With the performance, usability, and energy efficiency of first-generation cryptocurrency networks such as Bitcoin and Ethereum, the vision of an open decentralized network is clouded. In order to solve the current performance problems, Ethereum has launched a new version and corresponding L2 solutions. More importantly, a new generation of blockchain projects, Cosmos, Polkadot, and Avalanche, have been launched successively, and excellent infrastructure has been established. These projects aim to scale horizontally through an asynchronous and heterogeneous network model, where dedicated blockchains for each app can both coexist and interoperate when needed. In order to ensure the economic security between chains, these networks are designed to show their capabilities and make their own trade-offs and trade-offs, which also bring different impacts, which will be discussed in detail later. The goal of these networks is to build a blockchain internet that can accommodate millions of daily active users instead of the hundreds of thousands of today’s active users, and realize the web3 vision of “the Internet is owned and controlled by users”. This article hopes to help developers, researchers, entrepreneurs, investors, and everyone looking forward to a decentralized world understand this paradigm shift in cryptocurrency networks.
Interchain Economic Security Topology for Cosmos, Polkadot and Avalanche
Bitcoin has opened Pandora’s box and gradually has the status of “digital gold”, which is the consensus of today’s era.Ethereum ushered in the era of programmable internet money and became a stronghold for cryptoeconomic innovation.But Bitcoin, Ethereum, and their variants still have many hurdles to mass adoption. This article will first explore these barriers and then compare the new generation of blockchain platforms based on their key points.
Energy Efficiency : The proper functioning of an open, decentralized computer network requires independent actors to agree on a shared state. At the same time, the network needs to be able to maintain fault tolerance and effective consensus in the presence of incomplete information or malicious nodes (Byzantine fault tolerance). On the one hand, the network needs to remain open, allowing more nodes to participate in consensus, and on the other hand, the network needs to prevent the same entity from operating multiple identities (Sybil attacks) – these are achieved through a method called Proof of Work (PoW; introduced in 1992 by Invented by Cynthia Dwork, originally used to prevent spam). PoW requires nodes to use a lot of computing power, which will increase global warming and lead to high electricity bills.Clearly, maintaining the security of a decentralized computing network  requires economic costs. A new generation of blockchain projects replaces PoW with Proof of Stake (PoS) as the entry threshold for validating nodes, which requires network participants to deposit and lock tokens. In order to prevent malicious behavior and node offline, this economic threshold needs to be high enough. In fact, PoW and PoS apply the same principle of economies of scale: the cost of running a validator node changes from operating expenditure (OPEX) to capital expenditure (CAPEX).
Transaction Transparency : Bitcoin, Ethereum, and their variants all use Nakamoto Consensus, and transactions sent cannot enter an irreversible state until several blocks are created. Therefore, these types of blockchains are highly available but slow because they use probabilistic finality confirmation and need to wait until the blockchain is long enough. In order to speed up confirmation, many blockchain projects use the classic Practical Byzantine Fault Tolerance (PBFT) consensus, which brings other problems, such as the scale of nodes that may slow down the network, causing the network to prioritize security over uptime and activity.
Computational throughput : Throughput is the amount of computing work that a distributed computer network can complete per second, and it determines the capacity of the network. But the common unit of flux “transactions per second” is misleading, because “transactions” can be simple transfers or complex financial calculations, which require different computing power. Throughput is provided by nodes, and the actual throughput of the network refers to the amount of computational work the network can handle per second. There are two ways to improve throughput. One is the vertical expansion strategy, which requires nodes to have high computing performance and requires node software to be optimized; the second is the horizontal expansion strategy, which divides the network into multiple parts and processes transactions in parallel.
Transaction costs : The blockchain must limit the number of executions, otherwise the nodes running the blockchain are vulnerable to DoS attacks. For this reason, Bitcoin only supports a small number of scripting languages, and Ethereum charges transaction fees based on the gas metering executed by the smart contract. The problem is that whether your transaction is a simple transfer or a complex calculation, they are all performed by the same network. Therefore, when network traffic increases, the gas fee for simple transactions will also increase, and only those with deep pockets can afford it. Fees are paid to miners as an incentive to prioritize transactions. In the Bitcoin network, after the Bitcoin issuance reaches the upper limit of 21 million, the handling fee will become the only incentive, while in Ethereum, the handling fee is completely used for priority transactions (Technical Review Note: After the Ethereum 1559 protocol upgrade, The handling fee is also recycled and destroyed, and only the additional tip “tip” added by the user belongs to the node). The new generation of blockchain projects adopts the mechanism of burning fees more. Recently, Ethereum has also started to destroy some of the fees. This way, as network activity increases, token scarcity will rise, which will benefit all token holders.
