they are unaware of the problems; companies and investors continue to use them because they want to be where liquidity is; early entrants or “primitive gangsters” defend these networks , because they have great interests. But another world is possible.
Daily active ETH addresses丨Source: Etherscan
Today, Ethereum has an average of 500,000 daily active users, while popular web applications like Twitter have 200 million daily active users (400 times that of Ethereum), and Facebook has nearly 2 billion daily active users (4,000 times that of Ethereum) . Even adding Layer 2 and Bitcoin users, this is a long way from network size. Scaling is a very critical challenge for an open and decentralized internet, it is not a problem of tomorrow, but a priority problem of the here and now.
While new versions of Ethereum are designed to address scaling issues, and its ad-hoc layer2 solution is currently trying to meet growing demand, new-generation platforms Cosmos, Polkadot, Avalanche (mainnet launch in 2019 and 2020) are back on fire Commitment to a truly decentralized internet. We’ll start by looking at a new version of Ethereum.
Ethereum as a new version of the EVM ecosystem
Since its inception, new versions of Ethereum have been changing by employing new scientific research as well as mechanisms invented by new blockchain platforms. The new version of Ethereum will use proof-of-stake, splitting the network into synchronized shards, aiming to increase overall computational throughput. Validators running the same Ethereum Virtual Machine (EVM) will be assigned to different network shards, generate blocks, accumulate different user activity data, and synchronize with each other through a relay chain called Beacon. However, trying to synchronize all shard parts means trying to achieve full replication, i.e. having consistent copies of the database across all nodes. This is problematic because the point of sharding in distributed computing is to scale by not replicating all data across the network. In a synchronous model or homogeneous network topology, when one shard (such as the popular DeFi shard) gets more usage than other shards, it will start to suffer from the same speed, cost, and scaling issues. Additionally, there is a new problem of efficiently synchronizing data between shards.
While Ethereum’s transition to the new version is said to be fully complete in a year or so, so-called Layer 2 solutions — Rollup (Optimistic, zkSync), Plasma, and state channels — have been rolled out for the growing Ethereum Use demand to provide efficiency and speed. The dilemma is that the Layer 2 trust model either has an intermediary central operator that defeats the purpose of decentralization and censorship resistance, or has multiple incentivized operators (i.e. Polygon is built with Tendermint and runs on multiple validators, the goal of Matter Labs is a validator network using zkSync), which is similar to another decentralized blockchain that has its own token (such as MATIC) and eventually competes with its layer 1. Therefore, as more users join, these single-chain architectures will suffer from the same transaction cost issues.
Modular Blockchain Design
Recently, Ethereum has adopted a new strategy called the Rollup-centric roadmap, which positions the Ethereum Layer1 for data availability and the Layer2 project for computing. In other words, Ethereum wants to be the base layer that guarantees data availability and shares security with Rollup. As such, Ethereum is adopting the EVM blockchain ecosystem for computation, whether a single Rollup dominates or multiple Rollups coexist (see Vitalik Buterin’s article “Endgame”). In fact, this strategy lends itself to emerging modular blockchain designs, where blockchains can outsource data availability or execution to other blockchains. A general model for this strategy was developed by Celestia and EigenLayr. Additionally, Ethereum’s new strategy is similar to the shared security model already used in Polkadot and Avalanche.
On the other hand, since Cosmos, Polkadot, Avalanche all have bridges to Ethereum on at least one of their EVM-compatible chains, they are sometimes placed in the same “Layer2” bucket, and these projects often call themselves Layer0 , as they provide the infrastructure for building interconnected Layer 1 blockchains.
Cosmos, Polkadot, Avalanche are designed to scale horizontally through an asynchronous heterogeneous network model, where application-specific blockchains have different virtual machines and can interoperate with other chains when needed. These infrastructure platforms provide the ability to build your own custom blockchain, allowing for greater design space for decentralized applications and assets. Running your project as a sovereign chain rather than a set of smart contracts has three fundamental advantages:
- Performance Isolation: Isolating your chain from other chains ensures that your user experience is not affected by extraneous high activity on the network, so it provides better performance and you can bridge to other chains when needed.
