Layer by Layer Issue 48: Cosmos 2.0

The Cosmos ecosystem is an important subset of the broader crypto landscape today. Its growing network of application-specific chains connected via the Inter-Blockchain Communication (IBC) protocol represents perhaps the most tangible example of a multi-chain future that currently exists, standing in stark contrast to the generalized monolithic architecture that underpins popular layer 1 (L1) blockchains such as Ethereum and Solana. In the past few years, the concurrent rise of an increasing number of L1s and cross-chain bridges has underscored the role of protocols that enable generic communication and asset transfers between heterogeneous chains. 

In spite of an ongoing desire among L1 teams to amass liquidity to their specific ecosystems, it has nonetheless become clear that the ability to move capital easily between chains is a critical consideration for users participating in decentralized finance (DeFi) activities on-chain. Continued growth in cross-chain bridge and IBC transfer volume throughout 2022 has further signified a convergence of formerly opposing views on blockchain scaling and interoperability. Over the past month, IBC transfer volume has totaled about $1.25 billion. Similarly, bridge volume between the many L1s connected by the Multichain protocol was about $1.4 billion over the same period.