Level of decentralization : Contrary to what most people think, due to the concentration of mining pools (as of November 2021, 90% of Bitcoin’s computing power is controlled by 11 mining pools, and 90% of Ethereum’s computing power is controlled by 16 mining pools), the level of decentralization of Bitcoin and Ethereum is actually very low. In Nakamoto Consensus, as the mining cost increases, the difficulty of producing blocks increases, which will further lead to the concentration of computing power. Faced with this problem, a new generation of blockchain projects has shown its capabilities, which will be discussed in detail below.
Fair distribution : As the network grows, how will blockchain projects distribute their share of ownership (tokens)?Bitcoin’s token distribution model establishes the interdependence of blockchain security, mining, and exchange rates. It has become a model for many projects: miners join the network, earn token revenue, and the network is more decentralized and more secure, which in turn attracts more users. The increase in demand and the rise in currency prices will attract more miners to join the network and maintain network security. However, as mining costs increase, so does the difficulty of producing blocks. This can lead to a concentration of coins and computing power, creating a situation where miners are run by a few entities. Unlike Bitcoin, Ethereum’s strategy is to pre-mine tokens, remove caps on issuance, sell some tokens through private sales and crowdfunding, and allocate some tokens to foundations for development grants and bugs Bounty, and then give incentives to miners like Bitcoin. Soon, Ethereum tokens were also concentrated in a few mining pools, and exchanges became the largest token holders. Ultimately, over time, fair distribution will determine who has power in the network, including the power to produce blocks (initiating, accepting, or reviewing transactions), the power to fork the network, the power to participate in protocol upgrade decisions, and the power to control transactions on the network. The app’s right to invest and pledge.
Governance : Changes to network protocols can have a significant impact on all current and future users, whether they are aware of the changes or not. In Bitcoin and Ethereum, the core expert community will discuss, decide, implement and execute proposals to upgrade the protocol and adjust parameters. If a certain group of miners have different pursuits than the majority, they can fork the protocol and start a new network at the cost of not enjoying the previous network effects.In addition, they usually have a central foundation that manages the distribution of R&D funds, an alternative is a DAO (Distributed Autonomous Organization) responsible for the coordination of funds. Most token holders and users have a very limited say in governance decisions as they may not have the expertise, interest and awareness in the relevant field.Even if they had this information, they would still have less say than those with large token holdings, since votes are usually weighted by token holdings. The new generation of blockchain projects will have fairer on-chain governance (including quadratic voting, time-lock voting, adaptive voting bias, voting delegation, one-person-one-vote based on decentralized identity authentication) and off-chain governance (forum signature voting) mechanism, allowing token holders to generally participate in governance.
These issues will not only limit mainstream adoption of decentralized networks, but will also cause existing users to continue to rely on centralized exchanges and custodial wallets. It is difficult for users with non-technical backgrounds to use truly decentralized apps on a regular basis. On the other hand, ordinary users didn’t leave Ethereum and Bitcoin because they didn’t understand the problems; businesses and investors didn’t leave these networks because they followed where the liquidity was; early users and OGs maintained these networks, then Because of the stakes. However, other possibilities exist for blockchain networks.
Ethereum daily active address. Data source: Etherscan.io
Currently, Ethereum has 500,000 daily active addresses. For reference, Twitter has 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 up L2 platform and Bitcoin users is much worse than these mainstream applications. Expansion is a key bottleneck in opening up the decentralized Internet. This is not a problem we will face in the future, but a problem that urgently needs to be solved here and now.
In order to solve the expansion problem, Ethereum has also launched a new version, trying to cope with the growing demand through L2 solutions. At the same time, the next-generation blockchain platforms Cosmos, Polkadot and Avalanche, which launched the mainnet in 2019 and 2020, let us see the hope of a truly decentralized Internet again. Let’s first take a look at how the new version of Ethereum does it.
