Evolution of Blockchains
Bitcoin, Ethereum, Cosmos and now Saga. Find out in this article how the blockchain has evolved over time.
Bitcoin created a new category of distributed system powered by rules without explicit rulers. Each node in the network independently verifies the state of the network and checks that all rules are followed for all changes to the ledger. Satoshi Nakamoto delivered a new type of digital money backed by encryption and energy across the globe. The majority of bitcoin code remains the same today, keeping the simple feature set of only send/receive. Due to Bitcoin’s complex codebase and simple featureset, early blockchains such as Litecoin and Bitcoin Cash featured basic configuration changes to the Bitcoin codebase with slightly shorter block times or more transactions per block.
The next major evolution in blockchains came with Ethereum in 2014-2015. Ethereum’s vision revolved around rebuilding not just money, but the entire financial system that is the backbone of the modern-day economy. Ethereum enabled the blockchain to run snippets of code (or Smart Contracts) that allowed significantly more complicated transactions than simple send/receive tokens. These included features such as trustless swapping of assets or even the borrowing of underlying collateral with agreed upon terms. Smart Contracts enabled many builders to emerge within the ecosystem, all sharing the distributed database to settle all types of financial transactions, including trading monkey JPEGs.
The Ethereum design is known as a “monolithic blockchain'' because many developers share a single distributed database. However, a shared infrastructure is difficult to scale and constantly runs into extremely high and unpredictable gas costs. For example, Ethereum has faced gas fees of over $3,000 to mint a single NFT during certain high demand events, such as a Bored Ape Yacht Club virtual land sale. Over the next few years, many different monolithic blockchains were developed and launched to help ameliorate this problem, but these chains individually run into the same issues of scalability.
The next evolution in blockchains came in 2018 with Cosmos. The Cosmos vision has always revolved around the “appchain thesis” - a world with many blockchains that are specialized but able to interact with one another through a common interoperability protocol known as IBC[link] (Inter Blockchain Communication). Appchains are popular among builders because having your own blockchain offers full stack design flexibility, sovereignty and low gas costs.
The IBC protocol is the key innovation in Cosmos that allows all blockchains to talk to one another. With IBC, developers can transfer tokens and other arbitrary data across blockchains using a trust-minimized solution. There are more than 50 sovereign blockchains utilizing IBC, and there are many more coming soon.
History of Cosmos
Cosmos started around 2014 with Jae Kwon and Tendermint. Jae theorized that the blockchain ecosystem will evolve like the internet and will need multiple distributed blockchains to support the demand of the world. However, existing blockchains utilized a mechanism called “Proof of Work” that could not support a large number of secure independent blockchains. Jae went back to early research in Byzantine Fault Tolerance (BFT) algorithms and created Tendermint. Tendermint was a massive breakthrough in the field of distributed systems consensus because it created a framework to easily deploy Proof of Stake blockchains.
In the early days, Jae attempted to use Tendermint to power solutions for enterprise blockchains, but quickly learned that public blockchains were a better use case for Tendermint. However, Jae realized that launching a public blockchain using Tendermint was incredibly difficult and complicated. To usher in this multichain world, developing public blockchains needed to get simpler. Not long after the Tendermint white paper had been published, Ethan Buchman joined the team and started to ship the Cosmos SDK and the Cosmos white paper.
In 2019, the Cosmos team launched the Cosmos hub (ATOM) using the Cosmos SDK. Using and modifying the same SDK, hundreds of projects have created their own blockchains including Binance Chain and Polygon/Matic. The key findings from Jae’s invention of Tendermint and the Cosmos SDK can be found in nearly every corner of the modern blockchain industry, including parts of Ethereum 2.0 and Polkadot.
From the beginning, Cosmos was designed to support cross-chain interoperability using IBC. The release of IBC in early 2021 finally completed the long-discussed Cosmos vision from the original whitepaper. For the first time, two blockchains were able to bridge assets between one another without a middle man involved acting as the trusted “bridging solution”.
The IBC protocol has successfully transferred 10+ billions of dollars worth of assets without a single exploit to date. This vision becoming reality spurred on the biggest name in Ethereum Defi, dydx, to pivot their entire project to developing a Cosmos chain and leveraging IBC.
How is Saga Stewarding the Cosmos Vision?
Although Cosmos’ appchain thesis is real today, launching one’s own chain is still a very difficult process that often takes months. Saga was born inside the Tendermint organization where Jin Kwon (Jae’s brother), Rebecca Liao, Jake Mcdorman and Bogdan Alexandrescu met to design a novel product that makes launching a Cosmos chain as simple as deploying a smart contract. Saga is a chain to easily launch chains permissionlessly. Saga leverages a newly developed technology called interchain security that allows Saga to share its security with many underlying chains, or Chainlets. Saga also deploys many innovative new techniques to help scale the network. Details can be found in our litepaper and latest token economics and incentives paper.
Bitcoin was the birth of a new type of system, the V1 of blockchain technology. Ethereum spearheaded the next technological leap with the V2 of blockchains and smart contracting technology. Now Cosmos is pushing the industry forward with the appchain thesis, the V3 of Blockchain technology. The blockchain industry is embracing the Cosmos vision and the appchain thesis after many years of a monolithic mindset. However, Cosmos still lacks the ease of deployment that developers are used to with other top blockchain projects.
Saga fixes these shortcomings and completes the original Cosmos vision. Our protocol combines the ease of deployment & advanced functionality seen in Ethereum with the optimal performance seen in the Cosmos. Saga’s mission is to drop the barrier to entry for appchains as low as possible, while maintaining extremely high levels of security and scalability.