Inter-Blockchain Communication (IBC) originated as a trustless method for connecting Tendermint-based blockchains. Since its inception, the scope of IBC has broadened to encompass a wider range of blockchains, notably EVM-compatible ones such as Ethereum, BNB Smart Chain, Polkadot, and Avalanche. This expansion includes networks both within and outside the Cosmos ecosystem.
In this article, we’ll highlight the initiatives that are broadening the IBC ecosystem and delve into three key features to explain why IBC is essential to make the multi-chain worlds secure and open.
We are sure that IBC is the only standard that has all of the important natures described in this post, which are indispensable for the internet of blockchains.
- IBC is rapidly expanding by integrating over 85 blockchain zones with a total transfer value of $4 billion in the last 30 days, and extending its reach to various blockchain networks like Ethereum, Polkadot, and Avalanche.
- As the number of blockchains is expected to grow exponentially, IBC’s role in securely and permissionlessly connecting these blockchains becomes crucial, especially in the context of the burgeoning digital asset market, estimated to reach up to $68 trillion by 2030.
- The reason why EVM chains pay attention to IBC are based on the following three key characteristics of IBC: #1 Various Security Models, #2 Dynamic Connection, and #3 Permissionless Relayer.
IBC is Expanding
IBC is a blockchain-agnostic interoperability protocol. According to Map of Zones, over 85 blockchain zones have been connected through IBC, and the total value of IBC transfers in the last 30 days reached $4 billion.
IBC on Twitter: “Reminder: Interoperability is a public good.The core IBC protocol never extracts value. No in-protocol rent extraction or hidden fees.The code is open-source, free to use, and rigorously peer reviewed by world-class developers.All blockchains deserve to communicate. pic.twitter.com/2gnpgOzqlO / Twitter”
Reminder: Interoperability is a public good.The core IBC protocol never extracts value. No in-protocol rent extraction or hidden fees.The code is open-source, free to use, and rigorously peer reviewed by world-class developers.All blockchains deserve to communicate. pic.twitter.com/2gnpgOzqlO
While the blockchains currently connecting via IBC are mainly Cosmos SDK appchains, as I mentioned in the introduction, the scope will soon extend to other blockchains.
Some notable initiatives expanding the use of IBC include:
- Ethereum Cosmos: Composable Finance, Polymer Labs, TOKI, Union
- Ethereum BNB Smart Chain: TOKI
- Polkadot Cosmos: Composable Finance
- Avalanche Cosmos: Landslide
- Near Cosmos: Octopus Network
The companies are ordered alphabetically.
The core functions and key components of IBC, such as ibc-go, ibc-rs, ibc-solidity, relayer, and WASM light clients, are imperative for its expansion and are being implemented by organizations like Informal Systems, Strangelove, Interchain Foundation, and TOKI(Datachain).
In addition, non-Cosmos ecosystems are paying attention to IBC and looking to get involved. For instance, teams from Polkadot, Avalanche, and BNB Chain participated in Cosmoverse 2023 this October. Polymer Labs’ IBC Amsterdam saw a significant turnout from the Solana community.
So, why is there such keen interest in IBC?
What intrinsic values does IBC offer that captivate other blockchain networks?
Let’s see it in this post.
If you are not familiar with IBC, this tutorial is the best starting point.
The Internet of Blockchains
To set the scene, let’s start by discussing the future of blockchains.
As of 2024, it is estimated that there are more than 1,000 blockchains in circulation. This number is already significant, and it is expected to grow exponentially in the future.
One of the significant movements in crypto in the coming years is the RWA (Real World Assets) tokenization. According to the report by BCG and ADDX, the market size of digital assets, even when limited to the financial market, is projected to be 16.1 trillion dollars by 2030 in a conservative estimate, and could reach up to 68 trillion dollars in the best-case scenario.
Everything we know, from debt, securities, and funds to even currencies, will digitize. But it does not end there: IDs, games, voting systems, and more will all be part of the blockchain universe.
Given this, the number of blockchains is expected to multiply exponentially from today’s count, leading to millions thriving. In such a scenario, blockchains would emerge and disappear on a daily basis, similar to today’s smartphone apps.
In that environment, it’s imperative that we connect this vast number of blockchains both securely and permissionlessly. This is precisely the environment where IBC is crucial.
Without an open standard like IBC, we risk repeating past challenges. Specifically, a few organizations may control the rules and impose them on others, a problem we currently face with web2 giants and financial giants. We are already seeing signs of this issue. For example, LayerZero’s action of deploying a proprietary representation of wstETH to multiple chains, without support from Lido DAO, demonstrates this emerging pattern.