New version of Ethereum: EVM Ecology
Since its launch, the new version of Ethereum has been adopting various new mechanisms with reference to new research and the practice of a new generation of blockchain platforms. The new version of Ethereum uses PoS, splitting the network into synchronized shards in hopes of increasing the overall computational throughput. Validation nodes running the same Ethereum Virtual Machine (EVM) will be assigned to different network shards, they will generate blocks, accumulate different user activity data, and then synchronize with each other through the beacon chain. However, synchronizing all shards means full replication, i.e. all nodes store the same data. This can be problematic because the purpose of sharding is to scale, not to replicate all data across the network. In a synchronous model or in a heterogeneous network topology model, if the usage of one shard (for example, a very popular DeFi shard) is much higher than other shards, it will produce the same speed, cost and scaling issues. How to efficiently synchronize data between shards is also a problem.
Although Ethereum stated that it will take about a year to transition to the new version, in the face of the increase in user demand, L2 solutions such as rollup (Optimistic, zkSync), plasma, and state channels have been launched one after another in order to improve efficiency and speed. The problem is that L2’s trust model requires the use of a central node as an intermediary, or the use of multiple incentivized nodes (Polygon is built using Tendermint consensus and runs on multiple validator nodes, Matter Labs hopes to build a validator node network on zkSync), the former will break Decentralization and censorship resistance, the latter is equivalent to creating a new decentralized blockchain with its own token (such as MATIC), which will eventually join the competition of the L1 platform. So sooner or later, these single-chain infrastructures will face the same transaction cost issues as the number of users increases.
Modular Blockchain Design
Recently, Ethereum launched a new strategy of “rollup center roadmap”, that is, Ethereum is the data availability layer (L1), and other L2 projects are the computing layer. In other words, Ethereum hopes to serve as a base layer to ensure data availability and shared security for rollup. Therefore, Ethereum is actively integrating EVM chains as computing power, which may be dominated by a single rollup, or multiple rollups may coexist (see Vitalik Buterin’s Endgame article). In fact, this strategy coincides with the emerging modular blockchain design, 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 Polkadot and Avalanche’s existing shared security model.
On the other hand, Cosmos, Polkadot, and Avalanche are also sometimes considered L2 platforms because they all deploy Ethereum cross-chain bridges on at least one EVM-compatible chain. However, these projects often refer to themselves as L0 platforms because they provide the infrastructure to develop interconnected L1 blockchains.
Cosmos, Polkadot and Avalanche
Cosmos, Polkadot, and Avalanche all aim to scale horizontally through an asynchronous heterogeneous network model.On these three networks, app-specific blockchains have different virtual machines that can interoperate when needed. On these infrastructure platforms, users can build their own personalized blockchain, which provides greater design space for decentralized apps and assets. Running a project through an autonomous blockchain rather than a set of smart contracts has three major advantages:
- Performance Isolation : Improve blockchain performance by isolating your blockchain from other blockchains, ensuring your user experience is not affected by irrelevant network activity. You can also bridge other blockchains if needed.
- Predictable and customizable fees : On a shared permission-free network, you cannot control the fees. The high interaction volume of some apps will push up the fees of the entire network, and your app can only accept them. A custom fee structure means that fees are more predictable, and it will also eliminate the presence of the underlying platform. Users can use the app-specific blockchain without holding the tokens of the underlying platform. Allowing users to pay fees in currencies other than the underlying platform token is critical to mainstream adoption.
- The verification node can be customized : You can set the corresponding verification node rules and requirements for your own blockchain according to the needs of your app. You can require validators to comply with the laws of specific jurisdictions (such as the EU’s General Data Protection Regulation), have high-performance hardware, or provide specific proofs.
These next-generation blockchain networks have established or are about to establish cross-chain bridges connecting Ethereum and Bitcoin. They are also developing cross-chain bridges to connect each other, with a view to fully realizing the vision of the blockchain internet.
Cosmos, Polkadot and Avalanche are very different at the protocol level (consensus mechanism, economic security topology, etc.), therefore, their functions (inter-chain communication, token economic model, supported app types, etc.) and expansion methods (verification) Node participation, stake ownership, etc.) are also very different. The following sections will compare the three to help developers, entrepreneurs, investors, researchers, and those considering building projects on these platforms understand the differences and their respective trade-offs.
