What is Cosmos (ATOM)?

The Cosmos Network is a decentralized network of independent parallel blockchains, often called the “Internet of Blockchains”.

Cosmos aims to address the limitations of blockchain technology, such as scalability, usability, and sovereignty, by enabling interoperability between different blockchains.

This allows different blockchains to communicate and share data with each other, fostering a more interconnected and collaborative blockchain ecosystem.

Team Background

Cosmos was co-founded by Jae Kwon and Ethan Buchman in 2014. They initially developed the Tendermint consensus algorithm, which powers the Cosmos ecosystem. Kwon and Buchman later co-authored the Cosmos whitepaper and released the software in 2019.

The Interchain Foundation (ICF), a Swiss non-profit organization, played a crucial role in the development and launch of Cosmos .

The ICF funds open-source blockchain projects and held a two-week initial coin offering (ICO) of the ATOM token in 2017, raising over $17 million.

Tendermint Inc., the oldest company in the Cosmos ecosystem, raised $9 million in a Series A funding round to support the project’s development.

What is Cosmos (ATOM) and its purpose?

Cosmos is designed to create an interoperable network of blockchains that can communicate and share data with each other.

This is achieved through the Inter-Blockchain Communication protocol (IBC), which allows different blockchains to connect and exchange information.

The Cosmos SDK provides developers with the tools to build custom blockchains that can integrate with the network.

Cosmos allows developers to build blockchains in various programming languages, providing greater flexibility and customization options.

Cosmos takes a unique approach to interoperability compared to other projects like Polkadot.

While Polkadot uses a “relay chain” model with interconnected “parachains“, Cosmos employs a “hub-and-spoke” model with independent blockchains connected to the central Cosmos Hub.

This approach allows for greater flexibility and sovereignty for individual blockchains while still enabling seamless communication and interoperability.

The purpose of Cosmos is to:

Enhance interoperability: Cosmos enables different blockchains to communicate and share data, breaking down the barriers of blockchain silos. For example, a decentralized exchange built on Cosmos can easily interact with other blockchains in the network to access liquidity and facilitate cross-chain token swaps.
Improve scalability: Cosmos allows blockchains to scale without significant increases in network fees, unlike platforms like Ethereum, which can experience high gas fees during periods of network congestion.
Increase usability: Cosmos provides a user-friendly platform for developers and users. The Cosmos SDK simplifies the process of building custom blockchains, and the IBC protocol makes it easy for users to interact with different blockchains in the network.
Maintain sovereignty: Cosmos allows developers to maintain sovereignty over their blockchains while still benefiting from interoperability. This means that individual blockchains can have their own governance structures, tokenomics, and use cases while still being able to seamlessly connect and interact with other blockchains in the Cosmos network.

Whitepaper of Cosmos (ATOM)

The Cosmos whitepaper, published in 2016, outlines the vision of an internet of blockchains.

It describes the architecture and technology behind Cosmos, including the Tendermint consensus engine and the IBC protocol.

The whitepaper also discusses the role of the Cosmos Hub and the ATOM token in the ecosystem.

ATOM 2.0

A new whitepaper, known as ATOM 2.0, was released in 2022. This whitepaper introduces key changes to the Cosmos Hub, including:

Interchain security: This feature allows the Cosmos Hub to provide security to other blockchains in the network, known as “consumer chains”. This can enhance the security of these chains and encourage wider adoption of the Cosmos Network by reducing the barriers to entry for new blockchain projects.
Liquid staking: This allows users to stake their ATOM tokens while still being able to use them in other DeFi applications.

ATOM 2.0 also proposes changes to the issuance schedule of ATOM and aims to enhance the utility of the native token.

Cosmos Hub and How it Functions

The Cosmos Hub is the first blockchain launched on the Cosmos network. It acts as an intermediary between all the independent blockchains called “zones“, created within the Cosmos network.

The Cosmos Hub keeps track of the state of each zone, facilitating interoperability between them.

Each zone in Cosmos can perform essential functions on its own, such as authenticating accounts and transactions, creating and distributing new tokens, and executing changes to its own blockchain.

Zones connect to the Cosmos Hub via the IBC protocol, which enables information to travel freely and securely between each connected zone.

The Cosmos Hub is a Proof-of-Stake (PoS) network, where token holders can stake their ATOM tokens to participate in securing the blockchain. There are two main groups that can engage in ATOM staking:

Validators: actively participate in network consensus by operating validator nodes.
Delegators: stake their ATOM to validators they trust.

