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# SDK Intro
The [Cosmos-SDK](https://github.com/cosmos/cosmos-sdk) is a framework for building multi-asset public Proof-of-Stake (PoS) blockchains, like the Cosmos Hub, as well as permissionned Proof-Of-Authority (PoA) blockchains.
## What is the SDK?
The goal of the Cosmos SDK is to allow developers to easily create custom blockchains from scratch that can natively interoperate with other blockchains. We envision the SDK as the npm-like framework to build secure blockchain applications on top of [Tendermint](https://github.com/tendermint/tendermint).
The [Cosmos-SDK](https://github.com/cosmos/cosmos-sdk) is a framework for building multi-asset public Proof-of-Stake (PoS) blockchains, like the Cosmos Hub, as well as permissionned Proof-Of-Authority (PoA) blockchains. Blockchains built with the Cosmos SDK are generally referred to as **application-specific blockchains**.
It is based on two major principles:
The goal of the Cosmos SDK is to allow developers to easily create custom blockchains from scratch that can natively interoperate with other blockchains. We envision the SDK as the Ruby-on-Rails-like framework to build secure blockchain applications on top of [Tendermint](https://github.com/tendermint/tendermint). SDK-based blockchains are built out of composable modules, most of which are open source and readily available for any developers to use. Anyone can create a module for the Cosmos-SDK, and integrating already-built modules is as simple as importing them into your blockchain application. What's more, the Cosmos SDK is a capabilities-based system, which allows developer to better reason about the security of interactions between modules. For a deeper look at capabilities, jump to [this section](./ocap.md).
- **Composability:** Anyone can create a module for the Cosmos-SDK, and integrating the already-built modules is as simple as importing them into your blockchain application.
## What are Application-Specific Blockchains?
- **Capabilities:** The SDK is inspired by capabilities-based security, and informed by years of wrestling with blockchain state-machines. Most developers will need to access other 3rd party modules when building their own modules. Given that the Cosmos-SDK is an open framework, some of the modules may be malicious, which means there is a need for security principles to reason about inter-module interactions. These principles are based on object-capabilities. In practice, this means that instead of having each module keep an access control list for other modules, each module implements special objects called keepers that can be passed to other modules to grant a pre-defined set of capabilities. For example, if an instance of module A's keepers is passed to module B, the latter will be able to call a restricted set of module A's functions. The capabilities of each keeper are defined by the module's developer, and it's the developer's job to understand and audit the safety of foreign code from 3rd party modules based on the capabilities they are passing into each third party module. For a deeper look at capabilities, jump to [this section](./ocap.md).
One development paradigm in the blockchain world today is that of virtual-machine blockchains like Ethereum, where development generally revolves around building a decentralised applications on top of an existing blockchain as a set of smart contracts. While smart contracts can be very good for some use cases like single-use applications (e.g. ICOs), they often fall short for building complex decentralised platforms. More generally, smart contracts can be limiting in terms of flexibility, sovereignty and performance.
## SDK Application Architecture
Application-specific blockchains offer a radically different development paradigm than virtual-machine blockchains. An application-specific blockchain is a blockchain customized to operate a single application: developers have all the freedom to make the design decisions required for the application to run optimally. They can also provide better sovereignty, security and performance.
### State machine
To learn more about application-specific blockchains, [click here](./why-app-specific.md).
At its core, a blockchain is a [replicated deterministic state machine](https://en.wikipedia.org/wiki/State_machine_replication).
## Why the Cosmos SDK?
A state machine is a computer science concept whereby a machine can have multiple states, but only one at any given time. There is a `state`, which describes the current state of the system, and `transactions`, that trigger state transitions.
The Cosmos SDK is the most advanced framework for building custom application-specific blockchains today. Here are a few reasons why you might want to consider building your decentralised application with the Cosmos SDK:
Given a state S and a transaction T, the state machine will return a new state S'.
- The default consensus engine available within the SDK is [Tendermint Core](https://github.com/tendermint/tendermint). Tendermint is the most (and only) mature BFT consensus engine in existence. It is widely used accross the industry and is considered the gold standard consensus engine for building Proof-of-Stake systems.
- The SDK is open source and designed to make it easy to build blockchains out of composable modules. As the ecosystem of open source SDK modules grow, it will become increasingly easier to build complex decentralised platforms with it.
- The SDK is inspired by capabilities-based security, and informed by years of wrestling with blockchain state-machines. This makes the Cosmos SDK a very secure environment to build blockchains.
