As the Cosmos ecosystem –an “ecosystem of interoperable and sovereign blockchain apps and services” — continues to expand outwards, network usage growth and fees are a driving force behind the development of layer-2 (L2) scaling solutions like rollups and state channels that reduce pressure on layer-1 (L1) ecosystems like Ethereum (ETH-USD) or Bitcoin (BTC-USD).
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Network congestion resulting from higher network transaction volumes can not only create bottlenecks but also substantially raise fees for network users. L2 solutions can mitigate this congestion by transitioning the heavy computational load and transaction execution off the main L1 blockchain network.
To bring this form of expanded scalability to the Cosmos network, Dymension has closed a $6.7 million funding round to introduce the blockchain’s first rollups in a testnet set for release on February 15th. The round, led by Big Brain Holdings and Stratos, was joined by gaming DAO Matchbox and DraftKings’ (NASDAQ:DKNG) Shalom Meckenzie, among others, despite the crypto winter’s fundraising impact.
The rollups, called RollApps, act as separate, scalable blockchains for quickly deployable applications without needing consensus security mechanisms. Instead, the RollApps depend on Cosmos blockchain’s consensus mechanism to provide security for the layer-2 RollApps.
“Dymension RollApps are a major step forward for the blockchain infrastructure stack,” noted Big Brain Holdings General Partner Kasey. “They allow builders to monetize their apps as standalone chains without massive infrastructure overheads. We’re extremely excited to back the team on their journey.”
In a rollup, transactions are bundled and processed in L2 before being transmitted and recorded on the L1 network. By processing transactions on another layer, rollups can improve the speed and efficiency of the layer-1 blockchain, allowing it to handle a higher volume of transactions without sacrificing security.
By design, rollups reduce the costs associated with processing transactions on a blockchain network. By batching transactions off the layer-1 blockchain, rollups minimize the number of transactions executed and recorded on the layer-1 network, lowering overall transaction fees.
Making Way for Modular Blockchains
The underlying concept behind Dymension’s scalability approach is forming a network of modular blockchains that leverage layer-1 blockchain security and the scalability and throughput of layer-2 rollups. In this environment, RollApps connect to Dymension Hub, a modular blockchain connecting to Cosmos layer-1 consensus mechanism.
Modular blockchains refer to a blockchain architecture that allows for modular or component-based development. Different components or modules can be added, modified, or replaced in a modular blockchain system without affecting the entire system.
This approach allows for greater flexibility, ease of customization, and the ability to add new features and capabilities over time. Modular blockchains can also support integrating different blockchain systems and protocols, offering a high degree of interoperability.
In the case of Dymension, this interoperability comes in multiple forms. Its RollApps are EVM-compatible, meaning that smart contracts written in Ethereum’s Solidity coding language can also be executed in the Cosmos environment. Dymension’s RDK also enables developers to connect to Cosmos Inter-Blockchain Communication (IBC) protocol, ensuring layer-2 rollups can communicate with other compatible blockchains and rollups in a standardized format.
“Dymension makes modular blockchains a reality, today,” explains Dymension Labs CEO Yishay Harel. “We’re scaling a network of blockchains with technology capable of making the biggest paradigm shift since Ethereum. Dymension Hub will be the center of a new internet of value, composed of numerous modular blockchains.”
The public testnet rollups are scheduled for release on February 15th, with a mainnet launch to follow after the data collected from the first phase is reviewed. Combined with Dymension’s RDK, this testnet will allow developers to build and deploy rollups that harness the liquidity, security, and decentralization of the Cosmos blockchain ecosystem without building the execution layer from scratch.
Together, these solutions can help developers, companies, and communities rapidly build and deploy their own blockchains, complete with custom tokenomics and fees, without having to manage the security and scalability of the underlying infrastructure. As the demand for blockchain solutions grows, this new architecture approach offers a full-stack answer to high performance and low fees without sacrificing security and decentralization.
