With its extensive ecosystem of interconnected applications and services — targeted towards a decentralized future — Cosmos (ATOM) positions itself as the "internet of blockchains." The number of decentralized apps (DApps) and services on the platform has crossed 260, while the volume of digital assets under management has surpassed US$150 billion. The Cosmos IBC, or the Inter-Blockchain Communication protocol, allows its apps and services to seamlessly connect. As a result, users can freely exchange assets and data across several decentralized blockchains.
What Is the Cosmos Network?
Cosmos is a Layer 0 blockchain, which means it does the groundwork for the Layer 1 blockchains. It is made up of a decentralized network of independent blockchains that are interoperable through the Inter-Blockchain Communications (IBC) protocol.
Take Binance Chain (not to be confused with EVM-compatible BNB Smart Chain) for example. Cosmos is the underlying blockchain over which Binance Chain is built. Any blockchain network built on Cosmos can interact with each other, thus allowing for cross-chain interoperability. This is powered by the Tendermint Core consensus engine.
DApps are not deployed on the Cosmos Network directly, but on the independent blockchains on Cosmos — hence the term "application-specific blockchains."
The Cosmos ecosystem hosts many sovereign blockchain networks, all of which are scalable and can interact with each other — with notable ones being Binance Chain (BNB), Terra (LUNA), Crypto.org (CRO) and Cosmos Hub (ATOM). Thus, Cosmos is rightly called the "internet of blockchains."
Join us in showcasing the cryptocurrency revolution, one newsletter at a time. Subscribe now to get daily news and market updates right to your inbox, along with our millions of other subscribers (that’s right, millions love us!) — what are you waiting for?
What Is the Cosmos Hub?
The Cosmos Network consists of two types of blockchains — hubs and zones. Zones are the previously-mentioned "application-specific blockchains." Each zone is a spoke connected to hubs. Hubs can be connected to other hubs, thereby forming the Cosmos Network. The first blockchain deployed on the Network, the Cosmos Hub is a proof-of-stake blockchain secured and governed by ATOM holders.
ATOM is the native token of the Cosmos Hub. ATOM incentivizes the efforts of securing the Cosmos Hub. Cosmos validators who stake their ATOM tokens to secure the network receive a part of the transaction fees and staking rewards in exchange. There is every reason to anticipate a significant increase in rewards as the network keeps adding services, such as the interchain decentralized exchange (DEX) and interchain staking.
Interchain Foundation raised funds through both fundraisers and ICO. Initially, it had conducted a fundraiser to raise funds and its expected date was supposed to be February 28th, 2017, but it was pushed back without announcing any new dates. Then, the Cosmos team announced that the fundraiser will take place on March 31, 2017, with an announcement later, but it was again delayed and pushed back to April 6, 2017. As for the ICO, it took place in 2017, and Interchain Foundation raised $17 million through it.
The tokenomics are as follow: Interchain Foundation allocated 5% of ATOM's supply to initial contributors of the fundraiser. Then, 10% of ATOM's supply went to Tendermint Inc, which is responsible for most of the software development work and Interchain Foundation was allocated 10% of the supply. The distribution of the rest of the remaining ATOM tokens (75%) was dependent on the success of the fundraisers.
The current supply of ATOM tokens is 286,370,297, as for its maximum supply, there is no ceiling to it. It's because the number of new ATOM tokens created depends on the ATOM tokens being staked. The ATOM token has an estimated 7-20% inflation anually, and the vesting period for investors is fully completed.
What Is the Cosmos Software Development Kit (SDK)?
The Cosmos SDK helps build blockchain applications in three easy steps. First, you need to write your custom blockchain with a mix of prebuilt modules and custom modules. The next step involves testing your MVP with users, who will collect and iterate on feedback and subsequently launch on their public mainnet. Finally, the users can connect it to other Cosmos blockchains, leveraging the core interconnectivity property of the network. It helps increase the adaptability and liquidity of any blockchain by linking it to the Cosmos Network via the IBC app.
The Tendermint Core Blockchain Building Framework
Built on the Tendermint core, the Cosmos SDK helps build blockchains with a 99% lower carbon footprint. Moreover, it facilitates operations at a nominal cost, US$0.01 to be precise. The transaction confirmation happens in seven seconds.
