Cosmos Ecosystem : A permissionless B2B2C network

Below is a text transcript summarizing our report, which outlines our comprehensive vision for the long-term development of Cosmos and the Hub. To streamline the content, we have intentionally omitted the section explaining the Cosmos tech stack & validators role, under the assumption that members in this forum are already familiar with the fundamental components such as IBC, ICS, relaying, etc. For those interested in the complete document, you can access and download the PDF version here.


The first decade of cryptocurrency development has primarily focused on establishing reliable infrastructure. However, in recent years, the emphasis has shifted towards bringing real-world use cases to these technologies, aiming to drive widespread adoption. Distributed Ledger Technologies (DLT) inherently offer transparency, leading to their initial applications in public and open-source domains. However, there are indications that this dynamic is evolving, with the lines between public and private sectors beginning to blur.

This report delves into this particular topic: the convergence of public technology with more private Business-to-Business (B2B) and Business-to-Customer (B2C) interactions. Traditionally, these interactions were the domain of banking institutions, providing private services to companies and acting as trusted third parties to handle complex business relationships beyond formal computer logic. But today, certain protocols have progressed beyond the pilot stage, signaling the potential for real-world business applications.

In this journey, many competitors vie for success. The next cycle is likely to determine an interoperability protocol standard, amid the emergence of new challenging approaches. For now, we will focus on the two major classes of blockchain interoperability protocols: Oracle-based and consensus-based, each offering distinct trade-offs. First, we will examine their differences and market shares.

It’s important to separate two types of networks because they will require different interoperability architectures. The key difference in their infrastructure is based on the public versus private usecase :


In public networking, the shared values revolve around security and transparency, even if it comes at the expense of certain critical central points that are kept highly secure. This design choice is akin to the development of the global internet we know today, with server-based hosting in data centers, TCP/IP facilitating transparent communication between servers, and the DNS (Domain Name System) acting as a centralizing and systemic part of the internet. In the blockchain industry, this model aligns with an Oracle-based interoperability system, where data storage is decentralized across multiple chains, communicating via a common messaging standard (like CCIP). Drawing a comparison to Chainlink is appropriate, as multiple DNS providers exist for the internet, much like there would be numerous oracle service providers in the Chainlink network. Public infrastructures often trade-off reliance on a central actor for enhanced simplicity and ease of onboarding.


On the other hand, private networking is the preferred choice for businesses and corporate structures. It is either adopted for internal interoperability (intranets) or to facilitate exchanges with external counterparties (through shared databases, for instance). The technical implementations of private networks vary significantly from one company to another. To achieve interoperability, they often adopt “general-type” standards across partners. Challenges arise when smaller businesses interact with larger dominant entities, leading to difficulties in achieving seamless integration. A blockchain private network context is analogous to a consensus-based interoperability system like Cosmos’ IBC (Inter-Blockchain Communication) protocol. Each chain produces its own consensus to secure the message exchange. The information transport is entirely trustless and can be operated by independent relayers. The messages format is open but adheres to different InterChain Standards (ICS-x). Private infrastructures typically trade-off overall complexity for increased flexibility and composability.

This comparison tells us that CCIP & IBC are likely not direct competitors but more certainly targetting different marketshares. One for public & permissionless networks, the other for private & permissioned databases and intranets.


Compared to today’s industry, in which banks are common intermediaries. In a decentralized B2B system based on consensus interoperability, the landscape would resemble multiple “islands” of distributed databases and intranets. However, a critical consideration in this system is that these islands will exhibit varying levels of security, contingent on the collateral value they stake in the consensus mechanism. As a result, security and collateral become crucial factors if smooth interoperability is to be achieved.
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While this system holds the potential to eliminate the need for the traditional banking infrastructure, it is more likely that banks would transition to this new decentralized environment. They might even actively participate in these consensus “islands”, contributing their collateral value to enhance the overall system’s security. In doing so, banks would maintain their relatively central role, albeit in a decentralized context.


Should businesses utilize their own consensus-based infrastructures, they would engage in reading, writing, sharing, and trading various databases among themselves. This raises a vital question of how to partition these datasets. Consequently, the most critical component of our infrastructure would be modularity - separated components with their own logic architected around a common consensus core. This system would require the ability for these “modules” to communicate with one another and establish connections to external modules based on other consensus cores, all facilitated through programmable and permissioned connections.