Comparison of Cosmos, Polkadot, and Avalanche
Consensus mechanisms securely and consistently replicate the state of an application over an open computer network. At the same time, in the presence of incomplete information or malicious nodes (Byzantine fault tolerance), the network should maintain the effectiveness of fault tolerance and consensus mechanisms. Cosmos and Polkadot use Practical Byzantine Fault Tolerance (PBFT), which requires all nodes participating in consensus to communicate with each other.Therefore, network decisions have absolute finality. PBFT has the characteristics of low latency and fast confirmation, but it cannot scale to a large number of nodes in the global open network, because as the verification work increases, the burden on each verification node will increase exponentially. Bitcoin introduced the longest chain consensus mechanism (Nakamoto Consensus), which allows probabilistic determinism with extremely low error rates. It builds up a reliable and scalable network over time, but it’s a very slow process.
- The Cosmos mainnet was launched in March 2019 and adopts the Tendermint PBFT consensus with fast transaction confirmation. However, since all nodes must communicate with each other, the complexity of secondary message passing results in only one block being confirmed at a time.
- The Polkadot mainnet launched in March 2020 with a consensus mechanism that separates block production and transaction confirmation: BABE consensus (a variant of Ouroboros Praos) initiates candidate blocks, and GRANDPA (a variant of PBFT) confirms them in batches . This hybrid consensus mechanism optimizes the complexity of secondary message passing to a certain extent.
- The Avalanche mainnet launched in March 2020 using the Avalanche consensus protocol. This is a unique consensus mechanism that combines repeated sampling of validators (Snowball) and transitive voting, using a directed acyclic graph (DAG) instead of a linear blockchain. The messaging complexity of Avalanche Consensus is constant, so it features low latency and large-scale participation. Like Nakamoto Consensus, Avalanche Consensus provides probabilistic finality, but specific parameters can be adjusted and the error rate is extremely low.
Verify Node Access
The blockchain uses a PoW or PoS mechanism to prevent the same entity from operating multiple identities (Sybil attack) while opening nodes to participate. Like other new projects, Cosmos, Polkadot, Avalanche all use the PoS mechanism because it is more efficient and has a larger design space. Some projects on these networks also use a lightweight PoW mechanism or a fair coin distribution mechanism.
- Cosmos takes 6-7 seconds to confirm the transaction.
- It takes 12-60 seconds for Polkadot to confirm transactions (technical review note: most of them are around 5 seconds), and block generation and transaction confirmation are separated.
- Avalanche confirms transactions in less than 1 second. Avalanche, like Bitcoin, uses probabilistic finality confirmation with a very low error rate.
The total amount of computations that the network handles per second depends on the complexity of the virtual machines used by the network and the capabilities of the actual operating environment. Cosmos, Polkadot, and Avalanche all support dedicated asynchronous blockchain networks that ultimately have unlimited network throughput. The focus is on how much growth these networks can achieve and what their inter-chain economic security structure looks like.
Transaction fees rise as network activity increases. Cosmos, Polkadot, and Avalanche all support private networks, i.e. each chain can determine its own rate mechanism based on its state growth.
- In Cosmos, each chain can define its own rate mechanism.
- In Polkadot, each chain can define its own rate mechanism. Fees are pre-calculated through a weighting system. It is up to each chain to decide whether to destroy the fee or not.
- In Avalanche, each chain can define its own rate mechanism. On the mainnet, the fee for some functions is fixed, and the fee for other functions is 0. All fees will be destroyed to safeguard the long-term interests of token holders.
level of decentralization
The data below is as of March 17, 2022.
- Cosmos nodes require secondary information transfer, so the number of nodes is limited. Cosmos has 150 active validators, IRIS has 100 active validators, and Osmosis has 100 active validators. Currently, users need to stake at least 147,231 ATOM (about $1.3 million) to become an active node on the Cosmos Hub, and the delegation threshold is 1 ATOM. The total pledged is about $5 billion.
- Polkadot optimizes the secondary message passing between nodes, and the number of nodes is relatively limited.Polkadot has 297 active validators and Kusama has 1,000 active validators. At present, users need to pledge at least 1.75 million DOT (about 33 million US dollars) to become an active node of the Polkadot relay chain, and the nomination threshold is 120 DOT. The total pledged is about $12 billion.
