How Interchain Accounts improve the UX of apps in the Cosmos ecosystem
May 11, 2022
Complex, multi-step interactions can be performed with a single click, improving the composability and usability of the Interchain ecosystem
By Mark Forscher and Alex Ausmus
Cosmos, the “Internet of Blockchains,” was designed as an ecosystem of independent and interoperable chains that can exchange information, and transfer tokens, in a permissionless manner through the Inter Blockchain Communication Protocol (IBC). Approximately $4.75B worth of tokens were transferred between April 9th — May 9th, 2022.
A recently released Theta upgrade improves interoperability and gives developers an opportunity to dramatically improve the user experience of their applications in the Cosmos ecosystem. The Theta upgrade introduces the first version of Interchain Accounts, enabling more unique cross-chain communication and new interchain interactions.
Interchain Accounts
The introduction of Interchain Accounts offers four key benefits for users in the Cosmos ecosystem:
Improve composability and usability of the interchain ecosystem
Make interoperability easier
Simplify the user experience for interchain actions
Unlock opportunities for new interchain business models
Interchain Accounts allow blockchains to control accounts on other blockchains via IBC. As long as two blockchains have upgraded to include Interchain Accounts, both chains can create accounts on the other chain. The chain that controls an account on another is called the ‘controller chain’ and the chain hosting the account is the ‘host chain.’ Both chains can be both a controller and host chain — it's about the directionality of the interaction.
It’s important to note that Interchain Accounts are not really for user-account to user-account interactions; they are more for chain-module to chain-module interactions. While Interchain Accounts will vastly improve UX over time, the power of Interchain Accounts is directly realized by applications using them for composability between independent blockchains modules.
One great example of how a blockchain can make use of Interchain Accounts is to help offset its carbon emissions by purchasing carbon credits. Regen Network builds and maintains infrastructure that originates digital carbon assets for the Interchain ecosystem. Via Interchain Accounts, a blockchain can host an account on the Regen Network which can be used to purchase carbon assets and hold them non-custodially. This allows on-chain governance of the controler chain to have direct control over the carbon assets held by the protocol, rather than needing some sort of custodiol solution to facilitate such an action.
How do Interchain Accounts improve UX?
The first improvement that end-users will experience is the ability to claim, delegate, and unbond their stake across multiple blockchains from a single blockchain account.
With the Theta upgrade, Cosmos Hub has the ability to create and control Interchain accounts on other IBC-enabled blockchains. Until other chains upgrade to include Interchain Accounts, the feature is not able to be used. But once other chains support Interchain Accounts, they can host and control accounts associated with other Interchain Account-enabled blockchains to perform transactions and create new products.
For example, if a user has a number of different tokens staked across the ecosystem, such as $ATOM, $OSMO, and $EVMOS, they will need to go to each separate chain to claim their rewards. Using Interchain Accounts, the user can potentially perform these actions from a single blockchain (i.e. only needing to pay transaction fees in one denomination).
As Interchain Accounts become more widely adopted across the interchain ecosystem, products that otherwise would not be possible will be developed and deployed. One such example is a DEX aggregator assessing liquidity across all IBC-enabled DEXs. The aggregator chain would control Interchain Accounts on multiple IBC-enable DEXs (such as Osmosis, Sifchain, and Crescent Network) allowing it to make deposits and swaps on the various chains, providing the user with an improved trading experience. This provides the end-user the best price on a swap and would be a way to unify liquidity across the interchain.
Before Interchain Accounts, each action that a blockchain wants to perform on another chain via IBC, an Interchain Standard (ICS) must be developed, tested, and then included in the core IBC codebase. This process is quite rigorous and takes a significant amount of time. While there are use cases where an ICS is beneficial and will likely be developed, Interchain Accounts allow for such actions to happen without including each interaction type into the core IBC code.
Interchain Accounts allow for a message to be sent across IBC but not interpreted entirely by the IBC application layer. Instead, the IBC module will forward the message to the associated Interchain Account, which then is able to perform the action encoded in the message, whether that is staking or participating in governance.
What to expect next
While Cosmos Hub is the first to implement the Accounts module, as other chains implement it, we can expect to see interchain actions become commonplace in apps across the Cosmos ecosystem. This will lead to an increase in not only interchain transactions but also the power of applications built in the Cosmos ecosystem. A more efficient and powerful ecosystem will likely also increase the overall adoption of the Cosmos ecosystem.
There are currently a number of protocols in development which plan to make great use of the Interchain Accounts feature. As Interchain Accounts are more widely implemented, we can also expect to see new interchain services and business models emerge with increased composability and simple interfaces for creating these new interactions.
Are you a developer who needs dedicated Cosmos nodes to read and write data or access archival data? Check out our QT product.
Sources:
Interchain Accounts Take Cosmos Interoperability to the Next Level
Cosmos Hub Theta Upgrade Explained! | Interchain Accounts for the IBC Ecosystem!
This document and the information contained herein is not a recommendation or endorsement of any digital asset, protocol, network, or project. However, Coinbase may have, or may in the future have, a significant financial interest in, and may receive compensation for services related to one or more of the digital assets, protocols, networks, entities, projects, and/or ventures discussed herein. The risk of loss in cryptocurrency, including staking, can be substantial and nothing herein is intended to be a guarantee against the possibility of loss.This document and the content contained herein are based on information which is believed to be reliable and has been obtained from sources believed to be reliable, but Coinbase makes no representation or warranty, express, or implied, as to the fairness, accuracy, adequacy, reasonableness, or completeness of such information, and, without limiting the foregoing or anything else in this disclaimer, all information provided herein is subject to modification by the underlying protocol network.Any use of Coinbase’s services may be contingent on completion of Coinbase’s onboarding process and is Coinbase’s sole discretion, including entrance into applicable legal documentation and will be, at all times, subject to and governed by Coinbase’s policies, including without limitation, its terms of service and privacy policy, as may be amended from time to time.