One of the most advanced modules of the Cosmos SDK, Authz, is an implementation that helps grant arbitrary privileges from one account to another. The stake authorization gained with Authz facilitates authorizing another account to delegate, undelegate, or redelegate to validators. It proves helpful in preventing DoS attacks.
The REST server of Cosmos helps receive and route HTTP requests in the application itself. The SDK comes with its REST Server by default. It makes interacting with the mode easier as there are multiple ways to leverage a node, using the CLI, the gRPC API, or the REST endpoints.
Another product, developed by Tendermint, would help unleash the potential of Cosmos further. Integrated with the Gravity DEX protocol, Emeris will enhance the UX and adaptability of Cosmos by a significant margin. The blockchain-agnostic Emeris helps users with a noncustodial dashboard steer through the vast world of cross-chain DeFi, expanding beyond anyone's network and proving useful for all crypto applications.
Vision of the Cosmos Network
Cosmos wants to evolve as a full-fledged free platform that can break silos and monopolies in the decentralized space and promote collaboration, innovation and competition. The reason why it positions itself as the Internet of Blockchain is that it helps exchange, store and secure value in a decentralized, peer-to-peer mode, rather than relying solely on centralized servers. It empowers a diverse set of stakeholders, including developers, organizations, social networks, marketplaces, games and more.
The developers, for instance, can build fully autonomous application-specific blockchains which could be conveniently interconnected. A dependent existence as smart contracts on some different chain is not a compulsion anymore, resulting in reduced transaction fees and network congestion, and improved scalability.
Communities get the power to organize and allocate resources seamlessly and with utmost transparency. Standing against the regimes of filtered and censored content, Cosmos helps communities build autonomous social networks, where every user has their say and can create value.
Cosmos allows building cost-effective and efficient exchanges and marketplaces that help build permissionless global trade. Finally, for companies in gaming and related development, Cosmos is an ideal provision for creating unique collectibles and character upgrades that the developers can monetize. They don't need to depend on third parties or app stores.
Getting Started: Atom Wallet Compatibility
More than 35 wallets support the Cosmos Network and its token across ecosystems. Among hot wallets, there are AToken, Citadel One, Cosmostation Wallet and more. The Atomic Wallet, Huobi Wallet, and HyperPay are among some of the compatible iOS wallets. Some of the compatible Android wallets include Guarda, Trust wallet and more.
Kelpr Wallet is the most popular and the first-ever IBC-enabled Cosmos-focused wallet. It has amassed over 100K users, and its features include asset management, staking & rewards, DApps, governance, security and IBC transfers. The completely non-custodial Keplr wallet is available in both Android and iOS. Besides, it also supports the popular hardware wallet Ledger Nano S/X, which adds a further layer of security.
Atom Staking Calculator
The typical annual percentage yield (APY) of staked ATOM is around 14.2%, although after accounting for inflation, rewards are around 4.2%. The commission is typically 10.28%. Although, it varies between validators.
The Usability of Cosmos
The usability of Cosmos is wide-ranging and diverse. Projects can leverage the network in ways more than one. One can use it to expand the economy of one’s chain by connecting it to the Cosmos Hub Services through the IBC protocol. Developers can also use the protocol to earn support in bringing more users with services such as exchanges, wallets and more. Individuals can also choose to become validators in the network, helping secure the blockchain.
Today, the Cosmos ecosystem accounts for over $153 billion worth of digital assets under management. Most of the apps and projects it hosts are from finance and infrastructure. Besides these, it also hosts privacy, marketplace, social impact, games, microservice, smart contracts, enterprise apps and projects, and more. Some of the most popular projects within the Cosmos ecosystem include Osmosis, Terra, Crypto.com Chain, Juno Network, Secret Network and Gravity Bridge.
Osmosis (OSMO) is the first IBC-native Cosmos interchain automated market maker (AMM) that makes cross-chain trading possible within the Cosmos chain. All a user needs to do on the Osmosis Zone is pool their tokens and trade against the liquidity of other token pools. Over $1.6B is locked on the Osmosis protocol.