Providing services to seamlessly transition existing databases into this modular blockchain equivalent can be likened to the transformative impact that website creation had on the e-commerce landscape during the internet’s explosion.


Privacy stands out as another pivotal concern for businesses. Opting for a centralized consensus model is an impractical route, given that it would jeopardize the pseudonymous nature of all participants within the network. Consequently, the connections require a permissioned approach, coupled with extensive programmability. This arrangement empowers businesses to create custom-tailored solutions that align with their specific requirements.

Another pivotal inquiry revolves around the notion of block finality within the interconnected chains. The swiftness of finality directly impacts the promptness with which messages can be processed by the recipient chain and subsequently relayed to another chain in an unceasing flow of data traversing the participants. In this context, a network characterized by instant finality would manifest significantly enhanced efficiency.

Among various blockchain ecosystems, only the Cosmos Ecosystem currently offers all these features at a production-stage maturity


In selecting Cosmos as the optimal choice for a B2B2C network, it’s crucial to acknowledge that each ecosystem entails its own set of trade-offs. Our proposed model revolves around ecosystem specialization, delineating six distinct pools of market share. According to this model, our network would take the lead in interoperability, capturing over 50% of the Cross-Chain Transactions (CCT) market share, as depicted by the purple distribution in the left chart. While also securing a secondary share in privacy, the model suggests that achieving this might involve a trade-off with daily active users (accounting for less than 1% market share) and average transaction value (around 1%).

This alignment is logical, considering that B2B interactions prioritize utility over user engagement. The relatively lower transaction value could be attributed to the prevalence of contract-based and information-related transactions, such as business agreements, data sharing, and collateral insurance deposits, as opposed to settlements. By employing this model, we gain insights into the key metrics to monitor for adoption confirmation. Successful adoption should manifest through a notable uptick in cross-chain transactions, coupled with a significant portion of non-public transactions in comparison to public ones, while ignoring daily active users, average transaction value or even transactions per second.

[this is where we skipped the Cosmos SDK stack description, accessible in the PDF version here.]


At this juncture, we have outlined the essential components that constitute the overall Cosmos network. Now, let’s solidify this knowledge by constructing a comprehensive model of the Cosmos Infrastructure using an analogy. A comparison that effectively explains Cosmos to the general public is to liken it to ancient cities.

In this analogy, we can envision the Cosmos network as a fortified city comprised of data instead of citizens, databases and intranets instead of residantial areas and shops. Let’s not forget that, through history, cities and castles have existed long before we created megalopoles and skyscapers.

Now, let’s delve into the aspect of security (refer to the chart on top). The city’s protective walls symbolize the InterChain Security, establishing a minimum collateral threshold. Beyond these walls are low-security chains and external-type databases (namely the Interchain). Messages originating from the outside undergo processing via “gates,” which assess and filter them before granting entry into the city. Within the city, we encounter district-like group structures. The city center accommodates the public administration (5) and a marketplace (1). The Castle (10), a central fortress with its own walls, provides the highest level of security. Military forces often reside within the castle or in its immediate vicinity. They patrol the city, ensuring the foundational security required for peaceful living. This aligns with the Cosmos Hub, where validators undertake the role of city guards.

These patrols are also responsible for securing vital public infrastructure such as the temple (4), administration (5), and gates (9). Certain districts, akin to the patriciate (8), willingly pay an extra fee to have additional patrols due to their higher net worth and living standards. Marketplaces (1) function as public exchanges, reminiscent of Osmosis, where Liquidity providers, much like merchants (2) of the past, gather to trade their inventories. The docks (6) hold a pivotal role in trade as a gateway connecting to the outside world. Moreover, there are slum areas (7), where patrols are infrequent. These zones often house black-market operations, concealed transactions, and various high-risk activities due to their potentially illicit nature.

Through this analogy, we can readily visualize the consensus security layers spread across the city and their interdependencies. The patrols safeguarding the city center’s public infrastructure parallels ICSv1, the willingness of certain groups to pay for enhanced security corresponds to ICSv2. Patrols in other private districts resemble ICSv3. The remaining foundational safety layer is analogous to mesh security.