- The message passing volume of Avalanche nodes is constant, so the number of nodes can be expanded indefinitely.The Avalanche mainnet has 1,311 active validating nodes. Currently, users need to stake at least 2,000 AVAX (about $160,000) to become an active node on the Avalanche mainnet, and the delegation threshold is 25 AVAX. The total pledged is about $16 billion.
The level of decentralization also depends on the stake and revenue concentration of nodes (revenue is weighted according to stake), and they usually show a long-tailed distribution – a few nodes own the majority of the stake, and the majority of the nodes have a small stake. For blockchain platforms, how to achieve fair equity distribution is a problem to be solved, and each project is trying in its own way. For example, since the core of Polkadot is based on PBFT consensus, it has a limited number of active nodes, but these nodes can obtain the same benefits through the Phragmén algorithm.With its novel consensus mechanism, Avalanche can achieve unlimited expansion of nodes, and at the same time, the average weight of nodes is gradually decreasing, thereby improving the level of decentralization.
Inter-chain network topology
The data below is as of March 17, 2022.
- Cosmos is a distributed blockchain network, and each blockchain can have its own verification node. Inter-chain interoperability is achieved through the Inter-Chain Communication (IBC) bridging protocol. Each chain needs to implement IBC in order to connect to other chains. Currently, IBC has been deployed on 28 blockchains focusing on areas such as DeFi, EVM smart contracts, social media, privacy, regenerative agriculture, and gaming. Cosmos is developing a cross-chain bridge between Ethereum and Bitcoin.
- Polkadot allows parachains to inherit security from a central relay chain. Parachains do not have their own validators, but they have collators that collect transactions and generate state transition proofs for relay chain validators.Parachains realize interoperability through the cross-chain message (XCM) format, and the security inheritance mechanism provides the possibility of arbitrary data transfer. Currently, Polkadot has 10 parallel chains, focusing on DeFi, EVM smart contracts, social media, privacy, games, etc. Polkadot is developing a cross-chain bridge between Ethereum and Bitcoin.
- Avalanche allows validator nodes to coincide: Subnets run multiple blockchains while also providing validation for the mainnet. Different blockchains in the same subnet can enable near-instant asset transfers (export/import). Inter-subnet communication refers to the communication between a chain in a subnet and another chain in another subnet, which is currently implemented through a cross-chain bridge (using the EVM chain’s ChainBridge-Solidity contract). In fact, the more the validator nodes of the two subnets overlap, the higher the security assurance of the communication between the subnets, because the overlapping nodes have interests in both subnets. If a group of nodes behave maliciously on a subnet, their stake in the mainnet and other subnets will also be at risk. Although Avalanche has not yet introduced a direct interoperability method between subnets, the Avalanche mainnet can fully act as an intermediary between subnets. Currently, the Avalanche mainnet has 3 blockchains: X chain for transfer, P chain for pledge, and C chain for EVM smart contracts. Other blockchains and subnets are also thriving. Also, like the other platforms, Avalanche has the Avalanche-Ethereum Cross-Chain Bridge (AB Bridge), which operates through a trusted federation and is one of the most used of the 60 Ethereum cross-chain bridges today.
In today’s Cosmos, bridging blockchains with different security levels in the absence of a security sharing mechanism is no different from ordinary cross-chain operations. Therefore, the risk level of interchain communication is not fixed without a common deterministic guarantee. Polkadot’s inherited security model allows for unified deterministic guarantees, upon which parachains can safely pass arbitrary data to each other. Avalanche’s verification node coincidence model supports the sharing of security between each chain and the main network, and blockchains in different subnets will soon be able to directly share security without using cross-chain bridges. Therefore, the more nodes that overlap between subnets (nodes that have interests in both subnets), the higher the security guarantee of communication between subnets. Overall, the more nodes that overlap between different blockchains (similar to merged mining in the PoW mechanism), the stronger the security of inter-chain communication.
- Cosmos adjusts consensus parameters and coordinates fund allocation through on-chain mechanisms.
- Polkadot’s operating environment logic is all stored on the chain in the form of WASM binary files, allowing fork-free runtime upgrades, which means that decisions will be automatically executed according to the referendum results, without requiring any action by developers or validators. Its governance modules include token-weighted voting, rotating committees, time-locked token voting, and an adaptive voting bias mechanism.
