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Understanding Denoms in Cosmos SDK and Ignite

What is a Denom?​

Denom stands for denomination and represents the name of a token within the Cosmos SDK and Ignite. In the Cosmos ecosystem, denoms play a crucial role in identifying and managing tokens.

In Ignite, the configuration of your blockchain, including the specification of denoms, is set in the config.yml file within your blockchain directory. This file allows the definition of various denoms before initializing your blockchain.

Common examples of denoms include formats like token or stake.

Usage of Denoms​

In the Cosmos SDK, assets are represented as a Coins type, which combines an amount with a denom. The amount is flexible, allowing for a wide range of values. Accounts in the Cosmos SDK, including both basic and module accounts, maintain balances comprised of these Coins.

The x/bank module is pivotal in the Cosmos SDK as it tracks all account balances and the total supply of tokens in the application.

Key Points on Denoms and Balances:​

  • Fixed Denomination Unit: The Cosmos SDK treats the amount of a balance as a single, fixed unit of denomination, regardless of the denom itself.
  • Client and App Flexibility: While clients and apps built on Cosmos SDK chains can define arbitrary denomination units, all transactions and operations in the Cosmos SDK ultimately use these fixed units.
  • Example: On the Cosmos Hub (Gaia), the common assumption is 1 ATOM = 10^6 uatom, and operations are based on these units of 10^6.

Denoms and IBC (Inter-Blockchain Communication)​

One of the primary uses of IBC is the transfer of tokens between blockchains. This process involves creating a token voucher on the target blockchain upon receiving tokens from a source chain.

Characteristics of IBC Voucher Tokens:​

  • Naming Convention: IBC voucher tokens are denoted with a naming syntax that starts with ibc/. This convention helps in identifying and managing IBC tokens on a blockchain.
  • Native vs. Voucher Tokens: With IBC, a native token on one blockchain can be referenced as a voucher token on another. These tokens are differentiated by their denom names.

For a comprehensive understanding of IBC denoms and their application, refer to Understand IBC Denoms with Gaia, which provides detailed insights into the format and utilization of voucher tokens in the IBC context.