Overview of the Cosmos March 15 Upgrade: Can "Replication Security" Enhance ATOM's Value Capture Ability?

Author: Beichen, Chain Teahouse

For a long time, Cosmos has been outside the top 20 in market capitalization due to its overly decentralized governance mechanism, which has led to the prosperity of the ecosystem being unrelated to ATOM. In contrast, Polkadot, another "cross-chain giant," despite its weak ecosystem, still has a market cap that is double that of Cosmos.

The key issue lies in whether their platform tokens have value capture.

The Cosmos community has realized this and has been promoting the idea of having Cosmos Hub take on the validation tasks of blockchains within the ecosystem to capture value within the ecosystem since last year.

However, the initial proposal was not passed due to a high inflation rate (and other detailed flaws) that was unfavorable to ATOM holders, so the proposal was readjusted and re-voted in the past two weeks, ultimately passing with a support rate of 99.48%, and it will officially go live on March 15.

The core of this upgrade is "Replicated Security (RS)," which is the original Interchain Security, allowing blockchains in the Cosmos ecosystem to share validation resources to enhance security, with Cosmos Hub acting as the security provider.

This means that blockchains based on IBC can directly share security from Cosmos Hub without needing to set up their own validation nodes, and in the future, they can also directly share new features released by Cosmos Hub.

The cost of this is that a portion of the fees (default 25%) and part of the future inflation of the platform token (in the form of continuous airdrops) will be sent to Cosmos Hub, which will become the rewards for validators and delegators.

Therefore, this upgrade of Cosmos can be understood as transforming into a mechanism similar to Polkadot's parachains, but without needing to raise DOT to auction for relay chain slots; it only requires adding proposals to Cosmos Hub and obtaining a two-thirds vote from validators to initiate (as long as the standards are met, validators will not reject clients).

However, for security reasons, at any time, if one-third of the validators do not want to validate this chain, the service will be immediately terminated.

The Cosmos ecosystem has actually been quietly growing, and its tech stack is becoming increasingly refined within the open-source ecosystem. This upgrade has significant appeal for projects in the Cosmos ecosystem, with some leading projects already showing strong interest in the Replicated Security of Cosmos Hub.

It is believed that more and more IBC-based blockchains will choose to have Cosmos Hub provide security in the future, which will save the cost of building their own nodes, and ATOM will truly have value capture.

Especially under the narrative of "Next Billion Users," a continuous influx of developers will come in to develop their own blockchains, and the Cosmos ecosystem, which has accumulated significant technical advantages (the Cosmos SDK for rapid blockchain development, the permissionless cross-chain IBC protocol, and the internet-level Tendermint consensus protocol), is a good choice.