Blockchain Protocols That Scale: The case of Cosmos, Luna, Fantom and Near

Which are the most scalable blockchain protocols? If you are asking this question, then you have come to the right place. Everyone is now familiar with the growth of Bitcoin and Ethereum, but what are the other scalable solutions? In fact, Bitcoin does not scale at all compared to Ethereum. However, in this article we will be showcasing the DeFi projects that scale - Cosmos, Luna, Fantom and Near.

All four protocols are in the Top 30 cryptocurrencies list by market cap according to CoinMarketCap. This is a clear signal that each and every one of these projects is doing great given the millions of funds being transacted, invested, traded or staked on their platforms. As a result, opportunities for developers and companies are there to be seized. Large volumes of trading and massive markets are a great place to launch a new dApp or to build a DeFi project. Therefore, the blockchain protocols that we will be reviewing can be a great place to start or launch a service or product that can be monetized. There are many benefits to this and barriers to entering these markets are still low. However, this could be subject to change within the next few years, so it's best to act quickly and be the early bird in any of the given ecosystems.

If you are interested in any of the four blockchain protocols or one of the big players such as Ethereum, we at DCVX, can help you build your own NFT Marketplace, launch a smart contract, develop an NFT project or provide you with general blockchain consulting. So if you are interested in this article or anything DeFi-related, then please make sure to send us an email, so we can discuss how the future of Web 3.0 and DeFi 2.0 can be achieved.

What is Cosmos (ATOM)?

Cosmos has been around for quite some time as its origins take us back to 2014. In that very year, Tendermint, a core contributor to the network, was founded.

After, in 2016, the very first whitepaper for Cosmos was published. Then, a token sale was held the following year bringing crypto users the Cosmos-native token $ATOM. ATOM tokens are earned through a hybrid proof-of-stake algorithm. The algorithm in turn helps keep the Cosmos Hub alive and its project’s flagship blockchain secured at all times. This cryptocurrency ATOM also plays a role in the network’s governance. By owning ATOM tokens, users can reshape the future of Cosmos.

Essentially, Cosmos establishes itself as a project that solves some of the common issues faced by the blockchain industry. It aims to offer a way to “slow, expensive, unscalable and environmentally harmful” proof-of-work protocols, like those used by Bitcoin, by offering an ecosystem of connected blockchains.

The project’s other goals include making blockchain technology less complex and difficult for developers thanks to a modular framework that demystifies decentralized apps. Last but not least, an Interblockchain Communication protocol makes it easier for blockchain networks to communicate with each other — preventing fragmentation in the industry.

Benefits of Cosmos

A major concern for some in the crypto industry centers on the levels of fragmentation seen in blockchain networks. There are hundreds in existence, but very few of them can communicate with each other. Cosmos aims to turn this on its head by making this possible.

Cosmos is described as “Blockchain 3.0” —  a big goal is ensuring that its infrastructure is straightforward to use. To this end, the Cosmos software development kit focuses on modularity. This allows a network to be easily built using chunks of code that already exist. Long-term, it’s hoped that complex applications will be straightforward to construct as a result.

Scalability is another priority, meaning substantially more transactions can be processed a second than more old-fashioned blockchains like Bitcoin and Ethereum. If blockchains are to ever achieve mainstream adoption, they’ll need to be able to cope with demand as well as existing payment processing companies or websites — or be even better.

Security-wise, Cosmos uses a PoS (proof-of-stake) consensus algorithm. Validator nodes that stake a higher quantity of ATOM tokens are more likely to be chosen to verify transactions and earn rewards. Nodes that are found to be acting dishonestly are penalized — and they can end up losing the tokens that they had at stake.

What is Terra (LUNA)?

Terra is a blockchain protocol that uses fiat-pegged stablecoins to power stable-priced global payments systems. As per its whitepaper, Terra consists of a combination of price stability and wider adoption of fiat currencies with the censorship-resistance of Bitcoin (BTC). In addition, it offers fast and affordable settlements. Terra goes back to January 2018 when it was still being developed. Consequently, its mainnet officially launched in April 2019 allowing blockchain users to interact with the protocol

An interesting fact is that in September 2021, the protocol started offering stablecoins which are pegged to fiat currencies such as the US dollar, South Korean won, Mongolian tugrik and even the IMF's (International Monetary Fund) special drawing rights basket of currencies. The roadmap of the $LUNA involves adding more options to its current offerings. We mentioned LUNA which is Terra's native token and it is used for price stabilization of the protocol's stablecoins. The LUNA token holders are eligible to vote and submit and vote on numerous governance protocols. Thus, LUNA is in a sense a governance token quite similar to DAOs.

Benefits of Terra

Terra is set on a path of differentiation through the use of the fiat-pegged stablecoins. It combines the many benefits of other cryptocurrencies with its day-to-day price stability granted from fiat currencies. Its algorithm of one-to-one peg automatically adjusts the supply of stablecoins based on current demand. This is achieved by incentivizing the stability of fiat currencies. This is also incentivized by holders of the LUNA token who can swap LUNA and other stablecoins at profitable exchange rates. As result, the stablecoin supply is either expanded or contracted to match demand.