- Most importantly, the Cosmos SDK has already been used to build many application-specific blockchains that are already in production. Among others, we can cite [Cosmos Hub](https://hub.cosmos.network), [Iris](https://irisnet.org), [Binance Chain](https://docs.binance.org/), [Terra](https://terra.money/) or [Lino](https://lino.network/). Many more are building on the Cosmos SDK. You can get a view of the ecosystem [here](https://cosmos.network/ecosystem).
```
+--------+ +--------+
| | | |
| S +---------------->+ S' |
| | apply(T) | |
+--------+ +--------+
```
## Getting started with the Cosmos SDK
In practice, the transactions are bundled in blocks to make the process more efficient. Given a state S and a block of transactions B, the state machine will return a new state S'.
- Learn more about the [architecture of an SDK application](./sdk-app-architecture.md)
- Learn how to build an application-specific blockchain from scratch with the [SDK Tutorial](https://cosmos.network/docs/tutorial)
```
+--------+ +--------+
| | | |
| S +----------------------------> | S' |
| | For each T in B: apply(T) | |
+--------+ +--------+
```
In a blockchain context, the state machine is deterministic. This means that if you start at a given state and replay the same sequence of transactions, you will always end up with the same final state.
The Cosmos SDK gives you maximum flexibility to define the state of your application, transaction types and state transition functions. The process of building the state-machine with the SDK will be described more in depth in the following sections. But first, let us see how it is replicated using **Tendermint**.
### Tendermint
As a developer, you just have to define the state machine using the Cosmos-SDK, and [*Tendermint*](https://tendermint.com/docs/introduction/what-is-tendermint.html) will handle replication over the network for you.
```
^ +-------------------------------+ ^
| | | | Built with Cosmos SDK
| | State-machine = Application | |
| | | v
| +-------------------------------+
| | | ^
Blockchain node | | Consensus | |
| | | |
| +-------------------------------+ | Tendermint Core
| | | |
| | Networking | |
| | | |
v +-------------------------------+ v
```
Tendermint is an application-agnostic engine that is responsible for handling the *networking* and *consensus* layers of your blockchain. In practice, this means that Tendermint is responsible for propagating and ordering transaction bytes. Tendermint Core relies on an eponymous Byzantine-Fault-Tolerant (BFT) algorithm to reach consensus on the order of transactions. For more on Tendermint, click [here](https://tendermint.com/docs/introduction/what-is-tendermint.html).
Tendermint consensus algorithm works with a set of special nodes called *Validators*. Validators are responsible for adding blocks of transactions to the blockchain. At any given block, there is a validator set V. A validator in V is chosen by the algorithm to be the proposer of the next block. This block is considered valid if more than two thirds of V signed a *[prevote](https://tendermint.com/docs/spec/consensus/consensus.html#prevote-step-height-h-round-r)* and a *[precommit](https://tendermint.com/docs/spec/consensus/consensus.html#precommit-step-height-h-round-r)* on it, and if all the transactions that it contains are valid. The validator set can be changed by rules written in the state-machine. For a deeper look at the algorithm, click [here](https://tendermint.com/docs/introduction/what-is-tendermint.html#consensus-overview).
The main part of a Cosmos SDK application is a blockchain daemon that is run by each node in the network locally. If less than one third of the *validator set* is byzantine (i.e. malicious), then each node should obtain the same result when querying the state at the same time.
## ABCI
Tendermint passes transactions from the network to the application through an interface called the [ABCI](https://github.com/tendermint/tendermint/tree/master/abci), which the application must implement.
```
+---------------------+
| |
| Application |
| |
+--------+---+--------+
^ |
| | ABCI
| v
+--------+---+--------+
| |
| |
| Tendermint |
| |
| |
+---------------------+
```
Note that **Tendermint only handles transaction bytes**. It has no knowledge of what these bytes mean. All Tendermint does is order these transaction bytes deterministically. Tendermint passes the bytes to the application via the ABCI, and expects a return code to inform it if the messages contained in the transactions were successfully processed or not.
Here are the most important messages of the ABCI:
- `CheckTx`: When a transaction is received by Tendermint Core, it is passed to the application to check if a few basic requirements are met. `CheckTx` is used to protect the mempool of full-nodes against spam. A special handler called the "Ante Handler" is used to execute a series of validation steps such as checking for sufficient fees and validating the signatures. If the check is valid, the transaction is added to the [mempool](https://tendermint.com/docs/spec/reactors/mempool/functionality.html#mempool-functionality) and relayed to peer nodes. Note that transactions are not processed (i.e. no modification of the state occurs) with `CheckTx` since they have not been included in a block yet.