- Predictable and customizable fees: Fees on shared permissionless networks are not under your control. High activity on the network for some applications may increase arbitrary charges for your application. Having a custom fee structure allows you to get predictable fees and removes the infrastructure between your application and its users.You don’t need ATOM, DOT or AVAX to use application specific chains. Not forcing users to charge fees for using infrastructure tokens is critical to mainstream adoption.
- Customizable validators: Custom validator rules and requirements focus your chain on its domain-specific needs. Your chain’s validators can be compliant with certain jurisdictions (e.g. GDPR in the EU), can have high-performance hardware requirements, or have some proof of being a validator.
These next-generation networks have also built bridges with Ethereum, and soon Bitcoin, and are developing bridges with each other to fully realize the vision of the Internet of Blockchains.
Cosmos, Polkadot, Avalanche have key differences at the protocol level (e.g. consensus mechanism, economic security topology) that affect platform functionality (e.g., interchain communication, token economics, possible types of applications) and how they scale their Network (e.g. validator participation, staking release). The comparisons below are designed to help developers, entrepreneurs, investors, researchers, and those considering building on these next-generation infrastructures understand the differences between these architectures and their tradeoffs.
The secure and consistent replication of application state on an open network of machines is achieved through a consensus mechanism. While doing so, the network should maintain fault tolerance and efficient consensus despite imperfect information or malicious actors (Byzantine fault tolerance). Practical Byzantine Fault Tolerance (PBFT) used in Cosmos and Polkadot requires all participating nodes to communicate with each other, so the network agrees on a decision with absolute certainty. It has low latency and fast finality, but it cannot scale to many participants in a global open network because the load on each validator node grows exponentially with more validation work. Bitcoin introduced the longest chain consensus mechanism (Nakamoto Consensus), which allows for probabilistic determinism and extremely low error rates. It allows building a robust and scalable network over time, but is very slow.
- Cosmos, the mainnet launched in March 2019, uses the Tendermint PBFT consensus to provide fast finality. However, since each node has to communicate with each other, it has quadratic messaging complexity and can complete one block at a time.
- Polkadot, a mainnet launched in May 2020, separates block production and finalization by consensus: BABE (a variant of Ouroboros Praos) writes candidate blocks, and GRANDPA (a variant of PBFT) completes them in batches. This hybrid consensus optimizes the complexity of secondary message passing to a certain extent.
- The Avalanche mainnet went live in September 2020 using Avalanche consensus, a unique mechanism that combines repeated voting subsampling among Pass votes, not linear chains. Since Avalanche consensus has constant message passing complexity, it allows for low latency and massive participation in the network. It has probabilistic finality like Nakamoto Consensus, but it is configurable and has an extremely low failure rate.
Validator entry criteria
Consensus that allows participation in an open network while preventing the same entity from operating on multiple identities (Sybil attack) is handled by a proof-of-work (PoW) or proof-of-stake (PoS) mechanism. Like all new projects, Cosmos, Polkadot, Avalanche use Proof of Stake because of its energy efficiency and ability to provide a larger design space. There are also projects on these networks that implement lighter proof-of-work (PoW) mechanisms for fair token distribution.
- Cosmos can achieve transaction finality in 6-7 seconds.
- Polkadot as a whole can achieve finality in 12-60 seconds, with block creation and finality separate.
- Avalanche can achieve transaction finality in one second. It is probabilistic final like Bitcoin and has an extremely low failure rate.
The total amount of computational work a network can handle per second depends on the complexity of the virtual machines and runtime functions used on the network. Cosmos, Polkadot, and Avalanche are building specialized asynchronous blockchain networks, so ultimately their entire network is infinite in throughput. What really matters is how much these networks can grow, and their choice for cross-chain economic security matters.
As activity across the network grows, so do transaction fees. Cosmos, Polkadot, Avalanche build specialized networks, and each chain has its own custom fee mechanism based on its own state growth.
Each Cosmos chain has a customizable fee mechanism.
Each Polkadot chain has a customizable fee mechanism. Fees are pre-calculated using a weighting system. Fee burning per chain is optional.