Switching our focus to the roads, they represent the equivalent of IBC channels. Some roads experience heavier traffic (represented by their width). We also have faster and slower routes (color-coded) depending on the number of relayers and their efficiency in transporting packets. The fastest and most populated roads would likely connect the castle to the marketplace and the city center to the outside world. In this analogy, the docks (6) act as the frontier with real-world assets, where dock operators are tokenized asset issuers and IBC oracles. Meanwhile, gates (9) function as roads to other cities like Ethereum and Bitcoin via IBC native bridges, likely secured by ICS (blue circles).


With the aid of the previous model analogies, we can now elucidate the critical role that the Cosmos Hub plays in the Cosmos ecosystem. As the largest market capitalization, with nearly 5 times the weight of the second-largest chain in Cosmos, the Hub stands as the legitimate castle of the city.

While we will refrain from delving into the Hub’s complete legacy, it is worth noting that it ranks among the top #17 chains by capitalization (excluding stablecoins) and holds the #1 position in terms of active developers and token holders within the Cosmos ecosystem. It boasts three times more developers and over five times the number of individual delegators compared to the second-ranked chain.

Apart from providing security, the castle is the center of political activity. Its financial power is vital for investing in public infrastructures that would be unattainable otherwise. In exchange for the security provided and public services like administration, infrastructure construction and maintenance, patrolling, and securing gates, the castle collects taxes. As the custodian of the city’s treasuries, the castle assumes the role of a giant safe. Understanding these
references helps grasp the Hub’s significance for the broader ecosystem.

Cosmos has faced criticism for its intricate politics. However, with this framework in mind, the Hub should become the hub of democratic debate. Rather than reducing politics, it is likely to see an increase in its scope. As the ecosystem’s challenges grow in complexity, so should its hierarchical structure. We predict that complex DAOs and
sub-DAOs will have to emerge to maintain decentralization and accountability within the system.

Additionally, the Hub has been the subject of criticism for its substantial public spending. Nevertheless, we now comprehend that building the IBC and financing the development of core SDK modules is precisely its role, a role it will continue to play in the future. Continuous spending will be required for the SDK’s maintenance and research and development. The key to success lies in the Hub’s ability to efficiently collect taxes to balance against its public
spending. The deployment of the InterChain Security and its future updates are intended to serve this purpose.

With this model, we can also shed light on the final piece of the puzzle: the role of ATOM validators. They act as the castle relay, providing security across the entire city. Now, let’s explore the complex economics surrounding them.

[this is where we skipped the validators roles description, accessible in the PDF version here.]


In the Cosmos Hub, active politics and community expenditure form the visible part of the iceberg, while validators operate beneath the surface to create private value and expand the frontier. However, from a purely economic perspective, one might contend that validators could utilize an alternative base collateral for their operations, merely reaping the rewards without engaging with the associated public costs.

Cosmos boasts a notably horizontal distribution model, which contrasts with the vertical extractions that investors often seek. The concept of Security as a Service (SaaS) serves as a significant economic mechanism in this equation. This system necessitates a collateral, which inherently requires a deposit. The decision here hinges solely on investors’ assessment of risk versus reward. This is where Cosmos can feel quite confusing, as most of shared security consumers will be private entities that can’t interact directly with the depositors.

To further emphasize the ambiguity, businesses need a transparent collateral and investors need a transparent revenue sharing. Meanwhile, the system must maintain privacy and trustlessness.

The central takeaway is that trust becomes intertwined with the validation system when a common standard unit of account isn’t employed. Businesses utilizing a diverse array of collateral must trust that validators have performed due diligence and risk management on counterparties. On the investors’ side, a multi-asset deposit necessitates tracking each stream independently. A CBDC or fiat-based system only transposes the reliance towards the centralized issuer. This is perfect for a blockchain application. One that can store the collateral value,
its contractual usages and perform the reward distribution. Its utility should be conciled to these usecases.

To maintain their privacy, businesses using SaaS would be enclined to hold ATOM and utilize it directly as a form of payment for the services rendered. An on-chain binding contract would be established between the validator and the client, transparently outlining the fee structure for investors. Even if the payment contract is denominated in fiat terms, the actual value transfer from the business to the depositors would still occur in ATOM, making it a de-facto medium of exchange for trustless and confidential security agreements.

