Cosmos is made up of nearly 50 completely sovereign L1 blockchains called “zones”, each customized to meet their application-specific needs. For example, Osmosis is a DEX/AMM powered by its own blockchain.

IBC is a framework for connecting this universe of blockchains, allowing the scalable and secure transfer of assets and data between IBC-enabled chains.

The term “Cosmos” refers to this ecosystem of different IBC chains. Sometimes however, it is used to refer to the Cosmos Hub L1 blockchain within this ecosystem.

Introduction

Cosmos is a longtime interoperability pioneer with its novel Inter-Blockchain Communication protocol (IBC). It is constantly evolving to update and improve this protocol, and there is one update in particular that has everyone’s attention.

The Theta Upgrade, officially released back in April, brings the Interchain Account module to the broader IBC ecosystem. Something is brewing in the Cosmos ecosystem, and it results in a deeply interconnected app-chain universe in the long run.

The Problem

Tendermint consensus and the IBC protocol have together proven their worthiness as a secure, lightning-speed way to connect the Cosmos ecosystem. IBC makes it possible to safely send and receive assets with none of the standard bridge risks. Unfortunately it lacks one major component, and that is composability.

“Yes we can send [$ATOM] from one chain to another, but what we can’t do is tell that chain what we want done with the tokens. We may want to provide liquidity with $ATOM on Osmosis, and in order to do that we have to complete another transaction on the Osmosis chain itself.” - Confident in Crypto

IBC technology is unlike anything else, but it needs to be composable to achieve the full vision of Cosmos interoperability. Interchain accounts are the next step to achieving this vision, adding a layer of flexibility and interlinking protocols at the application layer.

The Goal

Simply put, IBC needed an improvement. True interoperability in DeFi means seamless cross-chain lending or providing liquidity on several chains in just a few clicks. True interoperability is the ability to vote and stake for multiple networks all from one chain.

Interchain accounts improve app-chains like never before, directly connecting their users while maintaining total chain sovereignty. Cosmos would bring the first model of advanced layer 1 interoperability to the cryptosphere.

How Does it Work?

With interchain accounts, users can perform application-specific transactions across different IBC chains without leaving the chain they are on. This all happens while completely preserving chain sovereignty and security.

There are two parts to ICAs, host chains and controller chains. Controller chains are where a user registers a standard account. Controller chains can customize who can create interchain accounts on the network and how interchain account transactions are handled. Controller chains are where interchain transactions are sent from.

Host chains are where an interchain account is registered. Interchain accounts on the host chain listen for directions from the standard account, or in other words, the interchain account is being controlled by an account from the controller chain.

Simply put, an account on one chain can be created and controlled from another chain. Some chains like Mars Protocol don’t let everyone create an interchain account, only the DAO can create interchain wallets and it is limited to one per chain. Other chains like the Cosmos Hub let any person create as many interchain accounts as they want.

Interchain Possibilities

With interchain accounts, IBC tokens can be sent and used for any other task afterwards, all from one account on one chain. This sets a new era of DeFi product innovations into motion by inspiring IBC developers to get composable.

Some are preparing for what they refer to as Cosmos’s “Cambrian explosion”. The ecosystem has endless new possibilities at its disposal, and IBC teams have wasted no time on shipping bold new ideas.

Cosmos Hub

The Cosmos Hub was the first chain to integrate interchain accounts. The Hub has made the creation of ICAs completely permissionless and unlimited, meaning anyone can create any amount of interchain accounts on the Hub.

Osmosis

Adopted back in June by Osmosis, interchain accounts sets the stage for “interfluid staking” amongst other deposit/withdrawal optimizations. Interfluid is an upgraded version of the existing superfluid staking process, which allows Osmosis liquidity providers to stake a portion of their LPed $OSMO while earning trading fees and pool rewards.

Interfluid staking would be superfluid staking on steroids. Rather than being limited to $OSMO staking, LPs could superfluid stake other network’s assets like $ATOM or $JUNO all via the Osmosis frontend.

On the flip side, anything in the IBC ecosystem can use interchain accounts to connect to Osmosis and take advantage of its liquidity. ICAs empower cross-chain swaps and better liquidity as a whole for Cosmonauts.

Evmos and Juno

As the EVM-compatible smart contract hub of Cosmos, Evmos enabling interchain accounts could be huge. The IBC ecosystem could have top EVM-based applications at its fingertips, creating the first form of Cosmos-EVM composability ever really seen before. We are still waiting for an update from Evmos on this planned release.