Avalanche has a customizable fee mechanism per chain. Main network fees are fixed or zero for different types of functions, and all fees are burned, so token holders benefit from usage over time.
degree of decentralization
The figures below are from March 17, 2022.
Cosmos has quadratic messaging between nodes, so the number of participants is limited. The number of active validators is 150 in Cosmos, 115 in IRIS, and 100 in Osmosis. Currently, you need at least 147,231 ATOM (~$1.3 million) to join the Cosmos Hub’s active validator set, and at least 1 ATOM for delegation. The total pledged value is approximately $5 billion.
Polkadot optimizes quadratic messaging between nodes, and a limited number of participants. The number of active validators is 297 in Polkadot and 1000 in Kusama. Currently, you need at least 1.75 million DOT (~$33 million) to join the active validator set of the Polkadot relay chain, and at least 120 DOT to nominate. The total pledged value is approximately $12 billion.
Avalanche has a constant number of message passing between nodes, so the number of participants is infinite. The number of active validators in the main network is 1311. Currently, you need at least 2000 AVAX (~$160,000) to join the mainnet’s active validator set, and at least 25 AVAX for delegation. The total pledged value is approximately $16 billion.
Decentralization is also a function of validator staking and reward concentration (based on stake-weighted rewards), often following a long-tailed distribution—few validators have the most stake, and many validators have very little. Fair stake distribution is still an open issue for blockchain platforms, with each project trying to achieve fairness in different ways. For example, since Polkadot is at its core PBFT-based consensus, there can be a limited set of active validators, but these active validators are rewarded equally through the Phragmén election method. Thanks to its novel consensus mechanism, Avalanche can have an unlimited number of active validators, and the average validator weight is gradually decreasing, increasing its level of decentralization.
Cross-chain network topology
The figures below are from March 17, 2022.
- Cosmos allows a distributed chain network with its own validator set. Interoperability between these chains is achieved through the Inter-Blockchain Communication (IBC) bridging protocol. Every chain must implement IBC in order to bridge with other chains. Currently, there are 28 IBC-enabled chains covering areas such as DeFi, EVM smart contracts, social media, privacy, regenerative yield farming, and gaming. Bridges to Ethereum, Bitcoin, etc. are under development.
- Polkadot allows for hierarchical inheritance of security from a central relay chain to connected chains (parachains).Parachains do not have their own validators, they have collector nodes that collect transactions and generate state transition proofs for relay chain validators. Interoperability between parachains is achieved through the Cross-Chain Message (XCM) format, and due to the security of inheritance, arbitrary data transfer is possible. Currently, 10 parachains have different focus directions, such as DeFi, EVM smart contracts, social media, privacy, and gaming.Bridges to Ethereum, Bitcoin, etc. are under development.
- Avalanche allows overlapping networks of validators to be organized into subnets running multiple chains, while also validating the main network. Different chains in the same subnet can transfer assets to each other (export-import) almost instantly. And subnet-to-subnet communication, where a chain in its subnet communicates with another chain in its own subnet, is currently handled through bridges (using the EVM chain’s ChainBridge-Solidity contract). In fact, the more subnets that have overlapping validators with other subnets, the higher the security assurance that they can communicate with each other. This is because those validators who intersect will have a common stake in both subnets. If a group of validators act maliciously in one subnet, they also risk validating stake in the main network and other subnets. Although a direct subnet-to-subnet interoperability approach has not been announced, it would not be surprising to see the Avalanche Primary Network itself acting as an intermediary between all subnets.There are currently 3 mainnet chains online: X-Chain for transfers, P-Chain for Staking, and C-Chain for EVM smart contracts. Additional chains and subnets are being built in the ecosystem. Also, like other platforms, there is Avalanche-Ethereum Bridge, which works through a trusted consortium and is one of the most used bridges out of 60 Ethereum bridges today.
