The long-awaited vision of the Cosmos blockchain has now been realized, as holders of the ATOM (+4.83%) token have voted through inter-blockchain communication (IBC), enabling assets to transfer easily between blockchains.
The final vote to enable the feature was 112 million to 75, overwhelmingly in support of activation.
In the simplest terms, IBC enables messages to travel between blockchains that have implemented the standard. The most obvious use case in crypto is sending messages to transfer tokens off one chain and onto another.
“At its core, IBC is a method of securely exchanging data between two independent (sovereign) blockchains. This means that any two blockchains that support IBC can send communication back and forth in a permissionless manner,” Zarko Milosevic, chief scientist at the blockchain consultancy Informal Systems, told CoinDesk by email.
This development has the potential to open up opportunities in the decentralized finance (DeFi) sector, where a product on an application-specific blockchain could use an asset from a completely different chain.
For example, ATOM is the governance token for Cosmos, the blockchain built to enable IBC. “Previously, ATOM was relegated to the Cosmos Hub with regard to its utility as a governance token. It is now transferable and interoperable with all blockchains that support IBC,” Milosevic said.
Pent-up demand
One place ATOM may go: the Terra blockchain, which runs a DeFi savings account called Anchor. Terra could plug in to IBC and make ATOM one of the tokens its underlying money market will loan.
IBC was built into the Stargate upgrade enabled by the Cosmos ecosystem in February. ATOM holders, however, opted to let Stargate run a bit longer and do further testing before enabling IBC. The vote put IBC into effect on Cosmos.
There was no delay between the vote and the feature going live. “Since it is a parameter change, it does not require for the chain to be halted,” Milosevic explained.
The activation of IBC is not enough for all blockchains to work in conjunction with each other, though. IBC is a protocol that other blockchains can use, but they must upgrade to the IBC standard.
That is theoretically possible for any blockchain to do, but those built on Tendermint, the consensus model native to the Cosmos ecosystem, are likely to be the first to adopt the standard. Some of the blockchains that are built on Tendermint include Kava, Agoric, Akash, Foam and Crypto.com.
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