Interoperability across blockchains is required if blockchain technology is to acquire mainstream acceptance. We've seen bridges try to tackle this problem by resting on a pool of different assets and guaranteeing that an asset can be spanned across to another chain. Bridges, on the other hand, have been the focus of many attacks this year, including the $615m Ronin hack and the $320 million Wormhole exploit. Since the beginning of the year, about $1.4 billion has been lost due to failures on cross-chain bridges. When a network allows inter-chain communication, it enables multiple blockchains to communicate with one another on the same or separate networks without the use of any bridges, providing a more reliable method for cross-chain interoperability. One of the most ambitious projects attempting to address this need is Cosmos.<h2>The Cosmos rally</h2><img src="https://cdn.builder.news/news/11ed43a10e6672dba8e6023f659fee92.jpg" alt="cosmos outperform" title="cosmos outperform" width="600" height="320" class="lykafe0">The ATOM token has recently risen and has been one of the top-performing cryptocurrencies in the whole crypto space in the previous month, outperforming BTC, ETH, and all of its direct rivals.The token has risen mainly as a result of hints from the founders of major announcements at a Cosmos conference next week, pointing to a concept of better value accrual for ATOM holders as part of a brand-new tokenomics plan that "will make EIP 1559 look like a joke," according to one of its most prominent contributors. Before delving into the consequences of these developments for ATOM, it is necessary to present Cosmos as an ecosystem and examine how it differs from its rivals.<img src="https://cdn.builder.news/news/11ed43a10e667b43a8e6023f659fee92.jpg" alt="cosmos rally" title="cosmos rally" width="600" height="272" class="lykafe1"><h2>An ecosystem of inter-chain</h2>Cosmos' approach to inter-chain operability is multifaceted. For starters, they offer a Software Development Kit (SDK) that allows developers to design their own proof of stake blockchains within the Cosmos ecosystem. The SDK is used by most, if not all, of the leading blockchains in the Cosmos ecosystem, including BNB Chain, Terra, and Crypto.com. Having distinct chains, known as zones in this context, functioning under one overall ecosystem allows Cosmos to build an interconnected network driven by a central hub known as Cosmos Hub. This tool not only saves developers time and money by making it simple to set up a blockchain or project on Cosmos, but it also eliminates higher transfer fees across chains because everything is part of the same ecosystem.Because of this, Cosmos is referred to as a layer 0 rather than a layer 1. Layer 0's primary offering is security, and its clients are other blockchains. Layer 1s, on the other hand, sell block space as a service and charge each user who interacts with the blockchain. Polkadot is Cosmos' most likely rival based on this criterion. Cosmos has recently outpaced Polkadot, with the ATOM/DOT ratio rising from 0.85 in June to 2.5 at the start of September.Inter-Blockchain Communication (IBC) is one of the SDK's most essential and distinctive features. With the use of something called the Tendermint consensus engine, IBC serves as the link between the many blockchains, or zones, on Cosmos. In Tendermint consensus, finality is instant; in Ethereum consensus, transaction finality necessitates that a block's transaction is built upon by a series of subsequent blocks. Due to the synchronized nature of final transactions, this finality is a property of Tendermint that all Cosmos blockchains are built using SDK share, enabling interoperability between blockchains.<img src="https://cdn.builder.news/news/11ed43a10e668427a8e6023f659fee92.jpg" alt="Cosmos SDK" title="Cosmos SDK" width="600" height="488" class="lykafe2">It's important to note that recent developments in IBC have linked other blockchains outside the Cosmos ecosystem, such Polkadot and NEAR. The ability to connect to Ethereum after the Merge is something that is also in development and, if successful, could significantly boost the adoption of Cosmos.<h2>Vertical scaling solutions for Cosmos</h2>The Cosmos ecosystem now has the potential to become the world's most scalable and secure blockchain ecosystem by leveraging both horizontal and vertical scalability.In the past, Cosmos and Ethereum had opposing approaches, with Ethereum emphasizing vertical scalability and Cosmos emphasizing horizontal scaling. Now, the two ecosystems appear to be convergent, since both are making headway toward adding components of the opposing scaling strategy to complement their previous work on either vertical or horizontal scaling. In no particular order, here are four vertical scaling solutions in development in the Cosmos: Interchain Security, Dymension, Celestia, and Saga.