Bridging between blockchains with different security levels without some kind of security sharing mechanism, as in the current Cosmos architecture, is no different than bridging any general chain. Therefore, cross-chain communication has different levels of risk without a common certainty guarantee. The security model inherited by Polkadot allows for unified deterministic guarantees, and under this umbrella, parachains can safely pass arbitrary data to each other. Avalanche’s overlapping validator network model currently enables secure sharing between chains in the main network, and will soon enable secure sharing directly between chains in different subnets without bridging. Therefore, the more subnets with overlapping validators (with a common interest in both subnets), the higher security guarantees their communication can have. In general, overlapping validators between different chains (like merge mining in proof-of-work) can provide more secure interchain communication.
- Cosmos has an on-chain mechanism for changing consensus parameters and coordinating funds.
- Polkadot’s entire runtime logic is stored on-chain as a Web Assembly (WASM) binary, allowing fork-free runtime upgrades, meaning decisions are made autonomously based on referendum results, without relying on developers or validators. Governance modules include token-weighted voting, rotating committees, time-locked token voting, and an adaptive quorum bias mechanism.
- Certain parameters of Avalanche can be upgraded through on-chain voting. An extended governance mechanism based on its unique consensus is under development.
At the heart of all blockchains are the following components: database, p2p network, consensus mechanism, transaction processing mechanism, and state transition capabilities (runtime or virtual machine). Cosmos, Polkadot, Avalanche provide these core components and let developers build their custom state transition functions.
Cosmos provides the Cosmos SDK and Tendermint middleware, allowing transactions to be programmed in any language.You can build your own virtual machine and grow your own community of validators. In order for your chain to go live, you need to build a validator community from scratch and attract validator communities from existing chains. You can also deploy smart contracts on EVM compatible chains (Ethermint or CosmWasm).
Polkadot provides a Wasm-based meta-protocol and Substrate development kit. You can develop your own virtual machines using the provided modules such as Accounts, Assets, Governance, EVM and building custom modules. You can also benefit from Substrate’s free execution model of on-chain scheduling, off-chain workers, and feeless transactions.After you win a slot in a parachain auction, your chain goes live, which provides the inheritance security of the relay chain.Alternatively, you can grow your own validator community. You can also deploy smart contracts on EVM compatible chains (Moonbeam, Acala) or use Ink smart contracts.
Avalanche provides the Avalanche Virtual Machine (AVM) where you can clone and customize an instance or build an entirely new instance as your own virtual machine (modular SDK for VM development has not yet been released). In order for your chain to go live, you need to start a subnet and attract validators — who have validated the main network — to run your chain. There is a subnet evm code that can be used to start a custom EVM chain. You can deploy smart contracts on EVM compatible C-chain.
Heterogeneous blockchain network topology
Hosting web-scale user activity over an asynchronous network of a dedicated blockchain is better than a blockchain network running an instance of the same virtual machine (i.e. a newer version of Ethereum). In this section, we discuss in more detail how the blockchain networks and interchain communication of Cosmos, Polkadot, and Avalanche are composed.
The Cosmos ecosystem has a distributed network topology, where different blockchains for different purposes have their own validator sets, and these chains communicate with each other through bridges when needed. This topology has been criticized as the least secure chain determines its security (when the most secure chain accepts assets from the least secure chain, it becomes less secure). However, it also makes the entire network resilient, since the security of no single chain is critical to the survival of the entire ecosystem. But how is the Cosmos ecosystem different from almost any blockchain that connects other chains? Cosmos has a “no strings attached” policy that allows projects like Binance DEX, Oasis, Terra, Nym, etc. to develop and launch their own application-specific blockchains using Tendermint.
The Inter-Chain Communication (IBC) protocol connects blockchains in the Cosmos ecosystem (see the 28 interconnected chains on the Zones map). As chains implement the IBC protocol, they are interconnected and the liquidity of the entire Cosmos ecosystem increases. IBC pretty much follows the way blockchain bridges work. When you send assets from one chain to another, i) you lock them in the source chain, ii) then a third party monitoring the chain (maybe a federated relayer) picks up the receipt and delivers to the destination chain, iii) The receiving chain verifies the receipt and provides you with a representation of the asset in the source chain. In the Cosmos ecosystem, chains implementing IBC have Tendermint light client validators so that they can use and validate these receipts in their communications. Furthermore, IBC is a general protocol that can be implemented in different blockchain architectures (Substrate has an IBC implementation). Additionally, the new IBC version will have a shared security scheme (see Billy Rennekamps’ talk for more info).
