Inter-Blockchain Communication Protocol (IBC): The TCP/IP Protocol of Blockchains, Bridges & Trends

The Stargate Upgrade

Current Status of the upgrade: 97% complete

Primary Features of the Stargate Upgrade

Within a matter of weeks the Cosmos Hub’s governance mechanism will be invoked so that delegators and validators vote on the passing of the proposal of the largest Cosmos upgrade to this day. Here are the primary features of the forthcoming upgrade:

  1. Inter-Blockchain Communication (IBC): The ability to exchange transactions of value and data across compatible chains;
  2. Protobuf Migration: Accelerates front-end development and what is claimed to be a 10x to 100x better blockchain performance;
  3. High Node Synchronisation Speeds: A new node can synchronise 200x faster, participating in consensus in a matter of minutes;
  4. Chain Upgrade Module: Enables validators to upgrade the chain software asynchronously in a matter of minutes of the hour.
  5. Tendermint’s light client security model allows full nodes to bootstrap themselves securely without waiting days to sync all past state.

Introduction to IBC

There are several blockchains that claim to be Sovereign, Decentralised, Scalable and Sustainable but only a one can claim that it will be able to do all of the above while solving the riddle of blockchain Interoperability. Cosmos Network is within arm’s reach of completing the vision of its original roadmap. The tool that will facilitate this vision is the Inter-Blockchain Communication Protocol (IBC).

What is IBC not?

IBC between homogeneous chains (chains existing within the Cosmos Ecosystem)


IBC & non-Tendermint/heterogeneous Blockchains

Can value and data be transferred between the Cosmos ecosystem and non-Tendermint blockchains (such as the Bitcoin network) with IBC?


Secret Network’s standalone Ethereum Bridge

Apart from Peggy, Secret Network (a Cosmos SDK/Tendermint chain) is also currently developing a custodial Ethereum bridge. It is running on testnet and will be going live in December.

Althea’s Peggy Ethereum Bridge: Why is it Superior?

Blockchain Bridges are not Payment Channels

In order to understand what a payment channel is, let us assume that you want to transfer 1 Dai (a dollar-pegged stablecoin on Ethereum) to e.g. 1 cosmosUSD (cUSD)(an imaginary different dollar-pegged stablecoin on Cosmos). To do this with payment channels you first need a counter-party who wants to do the opposite trade. In practice this role would be played by a market-maker type of entity (e.g. AMM) who is getting a fee for providing the liquidity. This counter-party must have an amount of cUSD equivalent to the amount of Dai that you would like to trade/move. In this example, since they are both stablecoins, this will usually be almost the same number of tokens (i.e. close to 1:1).

Suggestions for wide IBC adoption post-Stargate

Interchain Accounts

For an important overview of IBC and the possibilities of reaching its full potential post-Stargate, please read the article of Josh Lee entitled:

  1. Deterministically create a new interchain account over IBC
  2. Relay the transaction to the interchain account and submit it to the target blockchain.
  • IBC integration for interchain connections and exchanges between Cosmos zones
  • Interoperability with Ethereum based tokens using our two way peg technology
  • Onboarding Ethereum smart contract based systems utilising Ethermint.

IBC Use Cases

For an extensive overview of possible use cases of IBC please see:

  • Asset transfer (fungible tokens, non fungible tokens, vanilla & shielded payments)
  • Multichain Contracts (cross-chain contract calls, cross-chain fee payments, interchain collaterilisation)
  • Sharding (code migration, data migration)


Further Reading



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