How Interchain Accounts improve the UX of apps in the Cosmos ecosystem

May 11, 2022

Complex, multi-step interactions can be performed with a single click, improving the composability and usability of the Interchain ecosystem

By Mark Forscher and Alex Ausmus

Cosmos, the “Internet of Blockchains,” was designed as an ecosystem of independent and interoperable chains that can exchange information, and transfer tokens, in a permissionless manner through the Inter Blockchain Communication Protocol (IBC). Approximately $4.75B worth of tokens were transferred between April 9th — May 9th, 2022. 

A recently released Theta upgrade improves interoperability and gives developers an opportunity to dramatically improve the user experience of their applications in the Cosmos ecosystem. The Theta upgrade introduces the first version of Interchain Accounts, enabling more unique cross-chain communication and new interchain interactions.

Interchain Accounts

The introduction of Interchain Accounts offers four key benefits for users in the Cosmos ecosystem: 

  • Improve composability and usability of the interchain ecosystem

  • Make interoperability easier

  • Simplify the user experience for interchain actions

  • Unlock opportunities for new interchain business models

Interchain Accounts allow blockchains to control accounts on other blockchains via IBC. As long as two blockchains have upgraded to include Interchain Accounts, both chains can create accounts on the other chain. The chain that controls an account on another is called the ‘controller chain’ and the chain hosting the account is the ‘host chain.’ Both chains can be both a controller and host chain — it's about the directionality of the interaction. 

It’s important to note that Interchain Accounts are not really for user-account to user-account interactions; they are more for chain-module to chain-module interactions.  While Interchain Accounts will vastly improve UX over time, the power of Interchain Accounts is directly realized by applications using them for composability between independent blockchains modules. 

One great example of how a blockchain can make use of Interchain Accounts is to help offset its carbon emissions by purchasing carbon credits. Regen Network builds and maintains infrastructure that originates digital carbon assets for the Interchain ecosystem. Via Interchain Accounts, a blockchain can host an account on the Regen Network which can be used to purchase carbon assets and hold them non-custodially. This allows on-chain governance of the controler chain to have direct control over the carbon assets held by the protocol, rather than needing some sort of custodiol solution to facilitate such an action.

How do Interchain Accounts improve UX?

The first improvement that end-users will experience is the ability to claim, delegate, and unbond their stake across multiple blockchains from a single blockchain account.

With the Theta upgrade, Cosmos Hub has the ability to create and control Interchain accounts on other IBC-enabled blockchains. Until other chains upgrade to include Interchain Accounts, the feature is not able to be used. But once other chains support Interchain Accounts, they can host and control accounts associated with other Interchain Account-enabled blockchains to perform transactions and create new products.

For example, if a user has a number of different tokens staked across the ecosystem, such as $ATOM, $OSMO, and $EVMOS, they will need to go to each separate chain to claim their rewards. Using Interchain Accounts, the user can potentially perform these actions from a single blockchain (i.e. only needing to pay transaction fees in one denomination).

As Interchain Accounts become more widely adopted across the interchain ecosystem, products that otherwise would not be possible will be developed and deployed. One such example is a DEX aggregator assessing liquidity across all IBC-enabled DEXs. The aggregator chain would control Interchain Accounts on multiple IBC-enable DEXs (such as Osmosis, Sifchain, and Crescent Network) allowing it to make deposits and swaps on the various chains, providing the user with an improved trading experience. This provides the end-user the best price on a swap and would be a way to unify liquidity across the interchain.

Before Interchain Accounts, each action that a blockchain wants to perform on another chain via IBC, an Interchain Standard (ICS) must be developed, tested, and then included in the core IBC codebase. This process is quite rigorous and takes a significant amount of time. While there are use cases where an ICS is beneficial and will likely be developed, Interchain Accounts allow for such actions to happen without including each interaction type into the core IBC code. 

Interchain Accounts allow for a message to be sent across IBC but not interpreted entirely by the IBC application layer. Instead, the IBC module will forward the message to the associated Interchain Account, which then is able to perform the action encoded in the message, whether that is staking or participating in governance. 

Simplifying IBC Adoption

What to expect next

While Cosmos Hub is the first to implement the Accounts module, as other chains implement it, we can expect to see interchain actions become commonplace in apps across the Cosmos ecosystem. This will lead to an increase in not only interchain transactions but also the power of applications built in the Cosmos ecosystem. A more efficient and powerful ecosystem will likely also increase the overall adoption of the Cosmos ecosystem.

There are currently a number of protocols in development which plan to make great use of the Interchain Accounts feature. As Interchain Accounts are more widely implemented, we can also expect to see new interchain services and business models emerge with increased composability and simple interfaces for creating these new interactions. 

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