ATOM Token, its Use Cases, and Distribution

ATOM is the native token of the Cosmos Hub. It has several use cases:

Spam prevention: ATOM is used to pay transaction fees on the Cosmos Network.
Staking: Staking ATOM contributes to the security of the network.
Governance: ATOM holders can vote on proposals presented by the Cosmos Hub.

The ATOM token was introduced in 2017 through an initial coin offering (ICO) that raised over $17 million.

The distribution of ATOM is designed to promote healthy and sustainable network growth while engaging the community in the platform’s development and maintenance.

Token Metrics:

Circulating Supply: 390.93 million ATOM
Inflation Rate: Between 7% and 20%
Max Supply: Unlike some other cryptocurrencies, ATOM does not have a defined maximum supply

Cosmos Ecosystem and its Various Projects

The Cosmos ecosystem is an open-source platform that aims to improve interoperability between blockchain networks. It consists of various components and entities that contribute to the development and maintenance of the network.

The Cosmos ecosystem has experienced significant growth and development, with the total value locked (TVL) in Cosmos-based DeFi protocols surpassing $1 billion in 2023.

This growth has been fueled by the rise of innovative decentralized exchanges (DEXs) like Osmosis and Injective, which offer robust trading opportunities and advanced functionalities.

Additionally, Cosmos-based NFT marketplaces, like Pylons, have gained traction, showcasing the ecosystem’s potential for supporting diverse applications and fostering communities around unique digital assets.

Some of the notable projects in the Cosmos ecosystem include:

Akash: a decentralized cloud computing platform.
Fetch.ai: a decentralized machine-learning platform.
Osmosis: an automated market maker (AMM) built on the Cosmos ecosystem.
Celestia: a modular data availability layer for Cosmos zones.
Sei: a layer 1 PoS blockchain optimized for trading digital assets.
Axelar Protocol: offers full-stack interoperability between different blockchain networks.

Advantages and Disadvantages of Cosmos (ATOM)

Advantages:

Interoperability: Cosmos enhances interoperability among blockchains, allowing them to communicate and share data. This fosters a more interconnected and collaborative blockchain ecosystem, where different blockchains can leverage each other’s strengths and functionalities.
Scalability: Cosmos offers high scalability and customization options for developers. This allows developers to build high-performance blockchains that can handle a large number of transactions without experiencing significant network congestion or high fees.
Security: Cosmos provides strong security with the Tendermint consensus mechanism. This ensures that the network is resistant to attacks and that transactions are processed securely and reliably.
User-friendliness: Cosmos is user-friendly for both developers and users. The Cosmos SDK simplifies the process of building custom blockchains, and the IBC protocol makes it easy for users to interact with different blockchains in the network.
Decentralization: Cosmos promotes decentralized and independent blockchains. This ensures that no single entity controls the network and that decision-making is distributed among the community.

Disadvantages:

Complexity: There can be complexities in inter-blockchain communication, especially when dealing with different consensus mechanisms and security models.
Network size: The Cosmos network is smaller than some established blockchains like Ethereum, which may limit the availability of certain applications and services.
Token economics: The ATOM token’s economics have been criticized for their lackluster ability to capture value, particularly due to its relatively high inflation rate.

Future Roadmap and Developments of Cosmos (ATOM)

The Cosmos roadmap focuses on usability and scalability. This includes:

User adoption: Increasing user adoption of the Cosmos Network by making it easier for users to access and interact with different blockchains in the ecosystem.
Market strategy: Developing a strong market strategy for Cosmos to promote its adoption and attract more developers and users.
Technical debt: Clearing technical debt to improve the network’s efficiency and performance.
Developer experience: Enhancing the developer experience to attract more developers to the ecosystem and encourage the development of new and innovative blockchain applications.

Specifically, the Cosmos Hub roadmap for 2024 focuses on developing Atomic IBC, which will bring lower cost operation and atomic composability to Cosmos Hub consumer chains, and perfecting Replicated Security to make the protocol more robust and cheaper to operate.

Cosmos is also pioneering concepts such as protocol-owned liquidity and liquid staking to use the substantial liquidity and market value of the ATOM token to provide chains in the Atom Economic Zone with liquidity and collateral while reinforcing the foundational role of ATOM.

Cosmos also aims to address current blockchain challenges such as scalability, limited programmability, and poor user experience in 2025.

This includes upgrades to the Cosmos Hub and Interchain Stack, such as enhancing security, speeding up block times, and improving IBC