As the only source of verticality within the ecosystem, collecting community funds to finance the public infrastructure maintenance align logically. The responsibility to strike the appropriate balance rests with ATOM holders via the governance system.


  1. SUPPLY CHAINS: Businesses involved in supply chains could transition from a shared database model to a Cosmos blockchain where all participants become validators. Each participant’s data would be encapsulated within distinct modules, protected by encryption and gated access. While these chains can function independently within the Interchain, the true advantages emerge when introducing one or multiple SaaS validators to enhance decentralization. The providers’ contracts would involve Non-Dislosure Agreements and KYC as well as some collateral at stake in the consensus. The report has established that these businesses are likely to select Cosmos Hub validators, given their competition to be top performers in the ecosystem. ICSv3 would
    incorporate ATOM into the local consensus, with the Hub hosting legal agreements and handling payment channels.
    Through a theoretical minimum of 33% stake, the blockchain could potentially function with a private codebase, yet still be deemed eligible for connection with other Cosmos chains. The inclusion of public and reputable Hub validators staking their collateral could suffice to establish a trust-minimized IBC acknowledgment, thereby creating private to public gateways (refer to figure 1).

  2. CORPORATE MANAGEMENT: Migrating intranets into a Cosmos environment would establish a sovereign chain for each subsidiary. Databases would be updated into separate IBC-enabled modules following interchain standards to transmit data accross participants. A customized cross-chain governance system spanning accross all chains would enhance efficiency and security, enabling executive orders to trigger coordinated state changes directly following votes. This system can also operate privately using a similar ICSv3 gateway to public chains. Corporations are likely to opt for bank-type validators, offering additional regulatory compliance, on-chain accounting, corporate finance and tax reporting services. Regulated entities could even be allowed to replace
    conventional legal business contracts with audited smart contracts, significantly reducing original costs (refer to figure 2).

  3. SENSITIVE DATA: Through encrypted mempools and national public blockchains, citizens and countries could retain full authority over their personal data. They would be compartmentalized into distinct modules, and token-gated access, along with smart contracts, would facilitate confidential data processing within the chain. Only encrypted results would be exportable. Furthermore, permissioned IBC-enabled modules could enable deep learning without necessitating the extraction of raw data. Each national chain would be overseen by a meticulously supervised, regularly audited, and carefully selected group of trusted validators. Naturally, the centralized security of mempool encryption and decryption keys would be maintained by governments.

  4. E-COMMERCE: In contrast to centralized government mempool, online commerce could leverage web3 decentralized frontends and user signatures to perform trustless data encryption. Individuals would retain control by authorizing or revoking access to decryption keys. Interchain Queries1 (ICQ) allows dApps to harvest data from a vast network of independant
    sovereign chains via IBC routing, thereby creating a giant distributed database of customer activity with signature-gated access. This innovative paradigm disrupts the isolated silos of web2, establishing the foundation for a user-controlled data web3.
    Regarding consensus security, businesses have the flexibility to select their desired level of Cosmos integration and privacy. Aligned partners might leverage mesh security for a common baseline, then deciding whether additional SaaS collateral is warranted. From a broader perspective, this network is made of complex amalgamations of security and privacy agreements interconnected via public encrypted IBC routings (as depicted in figure 3). This architecture resembles the intricate organization of ancient city districts, with neighborhoods and interconnected streets.


This comprehensive report underscores the pivotal role that the Cosmos SDK can assume in the adoption of a decentralized B2B2C network. Through a detailed exploration, we have dissected the essential components and articulated a compelling model for its gradual implementation. The journey commences with the construction of public infrastructure, gradually evolving towards the integration of private business, with the ultimate aspiration of establishing a fully distributed data network. However, it’s important to acknowledge that the present state of the ecosystem is in the “Early Market” phase, intersecting the domains of “tech enthusiasts” and “visionaries.” With approximately 2.5% penetration of the Total Addressable Market (TAM), the projected adoption rates surge from 2.5% to an ambitious 16%, representing a remarkable growth potential of over 500%.