Similarly, developers looking to deploy on Juno could achieve the same thing, connecting interchain users from all over the IBC ecosystem to their CosmWasm applications. While interchain accounts just got enabled, no Juno dApps use them yet.

DeFi on these chains could connect with any other IBC chain at the application layer, powering things like interchain lending, an IBC DEX aggregator, interchain DAO treasury management, or providing liquidity to/from any network.

Secret Network

Interchain accounts and Secret Network are like a match made in privacy heaven. Secret can scale the entire IBC ecosystem with its privacy layer through the use of interchain accounts. Secret calls this “privacy as a service” (PaaS), and it will be ready with the release of Shockwave Delta.

This could be the use of private contract calls routed through Secret Network. Secret could also be used by the IBC ecosystem as a secure random number generator using interchain accounts.

Interchain accounts could facilitate private DAO voting too. Whether you voted or not, how much you voted with, and the end results of the proposal would still be publicly visible, however your actual vote choice is completely concealed.

Stargaze

Stargaze is an NFT marketplace powered by its own IBC-enabled blockchain. It allows Cosmonauts to mint and trade their own NFTs on a permissionless marketplace, and it is recognized as the main trading hub of Cosmos NFTs.

Stargaze just recently approved the integration of interchain accounts in a move to embrace cross-chain NFT swaps, connection to IBC liquid staking protocols, and more.

Agoric

Agoric is a layer 1 smart contract platform specially designed for Javascript developers. It is preparing for the launch of its $IST stablecoin, planning to be backed by ATOM initially with governance able to expand collateral types to support any other IBC asset.

Agoric confirmed it will look to leverage interchain accounts in multiple ways in order to make $IST minting more accessible. For example, this sketch discusses the possibility of allowing bonded Osmosis LP tokens to be used as $IST collateral. Inter Protocol would earn interest on this bonded collateral to grow their vaults, and Osmosis users can one-click mint $IST after providing liquidity and bonding it.

Kujira

Kujira is another layer 1 blockchain in the IBC family with its highly anticipated $USK stablecoin around the corner. It has several products like ORCA, FIN, BLUE, and more.

Atlo is an aspiring “interchain launch aggregator” bringing an IBC launchpad for any growing Cosmos project. Atlos will be built on Kujira, but any IBC chain can establish their own “store front” to raise money for projects on their chain. This kind of aggregator is only possible with interchain accounts.

There is no other word from Kujira on their intentions with interchain accounts.

Passage Network

Passage Network is a layer 1 blockchain specialized for gaming and NFT marketplaces. It currently powers the Strange Clan Game/NFT project’s marketplace, and just recently successfully launched its own IBC-enabled layer one blockchain.

Developers from Passage have recently discussed their intentions to establish cross-chain swaps using Osmosis, and are considering interchain accounts to achieve this.

Quicksilver

Quicksilver is a developing IBC-enabled layer 1 blockchain that is dedicated to liquid staking for the Cosmos ecosystem. Naturally, Quicksilver can find tons of ways to benefit from the use of interchain accounts in its model.

The team has already announced it will use interchain accounts and interchain queries to allow features like liquid stakers keeping their governance rights and ability to vote while staked, all while natively residing on Quicksilver. Quicksilver looks forward to connecting to Stargaze, Juno, and Osmosis when their ICA module is fully activated.

Akash

Akash Network is the “unstoppable cloud” of not just the IBC ecosystem but the broader cryptosphere as well. In short, Akash is an open compute marketplace for where users can choose their providers and seamlessly switch between them.

Greg Osuri, founder of Akash, has been a longtime advocate for the usefulness of interchain accounts and greater IBC ecosystem cooperation. Mentioned not long ago, Akash will look to utilize interchain accounts to offer users “Secret Deployments”. There have been no other updates from Akash on this yet.

Conclusion

Interchain accounts are one of the biggest developments in Cosmos history, and that isn’t said lightly. The IBC protocol is a game-changer for the interoperability landscape, and interchain accounts are just one of many components in improving this protocol.

Composable interoperability means a new frontier of DeFi products and applications. It means connecting the IBC ecosystem in a way that has never been done before, allowing users to seamlessly interact with other chains and their applications all from one place. It means achieving a truer version of interconnectedness, and it’s all being led by Cosmos.

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