Building Your Own Blockchain: A Beginner’s Guide to Setting Up and Using Cosmos

Introduction

Cosmos SDK is a blockchain development framework built on top of the Tendermint consensus engine. It is designed to simplify the creation of customized blockchains and applications, enabling developers to focus on building their unique business logic rather than dealing with low-level details.

Some of the key features of Cosmos SDK include:

Modular architecture: Cosmos SDK is built with a modular architecture that allows developers to easily customize and add new features to their blockchain. This makes it flexible and adaptable for a wide range of use cases.

Efficient performance: The SDK is built on top of Tendermint, a high-performance Byzantine fault-tolerant (BFT) consensus engine. This allows for fast transaction processing and high transaction throughput.

Interoperability: Cosmos SDK is designed to be interoperable, meaning that blockchains built with the SDK can easily communicate and interoperate with each other. This opens up possibilities for cross-chain communication and collaboration.

Extensive documentation and support: The Cosmos team provides extensive documentation and support for developers, making it easier for them to learn and use the SDK. There is also an active community of developers and contributors that can provide assistance and guidance.

Developer-friendly tools: Cosmos SDK provides tools like Gaia, a command-line interface for creating, managing, and running blockchain applications. These tools make it easy for developers to set up, test, and deploy their blockchain quickly.

With these features, Cosmos SDK offers a comprehensive and user-friendly platform for building customized blockchains and decentralized applications (dApps). Developers may choose to use Cosmos SDK for blockchain development because it allows them to focus on their unique use case and business logic, while leveraging the benefits of an established and well-supported framework. It also offers a level of scalability, interoperability, and flexibility that may not be available in other blockchain development platforms. Additionally, the active community and support from the Cosmos team make it an attractive choice for developers.

Getting Started with Cosmos SDK

To install Cosmos SDK on your local machine, follow these steps:

Ensure that you have the necessary dependencies installed on your machine. These include:

Golang: The preferred version for Cosmos SDK is Go 1.13 or above.
Git: To clone and manage the SDK repository.
GCC: Required for compiling Go code.

1. Next, create a new directory for your Cosmos SDK project. This will be the root directory for your project.

2. Navigate to the root directory and clone the latest version of the Cosmos SDK repository using the command:

git clone https://github.com/cosmos/cosmos-sdk

1. Once the repository has been cloned, navigate to the cosmos-sdk directory that was created and run the make command. This will compile the necessary binaries for your chosen platform.

2. Once the make process is complete, you can verify that the binaries have been built successfully by running the ./build/x/package_name command, where package_name is the name of the binary you want to run.

For example, to run the gaiacli binary, you can use the command:

./build/gaiacli

1. If the binary runs successfully, then you have successfully set up Cosmos SDK on your local machine.

To set up Cosmos SDK for development, follow these steps:

Navigate to the cosmos-sdk directory and run the make install command. This will install the necessary Go dependencies in your $GOPATH.

Next, set up your Go environment variables by running the following commands:

   export GO111MODULE=on
   export GOPATH=/your/go/path
   export GOBIN=$GOPATH/bin

1. To ensure that your environment variables are set correctly, run the go env command and check that the GOPATH and GOBIN variables are set accordingly.

2. Next, you can initialize a new project by running the cosmos_sdk init command. This will prompt you for a project name and create the necessary folder structure in your current directory.

3. Once your project has been initialized, you can start building your blockchain application using the Cosmos SDK modules and tools.

The Cosmos SDK includes various tools and components that are necessary for building blockchain applications. These include:

Gaia: This is the core blockchain application that is built using the Cosmos SDK modules. It is responsible for managing the validators, consensus, governance, and other network functions.
Gaiacli: This is a command-line interface tool for interacting with a Gaia blockchain network. It allows you to query the state of the network, send transactions, and manage your local account keys.

Gaia REST server: This is an HTTP server that allows you to interact with a Gaia blockchain network using REST API calls. It is useful for building web and mobile applications that need to interact with a blockchain network.

Cosmos SDK modules: These are the customizable components that can be used to build your blockchain application. They include modules for staking, governance, accounts, and more.

Cosmos SDK SDK: This is a library that provides the necessary tools and utilities for building blockchain applications using the Cosmos SDK. It includes code for handling transactions, events, and various other functions that are necessary for interacting with a blockchain network.

Iris: This is an alternative blockchain application that is built using the Cosmos SDK. It is designed for enterprise use and includes additional features for handling complex business logic and compliance requirements.

By setting up Cosmos SDK on your local machine and familiarizing yourself with these tools and components, you can start building your own blockchain applications or contribute to the development of the Cosmos ecosystem.

Creating a Blockchain Application with Cosmos SDK
Modules: Modules are the core building blocks of a Cosmos SDK-based blockchain. They represent the functional units of the blockchain application and are responsible for managing specific functionalities, such as account management, asset transfers, and governance. Each module can define its own data structures, state transitions, and business logic.

Transactions: Transactions are the fundamental units of interaction with a blockchain. They are used to define the state transitions within a module. In simple terms, a transaction is a request to change the state of the blockchain. For example, if a user wants to transfer some tokens to another user, they would create a transaction that includes the necessary information such as sender’s address, recipient’s address, and the amount to be transferred.

Get SSL

Nodes: Nodes are the individual computers or servers that participate in the validation and maintenance of the blockchain network. These nodes communicate with each other to reach a consensus on the state of the network. In Cosmos SDK, nodes run a set of processes that allow them to participate in the consensus and execute transactions.

Now, let’s get started with creating our basic blockchain application using Cosmos SDK.