The existence of IBC in production for more than two years indicates that the technology trigger has already occurred, as per the “S-Curve” performance breakthrough model. This suggests that the subsequent phase likely involves the public awareness, leading to inflated expectations and market speculation, further fueling growth potential. Venture capitalists, with their focus on high potential Return On Investment (ROI) of 10 to 20x, are well-suited for investing in this stage. ATOM is expected to be a prime focus as it offers substantial market-depth and a predominant position for potential verticality in this economy.

The presence and engagement of fintech venture capitalists are not only plausible but indeed essential. They have the potential to mitigate entry barriers for businesses and consumers alike, rendering the intricacies of the ecosystem more accessible.

Based on projections, we anticipate the “peak of hype” in mid-late 2024, performance breakthroughs between 2027-2030 and peak adoption (50% TAM) around 2032. It is evident that the role of venture capitalists will be instrumental in driving the success through the visionary phase, where banks are expected to be the pivotal actors in the “pragmastist” phase towards widespread adoption of this decentralized B2B2C network.


Link to the full document here.

Thanks for reading !
Greetings from the Govmos team, the governance arm of the PRO Delegators Validator


Excellent, appreciated work.

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This is great. I’m always impressed every time I read anything you guys write.

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Appreciations to @tknox35 and @Gnoman for sharing your insights. I’m curious to know which specific section of the report resonated with you the most. We were hopeful to receive additional feedback concerning the considerable effort invested in compiling this document. Regrettably, it seems that the significance of having a long-term vision is being undervalued by the hub governance, and the overall lack of interest to this post appears to validate our initial assumption. Hopefully this will change in the near future !

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Appreciate the effort here.

Finding it difficult to understand what’s the concrete takeaway. Where do you expect this forum post to lead to? Also, a note on the language and substance: It feels like an chatgpt-generated content. Doesn’t mean it’s not valuable, but like I said, I find it difficult to see what it informs exactly.

The key difference lies in the purpose behind using GPT for rephrasing – it’s all about improving clarity and flow rather than creating entirely new texts based on prompts.

In terms of content, our analysis takes a deep dive into how Cosmos fits into the current market landscape, with a primary focus on enabling private business interoperability, as opposed to the more common emphasis on public “app chains.” This viewpoint stands in clear contrast to the widely accepted narrative about Cosmos. We argue for a complex network of chains that resemble shared and interoperable databases, rather than standalone applications. We also lean towards characterizing these networks as predominantly private or semi-private.

Next up, we shed light on the potential framework for the public infrastructure. Leveraging our “ancient city” model, we can anticipate the services that could be strong contenders for a market fit under ICSv1, as well as those that are likely to align with ICSv2. Furthermore, we draw attention to the intriguing similarities between the functions of validators and traditional banks. As a result, we anticipated a strong likelihood of the hub evolving into a role more centered around business finance, which is quite different from the primarily political path it’s currently on.


Thanks for this work !

I think there is a need to address for discussions about the long-term vision / goal of the Cosmos ecosystem to address a specific market.
The current way of doing seems more to be like continuing to develop the app-chain thesis and letting the market come to the hub.

Our vision revolves around keeping the hub sleek and focused, facilitating economic coordination and engaging in political discourse on core themes. We propose setting up an Interchain Business Development (BD) structure led by savvy governors, each equipped to forge partnerships with key chains in the Cosmos ecosystem. These governors would act as business finders, potentially earning intermediary fees for their services. Additionally, we suggest a model where governors receive a base salary through delegation via the Stride Governor delegation program, aiming to cultivate a highly skilled political class within Cosmos actively fostering interchain business partnerships, rather than waiting passively for projects.

Moreover, our vision includes creating a technical BD layer operated by validators, expected to specialize and naturally form sub-groups. This concept was introduced over a year ago in a post: Ideation: Governance Councils & Treasury Modules. In this context, we discussed the formation of “validator councils” that would leverage Interchain Security V3, as detailed in this report (the page was removed from the transcript, but it is available in the full report’s PDF):


As validators professionalize, they are expected to resemble existing business banking affairs more closely. Much of their work would involve Business Development for enterprise clients, actively seeking clients and offering services. This proactive approach stands in stark contrast to a passive “let them come to us” strategy, requiring both governors and validators to actively seek mutually beneficial partnerships. In this collaborative ecosystem, governors would oversee the public blockchain side, while validators would focus on private business aspects.