Polkadot Inherited Security Topology
Polkadot has a hierarchically inherited security topology that is very efficient for arbitrary data communication between its parallel chains (parachains), but these parachains rely on leasing security from a central relay chain. Polkadot parachains do not require a validator community to build, but instead rent security from the relay chain. They do this by winning a slot in an auction (about 100 slots in total) and locking up Polkadot’s DOT tokens (they raise DOT funds through crowdsale).When these domain-specific parachains are connected and synced to the relay chain through their collection nodes, their functionality is immediately available. One criticism of this mechanism is that different chains may not require the same level of security, and furthermore, there should be no single chain whose security is critical to the survival of the ecosystem. While the Polkadot narrative today popularizes the idea of parachains without validators, one can use Substrate to start a blockchain and grow a community of validators without relying on a central relay chain (see Compound Gateway). Additionally, parachains can grow their own validator community, unlock their DOT funds at the end of the lease period, and use bridges when cross-chain communication is required. Additionally, there can be multiple relay chains that benefit the entire Polkadot ecosystem. Hierarchical topologies are likely to remain, as supporting inheritance-safe cross-chain communication is more efficient than using bridges between parachains.
Polkadot developed the Cross-Consensus Message Format (XCM), a common format not only for communication between parachains, but also between different smart contracts, bridges and Substrate pallets . XCM works with Vertical Messaging (VMP) and Cross-Chain Messaging (XCMP), it allows the exchange of messages from relay chains to parachains and back, it allows parachains to exchange messages with other parachains on the same relay chain. Messages in XCM are programs that run on a Cross-Consensus Virtual Machine (XCVM) (see Gavin Wood’s article series). This abstraction for programming networks and building composable interchain applications can also be used for other heterogeneous blockchain networks.
As the parachain community grows, they may also want to have their own set of validators so that they can become relay chains that rent out security guarantees to other chains. While nested security sharing mechanisms can become complex, all child parachains will share a common finality guarantee, and the total number of state transitions per second will increase, expanding the overall computational throughput of the entire Polkadot network.
Overlapping network topology for Avalanche
Avalanche has overlapping network topologies. Each Avalanche validator node must protect the main network while protecting other subnets. A set of validators forms a subnet. A subnet can verify multiple blockchains, and each blockchain is verified by only one subnet. In other words, validator nodes may be members of many subnets. When you start a new chain, you must provide incentives to attract a subnet of validators who are already running the main network and possibly other chains. If your chain is attracting new validators, they must be able to run the main network as well as the subnets that run your chain. Overall, the subnet architecture supports overlapping networks of validators (see diagram above), derived from the novel Avalanche consensus mechanism. Since Avalanche consensus does repeated subsampling among its validating nodes, it does not require all nodes but a small subset of nodes to communicate with each other, which results in lower message passing complexity in the network. Therefore, even as the network grows to thousands of validators, the bandwidth and processing power requirements of each node remain the same. As a result, chains built on Avalanche are more inclusive than Polkadot and Cosmos in terms of validator participation, as the participation of each chain is unlimited. How many chains a validator can run depends on the complexity of the chain runtime/VM design and is still an open question.
Interoperability between Avalanche chains is very efficient, not only because of fast determinism, but also because of the shared deterministic guarantees within the same main network (currently, asset transfers between X-Chain, P-Chain, and C-Chain are almost is instant). The secure sharing model is different from Polkadot or how it is envisioned in the new Ethereum Rollup-centric ecosystem. Avalanche’s novel subnet architecture supports higher density networks. This is because security sharing happens not only between chains in the main network, but also between chains in all overlapping subnets. This allows for the composability and programmability of the network, opening up a new design space, while enabling a group-forming network that can scale exponentially to millions of daily active users to realize the vision of Web 3.
