The cryptocurrency exchange, ShapeShift, announced the availability of a new report entitled “New Frontiers: An In-Depth Analysis of Cosmos, Polkadot and Near.”

The document, released on February 10, 2021, analyze these three blockchains specialized in smart contracts. He emphasizes that a wide variety of decentralized applications (or dApps) can be run on them.

“We’ve done everything we can to make this analysis timeless,” says ShapeShift in the introduction. In any case, they clarify that “that is impossible” and justify this limitation due to the rapid advance of this type of technology. “Three months in cryptocurrencies are equivalent to three years in time of the real world ”, adds the text. The company emphasizes the importance of taking this into account “when embarking on the learning journey.”

Cosmos: launch your own blockchains

The company starts its analysis with the Cosmos blockchain. It classifies it as the most consolidated of the three. In addition, the report clarifies that ShapeShift “has extensive experience and institutional knowledge around this technology.” They claim to have contributed to the decentralization of Cosmos through MicroTick, a software development package (or SDK, for its acronym in English).

According to the report, Cosmos, which was released During the “ICO bubble” of 2017, “it has partially fulfilled its vision.” Even so, they emphasize that the team responsible for its development “continues to work to improve it.”

The fundamental idea behind Cosmos is that intractable scalability issues arise when using “one blockchain to rule them all” and ShapeShift uses Ethereum as an example.

Every dApp that running on Ethereum can take advantage of the network’s robust proof-of-work (PoW) security, the report says, adding: “As a DApp creator, you have a lot to worry about, but the security of your network network is not a great cause for concern; you can launch a smart contract and immediately enjoy the peace of mind that comes with thousands of nodes and extensive hashing power. ”

This, which is beneficial in terms of security, is detrimental to scalability. “It is because each node in the network must process each transaction,” says the report.

Cosmos’s vision was to avoid shared security and instead establish a completely different paradigm: give cryptocurrency projects the tool and means to create your own blockchains and then connect them all using a specialized communication protocol.

This approach should be much more scalable , because nodes do not have to think about process transactions for a whole universe of dApps. But there are still certain features of these blockchains (or Cosmos zones) that can be adjusted to meet the exact needs of the application running on it.

Polkadot: Scalability through partitioning

The text addresses, in the second section, Polkadot. He begins by explaining that the self-sovereign model used by Cosmos is compelling. On the other hand, he says, it has worked very well with Ehereum, despite the lack of scalability.

Reflectively he states: «So why not keep testing with this model at the same time What are some fundamental changes made that allow it to scale? ShapeShift responds that this is precisely what the blockchains specialized in smart contracts are trying to do. Ethereum has taken this approach with Ethereum 2.0; Near Protocol also uses shared security; and this is also part of the emerging blockchain of the Polkadot ecosystem.

The path to scalable shared security is explains in a concept called partitioning. The basic premise of this concept is quite simple: in Ethereum 1.0 scalability is limited by the fact that each node must process a transaction.

According to ShapeShift’s comment, “this might simply require each node to process more transactions, but that would translate into fewer, more expensive nodes, making efforts to have the most decentralization difficult.”

Partitioning splits things up and allows each node to process only a specific subset of transactions. Scalability increases proportionally according to how many of these subsets (or shards) exist on the network. So all things would be considered equal, 64 chunks would provide a 64 increase in transaction performance, the document reads.

NEAR Protocol: room to grow

ShapeShift saved for last the newest platform , Near, which was launched in October 2020. It was created by Illia Polosukhin and Alexander Skidanov, two engineers that entered the “crypto space” between 2017 and 2018.

Briefly explain that Near tries to distinguish itself from other forms of smart contracts by being the most developer-friendly . It resembles Polkadot and Ethereum 2.0 in that the platform aims to provide a minimized and scalable blockchain that can be trusted through partitioning in a shared security context.

The founders of Near previously developed the partitioned databases for Google and Microsoft. This gave them great credibility in the tech ecosystem, which allowed them to raise about $ 21 million in the 2020 launch round.

Following their turn to cryptocurrencies, they demonstrated in-depth knowledge of scalability and blockchain fragmentation. At NEAR they evaluated the pros and cons of approaches employed by Ethereum 2.0 and Polkadot.

NEAR, which seeks interoperability between blockchains, uses its own unique variant of proof of stake (PoS, for its acronym in English), named Thresholded Proof-Of-Stake (TPOS). According to the ShapeShift report, this enables faster processing of transactions.

ShapeShift is moving towards decentralization

The team of this cryptocurrency exchange did not resist the growing popularity that experiences its competition from the exchanges decentralized (DEX). On the contrary, he decided to take advantage of it by being part of it.

His plan focuses on migrating outside the business model that requires him to comply with the Know Your Customer procedures (KYC) to become an interface that operates in an integrated manner with open protocols, without custody of funds or customer data.

ShapeShift CEO Erik Voorhes announced in a post on January 7, 2021 that the company would phase out its centralized business activity to adopt a 100% DEX-based decentralized alternative. In this way, it will offer its services without requiring personal information from users, to whom it will provide instant liquidity without the need for them to trust custodians, CriptoNoticias reported.

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