- `DeliverTx`: When a [valid block](https://tendermint.com/docs/spec/blockchain/blockchain.html#validation) is received by Tendermint Core, each transaction in the given block is passed to the application via `DeliverTx` to be processed. It is during this stage that the state transitions occur. The "Ante Handler" executes again along with the actual handlers for each message in the transaction.
- `BeginBlock`/`EndBlock`: These messages are executed at the beginning and the end of each block, whether the block contains transaction or not. It is useful to trigger automatic execution of logic. Proceed with caution though, as computationally expensive loops could slow down your blockchain, or even freeze it if the loop is infinite.
For a more detailed view of the ABCI methods and types, click [here](https://tendermint.com/docs/spec/abci/abci.html#overview).
Any application built on Tendermint needs to implement the ABCI interface in order to communicate with the underlying local Tendermint engine. Fortunately, you do not have to implement the ABCI interface. The Cosmos SDK provides a boilerplate implementation of it in the form of [baseapp](./sdk-design.md#baseapp).
### Next, let us go into the [high-level design principles of the SDK](./sdk-design.md)

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# SDK Application Architecture
## State machine
At its core, a blockchain is a [replicated deterministic state machine](https://en.wikipedia.org/wiki/State_machine_replication).
A state machine is a computer science concept whereby a machine can have multiple states, but only one at any given time. There is a `state`, which describes the current state of the system, and `transactions`, that trigger state transitions.
Given a state S and a transaction T, the state machine will return a new state S'.
```
+--------+ +--------+
| | | |
| S +---------------->+ S' |
| | apply(T) | |
+--------+ +--------+
```
In practice, the transactions are bundled in blocks to make the process more efficient. Given a state S and a block of transactions B, the state machine will return a new state S'.
```
+--------+ +--------+
| | | |
| S +----------------------------> | S' |
| | For each T in B: apply(T) | |
+--------+ +--------+
```
In a blockchain context, the state machine is deterministic. This means that if you start at a given state and replay the same sequence of transactions, you will always end up with the same final state.
The Cosmos SDK gives you maximum flexibility to define the state of your application, transaction types and state transition functions. The process of building the state-machine with the SDK will be described more in depth in the following sections. But first, let us see how it is replicated using **Tendermint**.
### Tendermint
As a developer, you just have to define the state machine using the Cosmos-SDK, and [*Tendermint*](https://tendermint.com/docs/introduction/what-is-tendermint.html) will handle replication over the network for you.
```
^ +-------------------------------+ ^
| | | | Built with Cosmos SDK
| | State-machine = Application | |
| | | v
| +-------------------------------+
| | | ^
Blockchain node | | Consensus | |
| | | |
| +-------------------------------+ | Tendermint Core
| | | |
| | Networking | |
| | | |
v +-------------------------------+ v
```
Tendermint is an application-agnostic engine that is responsible for handling the *networking* and *consensus* layers of your blockchain. In practice, this means that Tendermint is responsible for propagating and ordering transaction bytes. Tendermint Core relies on an eponymous Byzantine-Fault-Tolerant (BFT) algorithm to reach consensus on the order of transactions. For more on Tendermint, click [here](https://tendermint.com/docs/introduction/what-is-tendermint.html).
The Tendermint consensus algorithm works with a set of special nodes called *Validators*. Validators are responsible for adding blocks of transactions to the blockchain. At any given block, there is a validator set V. A validator in V is chosen by the algorithm to be the proposer of the next block. This block is considered valid if more than two thirds of V signed a *[prevote](https://tendermint.com/docs/spec/consensus/consensus.html#prevote-step-height-h-round-r)* and a *[precommit](https://tendermint.com/docs/spec/consensus/consensus.html#precommit-step-height-h-round-r)* on it, and if all the transactions that it contains are valid. The validator set can be changed by rules written in the state-machine. For a deeper look at the algorithm, click [here](https://tendermint.com/docs/introduction/what-is-tendermint.html#consensus-overview).
The main part of a Cosmos SDK application is a blockchain daemon that is run by each node in the network locally. If less than one third of the *validator set* is byzantine (i.e. malicious), then each node should obtain the same result when querying the state at the same time.
## ABCI
Tendermint passes transactions from the network to the application through an interface called the [ABCI](https://github.com/tendermint/tendermint/tree/master/abci), which the application must implement.