The Terra (LUNA) blockchain powers a suite of fiat-pegged algorithmic tokens that aims to supercharge the DeFi ecosystem and take it to the masses. Besides, it also aims to tackle the infamous volatility commonly associated with cryptocurrencies. Its most prominent stablecoin is TerraUSD (UST).
Aimed at driving the adoption of blockchain technology through DeFi, payments, and NFTs, Crypto.com has conceptualized a tendermint-based open-source, public blockchain that offers both high speed and low fees, which it has named Crypto.org Chain.
Juno Network (JUNO) enables developers to create interoperate smart contracts that execute automatically if pre-set conditions are met. Besides, it also has a cross-chain smart contract execution capability, as it is built on top of the Cosmos network. At the time of writing, 50+ DApps and 2000 DAOs have been built on Juno Network.
Built using Cosmos SDK, Secret Network provides smart contract development and privacy-oriented features by default. Due to its unique mix of features, Secret Network opens new avenues for Web3 space. What Secret Network does is that it makes computation on encrypted data possible, thus adding one more layer of privacy to public blockchains and smart contracts.
Gravity Bridge has connected the Ethereum ecosystem with the Cosmos ecosystem, which has added one more brick to Cosmos' "Internet of Blockchains." With this, all SDK chains within the Cosmos ecosystem can now participate in Ethereum DApps and also utilize Ethereum-based tokens as well.
There's an interesting aspect of Cosmos, as there are airdrops on almost a daily basis within this burgeoning ecosystem. To become eligible for airdrops, users can either stake tokens or provide liquidity. The top tokens to stake or provide liquidity to become eligible for airdrops are JUNO, ATOM, OSMO and SCRT.
A user must ensure to stake a minimal amount of tokens, otherwise, they may be excluded from the list of eligible users for the airdrop. There are two types of airdrops. In the first type of airdrop, the protocol doesn't differentiate between users on the basis of the number of tokens staked, but there is a minimum amount of tokens to be eligible for the airdrop. The second type of airdrop rewards users based on the number of tokens staked, and also requires users to meet the minimum deposit requirements.
The minimum amount to stake varies by the token. Holders can use trackers like this to track Cosmos airdrops.
The Future of Cosmos
The Cosmos Network is growing. You can interact with the ecosystem in more than one way. For instance, you can ask questions and chat with the global Comos community on Instagram. The Cosmos Twitter handle has a huge follower base of more than 370,000. Developers can solve their technical queries by discussing in the developer chat on the community Discord. Finally, there is always the chance to become a validator.
The Cosmos Network also helps the contributors assemble and become a patron or Cosmonaut. Projects can apply for micro-grants to build their products, host events, or even create media content. Building products can be a full-fledged integration or even as basic as translating vital documents and creating tutorials. Hosting an event can go from being something as elementary as hosting a meetup or workshop to hosting conferences or hackathons to creating a virtual reality world in itself.
In the days to come, the Cosmos Interchain Accounts would be introduced as a single secure account for all the user’s digital assets. The DEX facility of Cosmos would not only help swap tokens but collectibles too. The liquidity pools will incentivize liquidity providers with rewards.
With the aforementioned Gravity Bridge bringing Ethereum DApps into the Cosmos ecosystems, implementations with the NEAR protocol ecosystem and LayerZero bringing IBC to every other chains through Stargate and its transport layer, expect more adoption of Cosmos IBC.
All in all, Cosmos helps prepare the blockchain space for its future implications in the areas of DeFi, NFTs, gaming, autonomous organizations, social networks, marketplaces, and more. It frees users from the complexities of one million blockchain apps competing for throughput on a single base layer by introducing one million blockchain apps interconnected across one million sovereign blockchains.
This article contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. CoinMarketCap is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by CoinMarketCap of the site or any association with its operators.
This article is intended to be used and must be used for informational purposes only. It is important to do your own research and analysis before making any material decisions related to any of the products or services described. This article is not intended as, and shall not be construed as, financial advice.
The views and opinions expressed in this article are the author’s [company’s] own and do not necessarily reflect those of CoinMarketCap.