<h3>Interchain security</h3>Interchain Security on Cosmos Hub is the first vertical scaling solution to be announced going live in the Cosmos. Interchain Security, in essence, enables networks to rent security from the Cosmos Hub. In fact, this eliminates the need for networks to invest effort in "bootstrapping" validators for their network, which is one disadvantage of horizontal scalability. In order to further clarify, any network that goes live in the Cosmos has security equivalent to the value it has staked. Accordingly, there is a possibility that networks in the Cosmos may appear to be less safe if the number of assets supporting a network (staked) is insufficient.For example, because of the way Tendermint consensus works, a validator (or group of validators) that holds more than 34% of a network's stake may effectively censor a network by stopping finality in a Cosmos network. Therefore, it may be more enticing for a Cosmos team to choose to use Cosmos Hub's security, which is now being secured by ATOM for about $1.5b. A team would not only not have to worry about raising the value of its network to ensure its security, but it could also 'lease' validators that are already present on Cosmos Hub and avoid the need to engage in business development activities to acquire validators and operate its security budget for its own validator group.In exchange, a "consumer chain" (a chain that obtains security from Cosmos Hub) pays a leasing charge to the Hub and those who secure it, which entails redirecting a certain percentage of the consumer chain's emissions schedule to delegators at Cosmos Hub. A Cosmos Hub governance post will detail the cost paid to Cosmos Hub delegators for each client chain. Because client chains are "permitted," which means that client chains may only obtain security from the Hub when enough ATOM holders vote YES on it during a governance vote, teams wishing to rent security from Cosmos Hub are required to submit a governance post that describes their vision and product.One useful characteristic of interchain security is that it allows teams to create their own 'custom consumer chain' or 'contract consumer chain.' The key distinction between the two is the binary that validators use. This is conventional in contract consumer chains, however, in customer consumer chains, teams can customize the binary to explore alternative transaction prices and transaction assembly.<h3>Dymension</h3>Dymension is another vertical scaling technique being developed in the Cosmos. Dymension's method is extremely close to Ethereum's current vertical scaling plan. The key distinction between Dymension and Ethereum is the amount of adaptability and flexibility on offer against what is possible in Ethereum. Dymension is developing a Rollup Development Kit (RDK). The RDK is inspired by the Cosmos SDK and may be easily customized by any team based on their needs. Dymension is developing 'enshrined rollups,' which interact and transact with the base layer via native protocols and modules, increasing overall security over conventional rollups.Another feature Dymension possesses as a result of interoperability attributes spawned by the Cosmos is native interoperability across Dymension rollups linked to the Dymension base layer. PoS for sybil resistance / to solve the keeper's dilemma is another unique attribute Dymension is using that is not available in the Ethereum ecosystem. Dymension has devised a novel solution to the keeper's problem that rollups now face on Ethereum.Dymension is still in its early phases, thus not much about the protocol design can be revealed at this time. The best way to think of Dymension is to compare it to Ethereum's current settlement and execution layer design (e.g., ORUs executing transactions off-chain and then writing state to the settlement layer), except that Dymension inherits many of the features that enable Cosmos networks so dynamic, such as interoperability, PoS, and a developer framework for easily spinning up rollup chains.<h3>Celestia</h3>Celestia is a vertical scaling solution that is similar to Dymension but has its own distinct design that is now live in the Cosmos. Celestia is a 'data availability network' in a nutshell. In order to avoid the necessity for a challenging period on the settlement layer, Celestia validators ensure that state (data) is accessible for verifiers to check that execution was done successfully off-chain. The Celestia network does not perform any transactions. It is just a network with the most recent state of an L2 that verifiers may use to assess whether or not data is available.Celestia's use of 2d Reed-Solomon erasure coding to engage non-consensus nodes in deciding if data is actually accessible is a great design decision. Light nodes have never participated in consensus before, therefore this is a scaling decision in and of itself. In Celestia, light nodes may probabilistically establish that all transactions are available since censorship would require a block producer to withhold more than 50% of a block's data.Because of the technique of 2d reed-solomon erasure coding, light nodes may easily determine whether even a single transaction (which might be one of possibly hundreds) is being filtered by a block producer sequenced to a settlement layer. Without this, it is difficult for light users to sample transactions because even if only one transaction is withheld, the more transactions that are batched to a settlement layer, the more difficult it is for a light user to locate, and the less security a roll-up has.A rollup (such as Optimistic Rollup) might publish calldata to Ethereum in the Ethereum ecosystem, but doing so is still (relatively) costly compared to uploading the same data to Celestia to guarantee data availability. It's possible that rollups that are now implemented in Ethereum may just use Ethereum in the future to contest the off-chain execution (and slash on Ethereum) and utilize Celestia as the data availability layer to confirm that the data is accessible before submitting the challenge.In addition, Celestia is developing a framework that will enable zones (apart from rollups) to write transaction data to Celestia while Celestia assures that it is accessible.The Optimint program enables a chain to rollup and deploy instantly on Celestia. For consensus and data availability, it creates its own peer-to-peer network, gathers transactions into blocks, and uploads them onto Celestia.Since Celestia conducts the work for them, Optimint is essentially a framework that developers can utilize without having to go through business development to acquire their own validators or construct their own security budget. The consensus layer of Celestia is called Optimint, and it offers a framework for transaction queuing that can be used for both the settlement layer and the data availability layer (if required). Given that both Optimint and interchain security have the same value proposition, they are likely to compete with one another.<h3>Saga</h3>Saga is the last vertical scaling solution being developed in the Cosmos. The Saga network was developed specifically to provide any program that runs on it with its own execution environment. This implies that hundreds or thousands of "chainlets" may be active on Saga. The ability for applications to pick their own execution environment in accordance with their requirements is one of Saga's main value propositions. The benefit of having a separate execution environment for each program is that resources may be handled more effectively.When a single application runs out of blockspace, it may quickly handle the demand by deploying another version of the same smart contract, which will focus on a specific portion of the activity from the original program. Saga shares a lot of similarities with interchain security in that validators bear a heavy duty to enable applications and application-specific chains to function properly. Saga wants validators to furnish chainlets in a completely automated manner, however, this is a difficult problem to resolve. Saga will become a cosmic force to be reckoned with if it can successfully address provisioning automation.ConclusionTo sum up, Cosmos's previous focus was entirely on extending the ecosystem horizontally. The strategy Ethereum has pursued, which has concentrated on extending the network vertically, contrasts sharply with horizontal scaling. Teams have been increasingly focusing on testing vertical scaling options in the Cosmos as a supplement to the existing horizontal scaling methods since 2022. The Cosmos Hub Interchain Security, Dymension, Celestia, and Saga projects are the four main vertical scaling solutions now under developmentEvery vertical scaling solution has unique design considerations and trade-offs. All vertical solutions being developed in the Cosmos share one trait, though: adaptability. Developers have a ton of latitude to explore all vertical scaling options in the Cosmos since they are all entirely customizable. New vertical solutions in the Cosmos are utilizing the original value proposition of the platform in various ways, including IBC, Cosmos SDK, and Tendermint. The fact that scaling in the cosmos is inherently horizontal makes it special. All currently developed vertical scaling techniques continue to scale horizontally.This is mostly because of the common software development kits, standards, and smooth experience in the Cosmos. The modularity of the Cosmos allows it to grow horizontally more easily than other networks even if a vertical scaling solution is developed that takes advantage of the security of an underneath validator set. In order to pioneer what may be the most scalable blockchain ecosystem ever, vertical scaling will join current horizontal scaling for the first time in Cosmos history.<div class="pr-block-special">Disclaimer: This article is intended for and only to be used for reference purposes only. No such information provided constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific name.</div>

Cosmos comes with four outstanding vertical scaling solutions: Interchain Security, Dymension, Celestia, and Saga.

Cosmos: A fresh wind with vertical scaling solutions