```
+---------------------+
| |
| Application |
| |
+--------+---+--------+
^ |
| | ABCI
| v
+--------+---+--------+
| |
| |
| Tendermint |
| |
| |
+---------------------+
```
Note that **Tendermint only handles transaction bytes**. It has no knowledge of what these bytes mean. All Tendermint does is order these transaction bytes deterministically. Tendermint passes the bytes to the application via the ABCI, and expects a return code to inform it if the messages contained in the transactions were successfully processed or not.
Here are the most important messages of the ABCI:
- `CheckTx`: When a transaction is received by Tendermint Core, it is passed to the application to check if a few basic requirements are met. `CheckTx` is used to protect the mempool of full-nodes against spam. A special handler called the "Ante Handler" is used to execute a series of validation steps such as checking for sufficient fees and validating the signatures. If the check is valid, the transaction is added to the [mempool](https://tendermint.com/docs/spec/reactors/mempool/functionality.html#mempool-functionality) and relayed to peer nodes. Note that transactions are not processed (i.e. no modification of the state occurs) with `CheckTx` since they have not been included in a block yet.
- `DeliverTx`: When a [valid block](https://tendermint.com/docs/spec/blockchain/blockchain.html#validation) is received by Tendermint Core, each transaction in the given block is passed to the application via `DeliverTx` to be processed. It is during this stage that the state transitions occur. The "Ante Handler" executes again along with the actual handlers for each message in the transaction.
- `BeginBlock`/`EndBlock`: These messages are executed at the beginning and the end of each block, whether the block contains transaction or not. It is useful to trigger automatic execution of logic. Proceed with caution though, as computationally expensive loops could slow down your blockchain, or even freeze it if the loop is infinite.
For a more detailed view of the ABCI methods and types, click [here](https://tendermint.com/docs/spec/abci/abci.html#overview).
Any application built on Tendermint needs to implement the ABCI interface in order to communicate with the underlying local Tendermint engine. Fortunately, you do not have to implement the ABCI interface. The Cosmos SDK provides a boilerplate implementation of it in the form of [baseapp](./sdk-design.md#baseapp).
### Next, let us go into the [high-level design principles of the SDK](./sdk-design.md)

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# Application-Specific Blockchains
This document explains what application-specific blockchains are, and why developers would want to build one as opposed to writing Smart Contracts.
## What are application-specific blockchains?
Application-specific blockchains are blockchains customized to operate a single application. Instead of building a decentralised application on top of an underlying blockchain like Ethereum, developers build their own blockchain from the ground up. This means building a full-node client, a light-client, and all the necessary interfaces (CLI, REST, ...) to interract with the nodes.
```
^ +-------------------------------+ ^
| | | | Built with Cosmos SDK
| | State-machine = Application | |
| | | v
| +-------------------------------+
| | | ^
Blockchain node | | Consensus | |
| | | |
| +-------------------------------+ | Tendermint Core
| | | |
| | Networking | |
| | | |
v +-------------------------------+ v
```
## What are the shortcomings of Smart Contracts?
Virtual-machine blockchains like Ethereum addressed the demand for more programmability back in 2014. At the time, the options available for building decentralised applications were quite limited. Most developers would build on top of the complex and limited Bitcoin scripting language, or fork the Bitcoin codebase which was hard to work with and customize.
Virtual-machine blockchains came in with a new value proposition. Their state-machine incorporates a virtual-machine that is able to interpret turing-complete programs called Smart Contracts. These Smart Contracts are very good for use cases like one-time events (e.g. ICOs), but they can fall short for building complex decentralised platforms:
- Smart Contracts are generally developed with specific programming languages that can be interpreted by the underlying virtual-machine. These programming languages are often immature and inherently limited by the constraints of the virtual-machine. For example, the Ethereum Virtual Machine does not allow developers to implement automatic execution of code. Developers are also limited to the account-based system of the EVM, and they can only choose from a limited set of functions for their cryptographic operations. These are examples, but they hint at the lack of **flexibility** a smart contract environment often entails.
- Smart Contracts are all run by the same virtual machine. This means that they compete for resources, which can severly restrain **performance**. And even if the state-machine were to be split in multiple subsets (e.g. via sharding), Smart Contracts would still need to be interpeted by a virtual machine, which would limit performance compared to a native application implemented at state-machine level (our benchmarks show an improvement on the order of x10 in performance when the virtual-machine is removed).
- Another issue with the fact that Smart Contracts share the same underlying environment is the resulting limitation in **sovereignty**. A decentralised application is an ecosystem that involves multiple players. If the application is built on a general-purpose virtual-machine blockchain, these players have very limited sovereignty over it, and are ultimately superseded by the governance of the underlying blockchain. If there is a bug in the application, very little can be done about it.
