Cosmos is a network of blockchains that allows it to evolve better. In a way, it is more similar to Polkadot than to Ethereum, but the similarity between the three blockchains is that they support decentralized applications using smart contracts.
The common misconception of Cosmos and even Polkadot is that these blockchain protocols are in direct competition with Ethereum.
Structurally, Cosmos is different from Ethereum in that it is an ecosystem of many smaller blockchains. This allows Cosmos to process data faster and more efficiently.
Ethereum is looking to alleviate scalability issues through Eth2, but a full deployment of Eth2 would take time. Eth2 also evolves over time, as sharding and other technologies are released.
Cosmos can coexist with Ethereum and that’s optimistic
According to Jack Zampolin, Cosmos and Ethereum are complementary and can coexist with each other.
This is optimistic for Cosmos because it means that the smart contract market is not limited to a dominant player. Zampolin said:
“FWIW @cosmos and @ethereum are free. I am currently building a bridge between the two which will provide decentralized contract ownership and tools for liquidity providers on ETH #DeFi applications. We (@cosmos) have never considered ourselves EthKillaz ™. “
Throughout 2020, Cosmos has seen rapid growth with the emergence of large-scale blockchain protocols within the ecosystem.
For example, Binance Chain was launched on top of Cosmos, valued at around $ 5.5 billion as of January 1, 2020. It accounts for almost half of the valuation of the Cosmos ecosystem.
$ BNB @binance #BNB
MktCap: ~ $ 5.5 billion https://t.co/mOpbFRHew4
One of the first chains to adopt the @cosmossdk, token exchange for Binance– Jack Zampolin (@jack_zampolin) December 31, 2020
While it takes time for individual DeFi protocols and platforms to migrate to Cosmos, the network is seeing the emergence of widely used blockchains, like BSC.
DeFi is large enough for multiple ecosystems to coexist
For the foreseeable future, analysts predict that DeFi will expand to Cosmos, Polkadot and other blockchain networks due to the high network fees on Ethereum.
With Eth2, Ethereum would have to handle thousands of transactions per second. But, until Eth2 is fully deployed, Ethereum would continue to have issues with scaling.
For example, currently it costs around $ 20 to process smart contract transactions on the Ethereum blockchain network. For transactions involving DeFi protocols, gas may be higher due to staking.
Suppose a user buys an asset with ETH, puts it on the line as a liquidity provider, unlocks it, and sells the rewards to ETH. The whole process would involve five transactions, so it would cost $ 200 in total.
Scalability-focused blockchain networks would eliminate this problem in DeFi, where Cosmos could thrive in the coming months.
Analysts also expect the total value locked in DeFi to reach $ 100 billion, which would create a space for competition between blockchain networks in the DeFi space.
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