Step 1: Set up the Environment

To begin with, we need to set up the environment for developing our blockchain application. You will need to have Go installed on your machine. You can follow the official Go installation guide for instructions on how to install it.

Next, we will install the Cosmos SDK using the following command: $ go get github.com/cosmos/cosmos-sdk

Step 2: Initialize the Application

Once we have the environment set up, we can initialize our blockchain application using the cosmos-sdk init command. This will create a new directory with some default configurations and files.

Step 3: Define the Modules

Now, we can define the modules for our application. For this tutorial, we will create a simple module for asset transfers. The appid module will allow users to send and receive tokens within the blockchain network.

We can create our appid module using the cosmos-sdk add-module command. This will create a new directory named x within our application directory, which will contain all the necessary files for our module.

In the x/appid directory, we will have three subdirectories:

client: This directory will contain the client-side code for interacting with the appid module.
keeper: This directory will contain the code for handling the state transitions and business logic for the appid module.
types: This directory will contain the data structures and interfaces used by the keeper and client packages.
Step 4: Define Transactions

Next, we will define the transactions for our appid module. Transactions are defined in the types package of our module.

Using Cosmos SDK for Interoperability

Inter-blockchain communication (IBC) is a protocol that allows different blockchains to communicate and transfer value between each other. It was first introduced by the Cosmos Network, a project focused on building an ecosystem of interconnected blockchains.

The IBC protocol is built on top of the Cosmos SDK, a modular framework for building customizable blockchains. It enables blockchains to connect and communicate with each other in a decentralized and secure manner, without the need for intermediaries.

IBC uses a set of standard protocols and data structures to facilitate communication between blockchains. These include Merkle proofs, which allow for efficient and secure verification of data across different blockchains, and packet relay, which enables the transfer of data and assets between blockchains.

Connecting Blockchains using Cosmos SDK:

The Cosmos SDK provides a simple and modular way to build and connect different blockchains. It allows developers to create custom-built modules for their blockchains, which can interact with other blockchains through the IBC protocol.

To enable communication between two blockchains using the Cosmos SDK, three components are needed:

IBC Module: This module handles the communication between the two blockchains. It is responsible for creating and sending packets of data, receiving and processing packets from other blockchains, and managing connections between blockchains.

Tendermint Core: This is the core consensus engine of the Cosmos SDK. It ensures that transactions are executed consistently across all connected blockchains.

ABCI Application: An Application Blockchain Interface (ABCI) is a standard interface for connecting different consensus engines to blockchain applications. It allows the IBC module to interact with the application logic of the connected blockchain.

Examples of Inter-Blockchain Communication using Cosmos SDK:

Cosmos Hub and Peggy: The Cosmos Hub is the main hub of the Cosmos Network, and it uses the IBC protocol to enable communication with other blockchains. One of these blockchains is Peggy, an Ethereum-based blockchain that serves as a bridge between the Cosmos Hub and the Ethereum network. This allows for the seamless transfer of assets between the two networks.

Kava and Hard: Kava is a decentralized lending platform built with the Cosmos SDK. It uses the IBC protocol to connect to Hard, a blockchain-based savings and lending platform. Through this connection, users can transfer their assets from Kava to Hard and vice versa, allowing for more diverse financial opportunities.
Terra and Band: Terra is a price-stable cryptocurrency platform built using the Cosmos SDK. It uses the IBC protocol to connect with Band, a decentralized Oracle platform. This connection allows Terra to access accurate and up-to-date price data from Band, ensuring the stability of its currency.

Advanced Features and Best Practices in Cosmos SDK

Use State Channels for High-Performance Transactions: State channels allow for instant off-chain transactions between two parties, reducing transaction times and network fees. This is especially useful for high-volume applications such as gaming or micro-transactions.

Leverage Light Clients for Efficient Light-Weight Validation: Light clients allow nodes to quickly verify the state of the blockchain without downloading the entire blockchain history. This reduces the resource requirements for nodes, enabling them to process transactions quickly and efficiently.

Implement Governance and Slashing Mechanisms: Governance and slashing are key features of the Cosmos SDK that ensure the security and stability of the network. Governance allows stakeholders to vote on important protocol upgrades and decisions while slashing penalizes malicious behavior by validators.

Utilize Staking for Security and Incentives: Staking is a key mechanism in Cosmos that incentivizes network participants to behave honestly. Validators must stake a certain amount of tokens to participate in the network and can be slashed if they act maliciously. Staking also allows token holders to earn rewards for staking their tokens.

Use secure coding practices and audits: When developing on the Cosmos SDK, it is important to follow secure coding practices and to have your code audited by a third party. This helps to identify potential vulnerabilities and ensure the security of your application.

Optimize Gas Usage: Gas is the unit of cost for executing transactions on the Cosmos blockchain. To optimize performance and reduce costs for your application, make sure to carefully design and optimize your transactions to use the minimum amount of gas possible.

Choose the Right Consensus Algorithm: The Cosmos SDK supports multiple consensus algorithms, including Tendermint, which is known for its high performance and security. Consider the needs of your application and choose the most suitable consensus algorithm.
Implement Rate Limiting: To prevent spamming and DDoS attacks, it is recommended to implement rate limiting for your application. This limits the number of transactions that can be submitted within a certain time period and helps to ensure the stability and security of the network.

Maintain Regular Software Updates: The Cosmos SDK is constantly evolving and being improved upon by the community. It is important to keep your application up to date with the latest software updates to ensure optimal performance and security.
Educate Stakeholders and Validators: Lastly, it is important to educate stakeholders and validators about the features of the Cosmos SDK and how they can contribute to the security and performance of the network. This helps to build a strong and responsible community that works together to maintain a healthy ecosystem.