Inter-Blockchain Communication (IBC)
Inter-Blockchain Communication (IBC) is a communication protocol that enables different blockchains to exchange messages and interact with each other. It ensures secure, ordered, and authenticated communication between chains, allowing for trustless exchange of value, such as tokens, and relay of various types of data.
How Cosmos IBC Works
IBC is a fundamental component of the Cosmos blockchain ecosystem, enabling interoperability between blockchains that utilize the protocol.
It Consists of Two Layers
Transport Layer:
The transport layer handles the authentication, ordering, and transportation of data packets communicated over IBC.
It does not define the content or interpretation of the data being transported.
The components of the transport layer include light clients, relayers, connections, and channels.
Connections establish links between light clients on different chains, while channels facilitate data transfer between specific modules on different chains.
Connections are chain-specific, while channels are module-specific.
Application Layer:
The application layer, visible to users, consists of applications built on top of the transport layer. These applications can include tokens, non-fungible tokens (NFTs), oracles, and more.
IBC has its own token standard, similar to ERC-20, known as the ICS-20 standard. This standard specifies the structure and interpretation of data packets for different applications.
In summary, IBC acts as a communication protocol that allows blockchains to exchange messages like a mail delivery system.
The transport layer serves as the postal service, relaying communication between different blockchains, while the application layer interprets the contents of the data packets being exchanged.
Security of IBC
IBC incorporates two mechanisms for security: Interchain Accounts and Interchain Security.
Interchain Accounts enable interaction between chains without requiring chain switching.
It allows actions on one chain to be performed “remotely” on another, increasing composability between chains.
Interchain Security allows blockchains in the IBC ecosystem to lease security from other chains.
Using IBC
Developers can utilize IBC to build applications without worrying about consensus mechanisms, full nodes, and other technical aspects of ensuring decentralization.
The Cosmos SDK provides a framework for building applications on blockchains that incorporate IBC.
Users can benefit from IBC by utilizing blockchains built with the protocol. Everyday use cases include token swaps, staking, margin trading, lending, and providing liquidity.
The fees for IBC transactions vary depending on the individual blockchains involved. Still, since most Cosmos ecosystem blockchains use some form of proof-of-stake, gas fees are generally low and do not significantly impede value transfers.