Application-Specific Blockchains are designed to address these shortcomings.
## Application-Specific Blockchains Benefits
### Flexibility
Application-specific blockchains give maximum flexibility to developers:
- In Cosmos blockchains, the state-machine is typically connected to the underlying consensus engine via an interface called the [ABCI](https://tendermint.com/docs/spec/abci/). This interface can be wrapped in any programming language, meaning developers can build their state-machine in the programming language of their choice.
- Developers can choose among multiple frameworks to build their state-machine. The most widely used today is the Cosmos SDK, but others exist (e.g. [Lotion](https://github.com/nomic-io/lotion), [Weave](https://github.com/iov-one/weave), ...). The choice will most of the time be done based on the programming language they want to use (Cosmos SDK and Weave are in Golang, Lotion is in Javascript, ...).
- The ABCI also allows developers to swap the consensus engine of their application-specific blockchain. Today, only Tendermint is production-ready, but in the future other engines are expected to emerge.
- Even when they settle for a framework and consensus engine, developers still have the freedom to tweak them if they don't perfectly match their requirements in their pristine forms.
- Developers are free to explore the full spectrum of tradeoffs (e.g. number of validators vs transaction throughput, safety vs availability in asynchrony, ...) and design choices (DB or IAVL tree for storage, UTXO or account model, ...).
- Developers can implement automatic execution of code. In the Cosmos SDK, logic can be automatically triggered at the beginning and the end of each block. They are also free to choose the cryptographic library used in their application, as opposed to being constrained by what is made available by the underlying environment in the case of virtual-machine blockchains.
The list above contains a few examples that show how much flexibility application-specific blockchains give to developers. The goal of Cosmos and the Cosmos SDK is to make developer tooling as generic and composable as possible, so that each part of the stack can be forked, tweaked and improved without losing compatibility. As the community grows, more alternative for each of the core building blocks will emerge, giving more options to developers.
### Performance
Decentralised applications built with Smart Contracts are inherently capped in performance by the underlying environment. For a decentralised application to optimise performance, it needs to be built as an application-specific blockchains. Here are the benefits of an application-specific blockchains with regards to performance:
- Developers of application-specific blockchains can choose to operate with novel consensus engine such as Tendermint BFT. Compared to Proof-of-Work (used by most virtual-machine blockchains today), it offers significant gains in throuhgput.
- An application-specific blockchain only operates a single application, so that the application does not compete with others for computation and storage. This is the opposite of most non-sharded virtual-machine blockchains today, where smart contracts all compete for computation and storage.
- Even if a virtual-machine blockchain offered application-based sharding coupled with an efficient consensus algorithm, performance would still be limited by the virtual-machine itself. The real throughput bottleneck is the state-machine, and requiring transactions to be interpreted by a virtual-machine significantly increases the computational complexity of processing them.
### Security
Security is hard to quantify, and greatly varies from platform to platform. That said here are some important benefits an application-specific blockchain can bring in terms of security:
- Developers can choose proven programming languages like Golang when building their application-specific blockchains, as opposed to smart contract programming languages that are often more immature.
- Developers are not constrained by the cryptographic functions made available by the underlying virtual-machines. They can use their own custom cryptography, and rely on well-audited crypto libraries.
- Developers do not have to worry about potential bugs or exploitable mechanisms in the underlying virtual-machine, making it easier to reason about the security of the application.
### Sovereignty
One of the major benefits of application-specific blockchains is sovereignty. A decentralised application is an ecosystem that involves many actors: users, developers, third-party services, and more. When developers build on virtual-machine blockchain where many decentralised applications coexist, the community of the application is different than the community of the underlying blockchain, and the latter supersedes the former. If there is a bug or if a new feature is needed, the community of the application has very little sovereignty to upgrade the code. If the community of the underlying blockchain refuses to act, nothing can happen.
The fundamental issue here is that the governance of the application and the governance of the network are not aligned. This issue is solved by application-specific blockchains. Because application-specific blockchains specialize to operate a single application, the community of the application has full control over the entire chain. This ensures the community will not be stuck if a bug is discovered, and that it has the entire freedom to choose how it is going to evolve.
## Start Building Your Application-Specific Blockchain Today
Clearly, application-specific blockchains are awesome. The Cosmos SDK makes it easier than ever to build them. What are you waiting for?
- Learn how to build an application-specific blockchain from scratch with the [SDK tutorial](https://cosmos.network/docs/tutorial)
- Learn more about the [high-level architecture](./sdk-app-architecture) of an SDK application.