The year 2022 presented several challenges for Cosmos and its vision of inter-blockchain communications (IBC). Internal issues within the Terra Luna ecosystem, which was the biggest protocol on Cosmos at the time, strained the network’s prospects. Additionally, tension between co-founders and a decline in the token’s price further clouded the future of Cosmos. However, despite these setbacks, projects such as dYdX and the cross-chain oracle protocol Seda remain committed to the network and its IBC vision.
Seda, for instance, currently facilitates over 12 million data feeds across 24 networks. In an interview with Cointelegraph at EthCC Paris, co-founders Jasper de Gooijer and Peter Mitchell highlighted the significance of oracles in cross-chain bridges and the measures taken to protect the value they enable.
When asked about the value oracles bring to IBC, Jasper de Gooijer explained that the limitation of smart contracts only being able to query data outside of blockchains restricts their use cases. For example, in lending markets, if one wanted to assess the prices of six chains simultaneously, they would need six oracle providers. This illustrates the necessity of implementing multichain oracles to expand smart contract capabilities.
Regarding Seda’s achievements, Peter Mitchell revealed that within just eight weeks of its launch, the protocol became the second-largest oracle, securing over $2.7 billion in total value locked. However, the team soon realized that monitoring and scaling this to accommodate around 200 chains would be an insurmountable task. To address this, they developed an innovative solution where the main chain aggregates the data and pushes smart contracts to the subchain, eliminating the need to deploy the oracle contract on every new chain.
Related Post
In light of recent high-profile oracle exploits, the interviewees emphasized the importance of education and building secure technology. Jasper de Gooijer stressed that individuals should avoid building bridges with significant locked value if the underlying token has inadequate liquidity on decentralized exchanges. Additionally, he mentioned the implementation of smart price data modules as a preventative measure for slipping in volatile environments, advocating for the use of time-weighted average price for token swaps.
Peter Mitchell expanded on this by highlighting the implications of inadequate liquidity. For instance, he mentioned that if a token has $100 million in borrowed funds but only has $10 million in liquidity on-chain, liquidating large positions becomes challenging. To mitigate this risk, he suggested establishing metrics like liquidation thresholds and collateralization ratios beforehand to ensure the protocol’s success.
Meanwhile, Seda made waves by announcing a rebrand from Flux Protocol to Seda, positioning themselves as a new standard for data transmission across the web3 ecosystem. This move aims to move away from centralized control over data and towards a future where data flows more freely.
In conclusion, despite the challenges faced by Cosmos in 2022, projects like dYdX and Seda remain committed to the network’s IBC vision. Seda’s focus on providing multichain oracles and their innovative approach to data aggregation and deployment demonstrate their determination to overcome the obstacles hindering blockchain interoperability. As the industry continues to evolve, education, secure technology, and the establishment of robust protocols will be crucial in realizing the full potential of IBC and enabling seamless communication between blockchains.