- Avalanche can upgrade some parameters through on-chain voting. Its team is developing a broader governance mechanism based on the characteristics of Avalanche consensus.
All blockchains have the following core components: database, p2p network, consensus mechanism, transaction processing mechanism and state transition function (running environment or virtual machine). Cosmos, Polkadot, and Avalanche provide the above core components, allowing developers to build custom state transition functions.
- Cosmos provides the Cosmos SDK and Tendermint middleware to support executing transactions in any programming language. You can develop your own virtual machines and build your own set of nodes. If you want to start your own blockchain, you need to build a validator node set from scratch and attract nodes from existing blockchains. You can also deploy smart contracts on EVM compatible chains (Ethermint or CosmWasm).
- Polkadot provides a Wasm-based meta-protocol and Substrate development kit, and its language is Rust. You can develop your own virtual machine using modules provided by Polkadot (such as accounts, assets, governance, EVM, etc.) and custom modules. You can also use Substrate’s execution-free model of on-chain scheduling, off-chain workers, and fee-free transactions. After bidding for a slot in the parachain auction, you can start your own blockchain, and the new blockchain will inherit the security of the relay chain. Alternatively, you can scale up your validator node. You can also deploy smart contracts on EVM compatible chains (Moonbeam, Acala) or use Ink smart contracts.
- Avalanche provides the Avalanche Virtual Machine (AVM) for developers to clone and customize their own instances, or build entirely new instances as their own virtual machines (the module SDK for developing virtual machines has not yet been released). To start a blockchain, you need to start a subnet and attract validating nodes. The subnet nodes must be nodes of the Avalanche main network. (Technical review note: The subnet nodes are currently built or recruited by the subnet creators themselves, and do not have to be nodes of the Avalanche mainnet.) Currently, there is a subnet EVM code that starts a custom EVM chain. You can run the EVM-compatible C Deploy smart contracts on-chain.
Topology of Heterogeneous Blockchain Networks
An asynchronous network of dedicated blockchains has the potential to handle large-scale user activity compared to a network where each blockchain is an instance of the same virtual machine. This section will explore the respective blockchain networks and interchain communication mechanisms of Cosmos, Polkadot, and Avalanche in more detail.
The Cosmos ecosystem adopts a distributed network topology. Different blockchains have different uses, and each has its own set of verification nodes. When communication is required, these chains will communicate with the aid of a cross-chain bridge. According to the analysis, this topology is “as secure as the least secure chain” (the most secure chain receives assets from the least secure, and its security decreases). However, this topology also gives the Cosmos network resilience, because no single blockchain security issue will dictate the survival of the entire ecosystem. But what is the difference between such a Cosmos ecosystem and other blockchains that rely on cross-chain bridges? Cosmos has a “no strings attached” policy, and projects such as Binance DEX, Oasis, Terra, Nym, etc. can use Tendermint to develop and launch their own app-specific blockchains.
The blockchains in the Cosmos ecosystem are connected to each other through the Inter-Chain Communication (IBC) protocol (see 28 interconnected blockchains on the data platform Map of Zones). Blockchains implementing the IBC protocol will be connected to each other, improving the liquidity of the entire Cosmos ecosystem. IBC operates in a very similar way to a cross-chain bridge. When transferring assets from one blockchain to another, the user needs to 1) lock the asset on the outgoing chain; 2) a third party (possibly a federated relay node) monitoring each blockchain finds the receipt and puts it in Delivered to the destination chain; 3) The destination chain verifies the receipt and feeds back the asset representation to the transfer-out chain. In the Cosmos ecosystem, chains implementing IBC have Tendermint light client-side verification tools that can use and verify these receipts in communications. Furthermore, IBC is a general protocol that can be implemented in different blockchain architectures (see Substrate’s IBC implementation). In addition, the new version of IBC will provide a shared security scheme (see Billy Rennekamps’ presentation).