So, why do we need IBC? The answer lies in the following three key characteristics of IBC:
#1 Various Security Models
#2 Dynamic Connection
#3 Permissionless Relayer
Let’s delve into each characteristic.
#1 Various Security Models
Firstly, IBC can establish various security models as defined by ICS-02, based on the requirements of app chains or dApps. When discussing IBC, it is important to note that while light client verification is often emphasized for its superior security, it represents just one facet of the system.
For instance, the Tendermint light client is a specific implementation defined by ICS-07, while the solo machine client follows ICS-06. This flexibility allows us to set up diverse security models, such as zk-proof, TEE-proof, and multi-sig, in addition to light clients, based on application or chain demands. All these implementations align with ICS-02.
While light clients offer the highest security, it’s currently impractical to natively implement them on every chain, especially Ethereum, due to high gas costs. However, this doesn’t mean IBC implementation is impossible. We can start with a security model compliant with ICS-02 and upgrade as needed.
As shown in the diagram above, some connections use native light clients, while others utilize ZK-proof, TEE-proof, or multi-sig methods. This opt-in and opt-out security model lowers the barrier for apps to implement IBC.
#2 Dynamic Connection
Another key feature is the Dynamic Connection.
This is vital for the internet of blockchains, something non-IBC bridges will never offer. Applications can establish IBC channels both permissionlessly and instantly using multiple pre-existing connections, as defined by ICS-03.
Consider the following scenario: An application on blockchain A wishes to connect with apps on blockchain B. A doesn’t need a direct connection. If A is connected to C, it can establish a channel to apps on B via connections owned by blockchains C and D, without their permission.
These permissionless and hopping functionalities for establishing connections and channels will lead to dynamic network expansion when a massive number of blockchains are running.
Imagine a world without a standardized connection like existing bridges. Connections would be overly reliant on specific bridge chains, limiting network expansion due to their permissioned and standalone connections.
Dynamic connections are essential for keeping the internet of blockchains open and adaptable for applications, a feature enabled by ICS-03.
#3 Permissionless Relayer
Having discussed various security models and dynamic connections, it’s clear these features enable another essential component: the permissionless relayer.
As many of you might recognize from the diagram, a relayer is required to transfer packets between chains through a channel. However, as security and connections are abstracted (ICS-02, ICS-03) and the relayer’s responsibility is limited and minimal, focusing only on availability, a relayer can be run by anyone. As a result, packet relay costs are automatically optimized based on demand and supply dynamics.
In contrast, if app chains heavily depend on bridge chains lacking these features, packet relay costs won’t be optimized. These bridges are inherently designed to maximize revenue, and each bridge chain aims to incentivize its token holders and grow its ecosystem.
If a few bridges dominate connection shares, it’s easy to predict that fees will not be reduced or will even rise due to the absence of adjustment mechanisms.
Considering all these factors, in addition to various security models and dynamic connections, the permissionless relayer is essential for the Internet of Blockchains.
Summary and Comments from EVM Communities
In summary, IBC is an interoperability protocol that is highly modularized, can adopt various security models based on the requirements, and has a permissionless nature. Such characteristics are invaluable in a world with a vast number of blockchains in circulation, and IBC is the only standard that possesses these attributes.
Those blockchains are warmly welcoming IBC to connect with other blockchains. To wrap up this article, let’s explore comments from some of the EVM chain communities regarding IBC.
Comment from Avalanche:
IBC has been the leading standard for cross-chain interoperability for the past few years and bringing a combination of COSMWASM and IBC meets Avalanche Consensus and AWM should unify the Cosmos and Avalanche ecosystems and push both forward for the better.
-Matt Schmenk Ava Labs
Comment from Oasys, the leading gaming blockchain:
Oasys has set ‘Interoperability’ as one of the three pillars of its 2024 vision, ‘Oasys Dragon Updates.’ Interoperability is one of the important milestones for Oasys, and we believe it will become increasingly important for the further spread of blockchain games in the future.
IBC has become the go-to standard for cross-chain protocols. It’s kind of a no-brainer that supporting this standard is crucial.
The fact that IBC is permissionless plays a huge role for Oasys. It’s key for giving both users and game devs a secure platform and for growing their ecosystem.
Another cool thing about IBC is its response feature. It lets you know if your cross-chain transactions worked or not. This means you can do transactions across multiple chains with just a single click.
-Daiki Moriyama, Director at Oasys
IBC is expanding, and there are solid reasons for this growth.
In the first half of 2024, TOKI will launch the first IBC bridge between Ethereum and BNB Smart Chain on the testnet. We are looking into rewarding our early supporters, so getting involved with our testnet would be a fantastic opportunity.