Bringing Bitcoin (BTC) to Cosmos had always been “part of the plan,” according to the Cosmos development team.
With the new grant from the Interchain Foundation (ICF) to Interlay, the developers of interBTC, that goal “is getting closer.”
Cosmos has always been “ahead of the game,” anticipating or foreseeing the necessity of blockchain interoperability “straight from the start,” the announcement noted while adding that it should be quite clear to their community that blockchain maximalism “isn’t sustainable and is not in the interest of developers, end-users, or the wider blockchain space.”
As mentioned in the update:
“Just as we live in a globalized world in which countries interchange goods and services with each other, sharing expertise and enriching the lives of their people, so must thriving blockchain ecosystems, built for different intents and purposes, be able to connect, transact, and trade. The only way to achieve this goal is through collaboration.”
Interoperability through Collaboration — IBC
The dramatic growth of decentralized finance (DeFi) has “highlighted some clear trends — the need for interoperability is arguably the most pressing of them all.”
The announcement also mentioned that DeFi can “no longer live within the confines of Ethereum’s walled garden.”
As stated in the update, this was “made abundantly clear when ether’s price hit record-highs earlier this year, thrusting its transaction fees, network congestion, and scaling issues into the limelight once again.”
During the past few months, we’ve seen the “exodus” of multiple DeFi decentralized applications and protocols to various other blockchain networks, side chains, or layer-2 solutions that allow them to “provide a better user experience.”
But while it’s great that DeFi provides greater choice and flexibility, the user experience is “more fragmented, complex, and unappealing to a wider audience.”
The announcement further noted:
“Interoperability solutions can overcome this increasing blockchain fragmentation. Launched in February 2021, the Inter-Blockchain Communication protocol (IBC) is the Cosmos standard for allowing any two chains to communicate, share liquidity and functionality, and transfer tokens and other data within the Cosmos ecosystem.”
As mentioned in the update from Cosmos:
“Already with IBC, the first cross-chain decentralized exchanges, Coinswap, the Gravity DEX protocol, and Osmosis, have been made possible, enabling token transfers, swaps, and liquidity pools over multiple chains in the Cosmos ecosystem for the very first time. Emeris Beta, the first available dashboard supporting the Gravity DEX protocol, was launched in August as a cross-chain portal to all crypto apps, no matter what blockchain they run on.”
Users are able to manage all their crypto-assets and balances cross-chain from within one “intuitive” and “simple” interface. And, as more IBC-powered chains are added, the utility and popularity of Cosmos DeFi is expected grow.
As confirmed in the update, the Cosmos developers have been talking about “an ecosystem that secures more than $100 billion of digital assets. And that’s only the beginning.”
Connecting to Other Chains — Ethereum
As noted in the announcement:
“With the next upgrade to the Cosmos Hub, the Gravity Bridge connecting the Hub to Ethereum will be deployed. Gravity Bridge is the most secure decentralized bridge to Ethereum and will allow the Cosmos user base and liquidity to expand significantly, as DeFi becomes more accessible.”
Cosmos DeFi projects should be able to “amass wider user bases,” its developer claims. They also noted that cheaper fees, improved pricing model, and arbitrage opportunities “made possible by the Gravity DEX protocol will lead much of Ethereum DeFi to be carried out on Cosmos.”
They also mentioned that with additional work underway to connect to other chains like Celo and Polkadot, “it’s clear that DeFi is screaming for interoperability… It’s also screaming for Bitcoin.”
As stated in the update:
“Despite a veritable world of alternative financial opportunities existing outside of traditional finance, such as lending, borrowing, staking, and yield farming from various DeFi tokens and protocols, people still want Bitcoin. So, what’s the best and most sustainable way to fit together all the pieces of the puzzle?”
Bringing Bitcoin to Cosmos — interBTC
By collaborating with Interlay, a team that shares the Cosmos vision of interoperability among chains, we can “bring Bitcoin to the Cosmos ecosystem,” the announcement noted while adding that through interBTC, Interlay will “eventually bring Bitcoin to all DeFi platforms, allowing users to trustlessly invest, earn, and pay with their BTC anywhere.”
Through its lock-up and vault technology, users are able to secure their Bitcoin and “mint fully collateralized interBTC that can be used in any DeFi project on any blockchain.”
As stated in the update:
“Already hosted on a Polkadot parachain, interBTC is coming to Cosmos and will eventually be available to any chain that supports the IBC standard, as well as Ethereum and EVM-compatible networks. Bitcoin on Cosmos will bring deep liquidity to the Cosmos ecosystem and greatly increase the utility and scope of Cosmos DeFi.”
The announcement also mentioned:
“Taking this step forward will also help to further grow the DeFi sector, improve inter-blockchain collaboration, and give users a better experience — from more intuitive interfaces and lower fees, to a simpler way of managing their cross-chain assets.”
The Next Steps…
Interlay is getting ready to share a technical feasibility report for interBTC and IBC “to work together as well as a Proof of Concept implementation with selected IBC-compatible chains.”
The Interlay team will “use the ibc-rs module and the IBC substrate library to build an IBC bridge to bring Bitcoin to Cosmos,” the announcement revealed.