What is Interchain Security on Cosmos and how it works?

To understand what is Interchain Security, we should explain first that it is a new security concept that will be added to the Cosmos ecosystem by Informal Systems with its Interchain Security model.

In Proof-of-Stake networks, the responsibility for making the network more or less secure rests on the users' stake, including both validators and delegators. Roughly speaking, the higher the value of the staking tokens, the higher the security. However, small or recently launched networks are at risk of malicious attack because of their low staking participation.

As a result, some networks have banded together to share tools to increase their security, such as Cosmos Hub, which helps balance this security by sharing its staking with other chains.

Interchain Security is a Cosmos specific tool in shared security, and is built using the Inter-Blockchain Communication protocol (IBC), which in turn will be responsible for monitoring and controlling validators.

Its functionality is based on allowing Cosmos Hub to produce blocks for a Consumer Chain by running two nodes for each validator, one for Cosmos Hub and one for the consumer chain. If you want to run a node for a consumer chain as a validator, you will have to use the ATOM you had to stake on Cosmos Hub.

Through the approval of a governance proposal at the launch of a network, the network could use the same set of validators as Cosmos Hub, acquiring its security capacity.

Consumer Chains

Key factors for the success of Interchain Security in Cosmos

Once Interchain Security is implemented, each provider chain delegator will no longer just receive the usual rewards for contributing to the security of the network. Each consumer chain will be committed to reserving a part of its profits to share with the delegators participating in the staking of the provider chain.

That is, by simply staking ATOM, you will contribute to securing both the Cosmos Hub network and the consumer chains participating in its ICS. The only important thing is to choose the best validator so that you can enjoy the journey while your capital increases.

Cosmos will be the first ICS Hub in the ecosystem. The consumer chains based in its Hub will send part of their rewards to each ATOM delegator through the provider chain. As a delegator, you just have to make sure to do your homework by choosing a validator to stake, the rest will simply be seeing the progressive increase in rewards (in other currencies) that will be added to the ATOM rewards.

Interchain Security provides much more than security. Another great value of the initiative is the peace of mind that new chains will have thanks to Cosmos Hub's set of validators and market capitalisation, becoming what is called a Consumer Chain, as it consumes Cosmos Hub's resources.

This will be a great advantage for new chains, because they can maintain the scalability and sovereignty of an independent chain, while being under the protection of a large group of validators. This means that they will also not have to look for validators for their network, as they will have the Cosmos Hub's own validators, who through a governance vote will be able to adopt a new network; this will in turn be an incentive for the Cosmos Hub's own validators, as they will have access to validate other networks.

Consumer Chains can also be created to add new functionalities to the Cosmos Hub, as mentioned above. This is the case of Quicksilver, for example, through which Cosmos staking will be redefined using Interchain Accounts and the Liquid Staking module.

We also have Neutron, which will be Interchain's smart contract host. It aims to be the most secure permissionless smart contract platform for Interchain DeFi. It is built with Cosmos SDK, as well as having CosmWasm, which facilitates interaction with smart contracts written in other languages such as Rust or AssemblyScript, among others.

Can a consumer chain become independent?

Yes, at any time a consumer chain can become independent from the Cosmos Hub validator group, creating its own validator group.

Although these chains will be integrated with each other through Cosmos Hub, they will also be connected to other independent chains in the ecosystem through IBC.

The Contract Consumer Chains

Within the Consumer Chains, contract consumer chains would be a smart contract application under the protection of the Cosmos Hub. Informal Systems, through its CLI tool that is a consumer smart contract converter, will enable the compatibility of smart contracts written in EVM and CosmWasm compatible languages.

Some of the noteworthy features of this type of chain is that they are "Standardised Binary Chains" and most of the gas fees will go to the DAO developer, making it a sustainable development.

The Custom Consumer Chain

In this case, the logic will not be executed as smart contracts but the consumer chains are fully customized by the developers at the Cosmos-SDK level, this will allow to control the gas and the assembly of transactions on the blockchain. In addition to the fact that their token will be inflationary and their fees will also be customized, the Cosmos Hub delegators of these chains will receive a portion of the fees as tokens from that consumer chain.

Interchain Security will also introduce a new concept, Practical Hub Minimalism, whereby the Cosmos ecosystem takes on a new dimension of performance, reducing friction between user groups and growing security.

This system reduces the functions of the Cosmos Hub to a minimum, optimising its efficiency and at the same time: the fewer functions, the fewer possible management frictions between user groups. In keeping with this philosophy, the intention is that as the need arises to create new functions, new independent chains will be created with their own tokens and value, increasing security by growing in staking as well as enjoying the shared security of Cosmos Hub; this will reduce the possibility of malicious attacks.

Interchain Security V2

For blockchains that have already launched on Cosmos, whose staking tokens already have a stable value and market capitalisation that provides them with sufficient security, Interchain Security will provide what is called Layered Security (Interchain Security V2), which will combine the consumer chain's staking token with that of the Cosmos Hub provider chain (ATOM).

This will provide additional security to the chain, as well as having the market capitalisation of the consumer chain with the extra layer of the capitalisation of the supplier chain.

A new vision of security that will be extremely useful for new chains to be created in the Cosmos ecosystem, eliminating major destabilisers in the early stages of chain creation, but even taking advantage of active chains by adding an extra layer of security. A minimalist and functional system that gives the Cosmos universe added value to its already disruptive structure.

And it's not just about security: transactions are expected to be fast and gas fees predictable. The Interchain Security launch is expected to take place between August and September, so we will certainly be watching closely.

Interchain Security