TERRA + Columbus-5 and IBC
By: Everything Blockchain
Tags: Coinmarketcap, Blockchain, Terraform, Terra, Cosmos

Imagine if the blockchain could connect seamlessly with other blockchains transferring data and value, Imagine if the blockchain nodes could sync in minutes than days, Imagine if the blockchain could be upgraded in minutes than hours, Imagine if the transaction speeds could be increased up to 100x, and Imagine if the technical risks on the blockchain could be mitigated through Insurance policies. Imagine if we could transport ourselves to different dimensions of the universe through a portal gun. Does it all sound too good to be true?

Maybe yes, maybe not. The only way of knowing for sure is to wait for the Columbus 5 upgrade to happen. Maybe the only thing restricting is our imagination. I wonder why Columbus though. Maybe because he found America but that was accidental. Wasn’t it?

Taking a dive into Columbus 5 Mainnet Upgrade

These few months have/will be a witness to some important upgrades in the blockchain world whether it was the London HardFork or the Alonzo HardFork or Terra’s Columbus 5 Upgrade.

Columbus-5 is the new system that will inherit Columbus-4. If I would want to define Columbus 5 upgrade through my poetic calling, “I would call it a breeze of fresh air that will fill you with a new life”. But for now, let’s try understanding it from a little more technical perspective.

Seigniorage burning — Columbus 5 upgrade will see a major change in terms of Seigniorage. When LUNA is burned to mint new Terra stablecoins, Seigniorage is created. Presently, only a portion of LUNA is burned with the minting of UST. The remaining goes to the community pool and the oracle reward pools. With the upgrade, the entire Seigniorage will be burned. The amount of extra burn will be significant that will push more adoption of UST and further increase the price of LUNA.

Stargate Upgrade — Stargate Upgrade is the largest Cosmos upgrade to date. This will enable higher transaction throughput, cross-chain transactions, accelerate UI development, amongst other developments. Let’s understand these -

I. IBC enablement — IBC is Inter-Blockchain Communication Protocol that enables Cosmos SDK-based sovereign blockchains or zones to communicate with each other and is set to launch with the Stargate update. It will help to achieve interoperability of the Cosmos Network. IBC will enable value transfer across sovereign chains that enable IBC. With more and more zones enabling IBC (Osmosis) or having announced intentions of enabling IBC (Gravity DEX, Secret Network), it will allow Terra to benefit in the form of increased UST adoption on different chains.

If two chains are sovereign, how can tokens from one be transferred to another?

Chain A locks the tokens and relays proof to Chain B. Once verified, Chain B mints its own representative tokens (sort of like vouchers), which can later be destroyed to unlock the original tokens on Chain A. So the value that tokens represent can be transferred across chains, but the token itself cannot.

It will also help to connect non-tendermint blockchains like BTC and ETH through the peg-zones thus connecting the different silos of the blockchain world.

II. Protobuf Migration — Protobuf as a name seems so lackluster given the kind of magic it will do with the incredible changes. Stargate upgrade implementation will make a transition from Amino to Protobuf that will see significant improvements to performance, compatibility, interoperability, operability, and developer ease-of-use. Protobuf is expected to clear the biggest bottleneck in Cosmos network to make the applications way faster, reliable, easy to create with much lower gas costs. The blockchain performance will see an improvement of 10x to 100x in throughput that will enable Cosmos to handle the increasing volume of cross-chain transactions. Protobuf will introduce a standard for composability that will enable developers to develop reliable front-end UI that works with other UI.

III. State Sync — Tendermint makes new blocks at 6 or 7 seconds per block which is great for blockchain performance. However, it takes days for participants to synchronize a new node and is a challenge for a validator operator that needs to replace a failed validator. The current practice is downloading a public snapshot, which makes syncing much faster, but it’s a security risk for the validator and the network. State Sync solves this issue that will enable new nodes to sync in minutes than days.

IV. Chain Upgrade Module During the Cosmoshub-2 and Cosmoshub-3 upgrade there was an hour of disruption. This issue will be solved by changing to a new auto-upgrade system powered by Regen Network, which reduces the coordination complexity, human error, etc. This will enable validators to upgrade the chain software asynchronously in minutes rather than an hour or more.

Wormhole Launch — Wormhole will be launched with the Columbus-5 upgrade. Wormhole is a bridge that connects Terra to Solana. As of now, only the ERC-20 version of UST can be ported to Solana which creates friction and with Wormhole, UST can be bridged directly to Solana. This will help in the increased adoption of UST by Solana projects leading to further integration and collaboration between the two ecosystems and enable a large deflationary pressure on LUNA’s supply. Saber and Mercurial (stableswap projects on Solana) already have UST pools and multiple other projects are also hinting at future collaborations. The coming together of these two ecosystems would mean unimaginable possibilities with varied use cases and integrations.

Ozone Insurance v2.1 — Ozone is a Defi protocol from Terraform Labs. It’s an insurance mutual protocol that facilitates levered coverage of technical failure risks in the Terra DeFi ecosystem. This will see the lock-up of a considerable amount of UST to safeguard the ecosystem and thus driving more adoption of UST and the growth of Terra. Ozone over time can be expected to be the cheapest and more reliable than most of the other available policies on Terra.

Other Upgrades — Columbus 5 upgrade will see various other upgrades listed below -

Swap fees as dividends instead of burns — to increase staking rewards (will only result in ~2% less burn happening, while staking yield will increase above 10%).

— to increase staking rewards (will only result in ~2% less burn happening, while staking yield will increase above 10%). Optimize gas efficiency of oracle voting — achieved through seigniorage burning.

— achieved through seigniorage burning. Charge gas fees for log size — to prevent spamming of local storage.

— to prevent spamming of local storage. Separate mint/burn swap base pools in the Market Module — to reduce arbitrage opportunities by simulation of a virtual AMM.

Portal Gun Access — Anyone staking UST or LUNA will have access to a portal gun that can transport you to different realms of the universe, just like Rick’s. Maybe not exactly that but with IBC, it can surely take you to different realms of chain metaverse. Just not Rick’s portal gun though.