Polkadot’s Inherited Security Topology
Polkadot employs a hierarchical inheritance security topology, and arbitrary data communication between parachains is very efficient, but these parachains rely on security leased from a central relay chain. In Polkadot, parachains do not need their own validator nodes, instead leasing security from the relay chain. Specifically, parachains need to bid for slots in an auction (about 100 slots in total) and lock up DOT tokens (raise DOT through crowdfunding). Parachains specialize in their respective fields, and their functionality will be immediately available when they are connected to and synchronized with the Relay Chain via reconciliation nodes. Critics believe that different blockchains may not require the same level of security, and that the security of a single blockchain should not have the ability to determine the survival of the entire ecosystem. Although Polkadot currently advocates a parachain without validator nodes, users can start the blockchain with Substrate and establish their own validator nodes instead of relying on a central relay chain (see Compound Gateway).Additionally, parachains can accumulate their own validator nodes, unlock DOT tokens at the end of the lease, and use cross-chain bridges when cross-chain communication is required. In addition, Polkadot can set up multiple relay chains, which will benefit the entire Polkadot ecosystem. However, the hierarchical topology of the network is likely to remain, as cross-chain communication based on inherited security is more efficient than cross-chain bridges.
Polkadot developed the Cross-Consensus Message Exchange Format (XCM) as a common format for communication between parachains, smart contracts, cross-chain bridges, and Substrate pallets. In addition, there are vertical message transfer (VMP) for information exchange between relay chains and flat chains, and cross-chain message transfer (XCMP) for information exchange between flat chains under the same relay chain. The information in XCM is a program running on a Cross-Consensus Virtual Machine (XCVM) (see Gavin Wood’s series). This abstract method of writing networks and building composable inter-chain apps is also applicable to other heterogeneous blockchain networks.
As the parachain community grows, parachains may want to have their own validator nodes (see Acala’s ppt) so that they become relay chains that lend security to other chains. While nested security sharing mechanisms can become complex, all sub-chains can share deterministic guarantees, and the amount of state transitions processed per second increases, expanding the total computational throughput of the Polkadot network.
Avalanche’s network overlay topology
Avalanche has a topology with overlapping networks. Every node validating the subnet needs to be validating the Avalanche mainnet at the same time. (Technical review note: There is no such setting at this stage, it is not mandatory that the node is the verification node of the main network and the subnet) The subnet consists of a group of verification nodes. A subnet can verify multiple blockchains, but a blockchain can only be verified by one subnet. That is, a node can participate in multiple subnets. When launching a new blockchain, you must provide incentives to attract validating nodes that also validate the mainnet or other blockchains. (Technical review note: see note above, not so) If your chain attracts new validating nodes, those nodes must validate both the mainnet and the subnet running your blockchain. Overall, the subnet structure determines the network structure where validators overlap each other (as shown in the figure above), which is determined by the innovative Avalanche consensus. Avalanche consensus performs repeated sub-sampling of verification nodes, and does not require all nodes to communicate with each other, only a small number of nodes need to communicate with each other, which greatly reduces the complexity of information transmission in the network.Therefore, even if the number of validating nodes increases to tens of thousands, the bandwidth and processing power requirements of the nodes are constant. Therefore, from the perspective of node participation, the blockchain of the Avalanche platform is more inclusive than the blockchains of Polkadot and Cosmos, because the validator nodes of each chain of Avalanche can expand indefinitely. How many blockchains a node can run depends on the complexity of the blockchain’s runtime/virtual machine design, and there is no definite answer yet.
In Avalanche, cross-chain interoperability is very efficient, not only because of the fast transaction confirmation speed of Avalanche, but also because the mainnet ensures shared deterministic guarantees (currently, near-instant asset transfers can be achieved between X-chain, P-chain, and C-chain). Avalanche’s secure sharing model differs from Polkadot or Ethereum’s latest rollup system. Avalanche’s novel subnet architecture supports denser networks. This is because security sharing occurs not only between the three chains of the mainnet, but also between all overlapping subnetworks. This gives the Avalanche network composability and programmability, opens up new design spaces, and will support Formative Group Networks (GFNs; see Reed’s Law) that can scale exponentially to millions of daily active users, enabling the development of the Web3 vision. accomplish.
Heterogeneous blockchain networks Cosmos, Polkadot, and Avalanche provide a broad design space with innovations in core infrastructure. As of now, Ethereum has been a stronghold for cryptoeconomic innovation. In fact, teams launching projects on these heterogeneous networks initially optimized existing projects on Ethereum (DEX, AMM, lending, stablecoins, aggregation tools, insurance, NFT platforms, etc.). However, there are also teams taking advantage of the unique advantages of these heterogeneous networks to explore new application scenarios.