Heterogeneous blockchain networks Cosmos, Polkadot, and Avalanche provide broad design space for their core infrastructure innovations. To this day, Ethereum has been the birthplace of innovation in the crypto economy. In fact, the teams building on these new networks originally created glorified versions of what existed on Ethereum (decentralized exchanges, automated market makers (AMMs), lending, stablecoins, aggregators, insurance, NFT platforms etc.), but there are also projects that have discovered new use cases by leveraging these new infrastructures.
On the Cosmos network, Osmosis combines transaction privacy (decrypting transactions with thresholds to prevent front-running) with cross-chain AMM capabilities and implements IBC to bridge with other chains. Celestia encodes block data to improve light client security, a key component in enabling autonomous chains and chain interoperability between their different security levels in a distributed chain ecosystem. Regen enables cryptoeconomic platforms to incentivize regenerative agriculture and leverage data from sensors and satellites and audit ecosystems. Nym enables mixnets, which prevent network traffic analysis from adversaries capable of monitoring the entire network. Nym uses Tendermint and Cosmwasm smart contracts to control directory services, node bindings and delegate mixnet staking. Penumbra supports privacy-preserving cross-chain network transactions. Tendermint is also used by large projects like Binance DEX and Terra.Greater value will be unlocked when these independent blockchain networks begin to interoperate through IBC.
On the Polkadot network, the Acala parachain is a DeFi hub that provides functionality from AMM to lending to stablecoins. Moonbeam is an EVM compatible smart contract chain. Subsocial is building a decentralized social networking platform. Robonomics is building autonomous robotics services. Bit Country is a platform to launch a virtual world/Metaverse for your community. Integritee and Phala use a Trusted Execution Environment (TEE) to enable decentralized confidential computing and encrypted data storage. Polkadot’s development framework, Substrate, is also used independently (not as a parachain) to run blockchains such as Compound Gateway. While all parachains are designed to be compatible with Polkadot’s cross-chain ecosystem, they should indeed leverage the incredible composability, memory efficiency, and auto-upgrade meta-protocol governance capabilities of the Substrate framework to enable new use cases.
Avalanche’s EVM-compatible C-Chain initially attracted developers to build efficient versions of Ethereum projects.Pangolin is a fast AMM cloned from Uniswap. Sherpa Cash supports private transactions cloned from Tornado. TraderJoe started out as an AMM and added lending on the way to becoming a DeFi hub. The Benqi lending app is a version of Compound that also started AVAX’s liquid staking. Platypus is a better version of the Curve stablecoin exchange because it has asset liability management. The largest Ethereum projects with a multi-chain strategy, such as Aave, Curve, Sushiswap, also launched on C-Chain and attracted a lot of liquidity, thanks to the thriving Avalanche-Ethereum Bridge. The Avalanche ecosystem also has new types of assets, one of which is for litigation financing, which, when combined with DAOs, could have a huge impact on connecting existing legal systems to crypto networks. In fact, the clever Avalanche consensus and overlapping subnet topology together provide a huge room for innovation for new projects to arrive.
Heterogeneous blockchain networks Cosmos, Polkadot, Avalanche provide extraordinary infrastructure to realize the Internet of Blockchains, which shows that the asynchronous heterogeneous network model works effectively, which is an improvement over Bitcoin and Ethereum. They will eventually host millions of daily active users and fulfill the Web 3 vision of user ownership and control.
The coexistence of these major architectures is healthy for a truly decentralized internet, as they have their own design choices and trade-offs. Understanding the similarities and differences of these new infrastructures today will help build future-proof systems. Projects using this infrastructure will go beyond smart contract applications to become scalable production-quality systems with their own specialized chains and communities, and demonstrate previously unimaginable use cases. Since this could happen in a vacuum, we still have unanswered questions: how do we ensure liquidity flows efficiently across chains, rather than being isolated within a particular chain? How will those open organizations that operate across chains prevent the emergence of multi-chain whales and ensure a fair distribution of wealth and power?
Special thanks to Sam Hart, İstem D. Akalp, Engin Erdogan, Joe Petrowski for their feedback and reviews.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/is-it-really-better-to-compare-the-three-heterogeneous-blockchain-networks-of-cosmos-polkadot-and-avalanche-than-bitcoin-and-ethereum/
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