Moreover, Terra has partnered up with many different platforms with the emphasis being on the Asia-Pacific region. Early as July 2019, the protocol announced a partnership with Chai which is a South Korean mobile payments application. Chai allows users to execute payments on eCommerce websites with the assistance of the Terra blockchain network. Ultimately, each transaction that is executed on-chain is subject to a fee of up to 2%-3%. This in turn generates both traffic and profit.

What is Fantom?

The next protocol which we will be looking at is Fantom. Originally developed by The Fantom Foundation, Fantom has seen the light of day in 2018 with the launch of its OPERA-mainnet following in the latter year of 2019 (December). It is notable to mention that through token sales in 2018, Fantom raised almost 40 million US dollars to fund development.

In short, Fantom is a DAG (Directed Acyclic Graph) smart contract platform that provides DeFi (Decentralized Finance) services to developers who use its own consensus algorithm. In addition, it has its own native $FTM token. The Fantom token's main purpose or goal is to solve existing problems related to smart-contract platforms. In particular, transaction speed is what the cryptocurrency wants to improve. The team behind Fantom states that their transaction speed has been reduced down to under 2 seconds. In comparison, transactions on the Ethereum blockchain can take from 5 to 30 minutes depending on how busy the network is.

Benefits of Fantom

Apart from transaction speed, what makes Fantom so good? Fantom attempts to use a newly built consensus mechanism to facilitate DeFi and related services on the basis of smart contracts. The mechanism in question - Lachesis, allows for an improved capacity and execution of swift transactions. In addition to that, it offers security improvements over the traditional PoS (Proof-of-Stake) algorithm platforms.

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Matching Ethereum, the project appeals to developers looking to deploy decentralized solutions or dApps. According to its official literature, its mission is to:

“Grant compatibility between all transaction bodies around the world.”

Its in-house PoS token, $FTM, creates the backbone of transactions, and allows fee collection and staking activities, along with the user rewards the latter represents.

What is Near?

NEAR Protocol is a layer-one blockchain that was designed as a community-based on a cloud computing platform and that eliminates some of the limitations that have been bothering competing blockchains. Such include low transaction speeds, low throughput and poor scalability. This provides the perfect environment for dApps. Consequently, creating a  developer and user-friendly platform. For instance, NEAR uses human-readable account names, as opposed to the cryptographic wallet addresses such as Ethereum. $NEAR also introduces unique solutions to scaling problems and has its own consensus mechanism called “Doomslug.”

"Through simple, secure, and scalable technology, NEAR empowers millions to invent and explore new experiences. Business, creativity, and community are being reimagined for a more sustainable and inclusive future." - NEAR Protocol

Also, NEAR offers a multi-chain future to its users. NEAR runs in concert with Ethereum, Polkadot, Cosmos, and more, allowing for the free flow of assets and communication between networks for the betterment of all. Not only that, but the protocol offers scalable solutions. The protocol eliminates the barriers to Web3 adoption. With high speeds, low fees, and progressive UX, NEAR’s climate-neutral blockchain is ready for explosive growth.

One of the most successful projects built on NEAR is called Flux. Flux is a protocol that allows developers to create markets based on assets, commodities, real-world events, and Mintbase, an NFT minting platform. Therefore, Flux is a great example of what can be achieved with Near.

Benefits of Near

NEAR uses its Nightshade technology to improve transaction throughput massively. Nightshade is a variation of sharding, in which individual sets of validators process transactions in parallel across multiple sharded chains, improving the overall capacity of the blockchain. In contrast to “regular” sharding, shards in Nightshade produce a fraction of the next block, called “chunks.” In doing so, NEAR Protocol is able to achieve up to 100,000 transactions per second and achieve near-instant transaction finality thanks to a one-second block cadence while simultaneously keeping transaction fees at virtually zero.

NEAR Protocol also improves upon the convoluted onboarding process of other blockchains by having human-readable addresses and building decentralized applications with similar registration flow to what users have already experienced. Moreover, it provides developers with modular components, helping them start projects like token contracts or NFTs more efficiently and faster than ever before.

Conclusion

Cryptocurrencies with a smaller market cap may not be getting the attention of their bigger rivals such as Ethereum or Bitcoin, but it is arguable that the real innovation is taking place in ecosystems such as Cosmos, Luna, Near, Terra, and many others. Developers are building new tools, dApps for creators and companies to unlock the real value of blockchain technology. Thus, making concepts like tokens more available and liquid that can continue that innovation and growth.

Given how many new users joined the world of DeFi in 2021, the year 2022 will see more investors wanting to follow the rapid growth and development of smaller projects and their ecosystems. Building tools is great, but attracting a critical mass of creators and users alike will be critical whether finance products are being built or non-fungible tokens. The real challenge will consist of deciding on what is better and where to build.

Therefore, it is always good to keep an eye on the long-term strategy of such cryptocurrencies. Consequently, long-term growth will be driven by whoever can build the biggest ecosystem that offers all products and services in one place.

If you enjoyed reading this article and would like to learn more about DeFi and build your own DeFi project or receive blockchain consulting, then please feel free to contact our team of elite developers who can help you achieve great results and become the pioneer of our future. Also, if you would like to learn more about the services our company offers, then definitely check out the Services page.

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