In Cosmos, Osmosis combines transaction privacy (decrypting transactions with thresholds to prevent front-running) with cross-chain AMM, and achieves cross-chain through IBC. Celestia encodes block data to improve the security of light clients, which is of key significance to the interoperability of autonomous identity blockchains and the difference in security levels in the distributed blockchain ecosystem. Regen incentivizes regenerative agriculture through a cryptoeconomic platform and utilizes sensor and satellite data with an audited ecology. Nym launches mixnets to prevent attackers from analyzing network traffic, even if the attacker has the ability to monitor the entire network. Nym uses Tendermint and Cosmwasm smart contracts to control directory services, node bindings and mixnet delegated staking.Penumbra protects the privacy of cross-chain network transactions. Larger projects like Binance DEX and Terra also use Tendermint. When interoperable through IBC, these blockchains will unlock even greater value.
On the Polkadot network, the Acala parachain is a one-stop DeFi hub, offering a wealth of features from AMM to stablecoin lending. Moonbeam is an EVM compatible smart contract chain. Subsocial is developing a decentralized social networking platform. Robonomics is developing autonomous robotics services. Bit Country is a platform for launching a virtual world/Metaverse for a specific community. Integritee and Phala use a Trusted Execution Environment (TEE) to enable decentralized confidential computing and encrypted data storage. Polkadot’s development framework, Substrate, can also be used independently (not as a parachain) to run blockchains like Compound Gateway. While all parachains are designed to be compatible with Polkadot’s cross-chain ecosystem, they should make better use of the Substrate framework’s excellent composability, memory efficiency, and auto-upgrade meta-protocol governance capabilities to enable new usage scenarios.
Avalanche’s EVM-compatible chain, C-Chain, initially attracted teams looking to develop “energy-efficient” versions of Ethereum projects. Pangolin is a high-speed AMM modeled after Uniswap. Sherpa Cash follows Tornado in charge of providing private transactions. Originally an AMM, Trader Joe added lending functionality and is now making its way to the DeFi hub. Benqi, a lending app similar to Compound, recently launched AVAX Liquid Collateral. Platypus is an optimized version of Curve’s stablecoin exchange, adding asset-liability management capabilities. Aave, Curve, and Sushiswap, the leading Ethereum projects with multi-chain strategies, have also been launched on the Avalanche C chain, attracting a large amount of liquidity across the chain along the AEB bridge. The Avalanche ecosystem also has some new asset types, such as litigation financing. By combining with the DAO, the project may be able to connect the legal system to the cryptocurrency network. In fact, Avalanche’s innovation consensus and topology of overlapping subnetworks opens up enormous possibilities for future innovation projects.
Heterogeneous blockchain networks Cosmos, Polkadot, Avalanche provide excellent infrastructure for the blockchain Internet, proving the efficiency of the asynchronous heterogeneous network model, and improving the current Bitcoin and Ethereum networks. These networks will eventually host millions of daily active users, fulfilling web3’s vision of “the Internet is owned and controlled by users”.
Heterogeneous networks each have their own potential to help achieve a truly decentralized Internet, because they are unique in design, with their own trade-offs and trade-offs. Understanding the similarities and differences of these networks can help develop new future-proof systems. Projects using this infrastructure will move beyond smart contract applications to scalable production quality systems with dedicated blockchains and their own communities for previously unimaginable scenarios. But it is too early to say, and there are still some unresolved questions, such as how to ensure that liquidity flows efficiently between chains, rather than existing in isolation in a specific chain? How will an open organization operating across chains prevent the emergence of multi-chain giant whales and ensure fair distribution of wealth and power?
 The Bitcoin network is built on decades of cryptographic research, see Arvind Narayanan and Jeremy Clark’s paper “The Academic Origins of Bitcoin”.
Special thanks to Sam Hart, İstem D. Akalp, Engin Erdogan, Joe Petrowski for their feedback and review suggestions.
Disclosure: The author of this article may hold assets in the projects described in this article.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/parsing-cosmos-polkadot-and-avalanche-differences-in-heterogeneous-blockchain-networks/
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