Strengths and Weaknesses
- Interchain Security will be implemented in the near future and will increase the usability of the native coin $ATOM, which may result in an increase in its price in the future. Additionally, it manages the security of blockchains built on Cosmos, reducing their cost and making it easier to build high-quality apps.
- Inter-Blockchain Communications (IBC), which makes blockchains interoperable. Users can exchange cryptoassets, stake, vote, and use other features across individual blockchains.
- It is supported by high-profile projects in the cryptocurrency world. Several successful projects, such as Cronos, intend to build on Cosmos, so it automatically receives their support.
- Sovereignty for blockchains. Unlike other blockchains, Cosmos provides developers with the tools to create a blockchain that has its own governance structure as well as its own independent rules.
- Simple development environment and free app development.
- Among the things Cosmos should work on is their own marketing. A development space for building other blockchains isn't enough.
- There is a 21-day unlock period for staked $ATOM, which may appear lengthy to some. However, long-term investors are protected from sudden market pressures by this measure.
- The Cosmos 2.0 announcement divided the community into two camps. Even though many users agree with Whitepaper 2.0, there is still a great deal of uncertainty and negative feedback. Nevertheless, the developers assure that the community should remain calm and that each step will be announced soon enough for everyone to participate.
Cosmos Network is a decentralized network of independent, scalable and interoperable blockchains.
Cosmos figured out a solution to many problems that other blockchains have been struggling with for years – problems with scalability, usability and interoperability. One of the reasons developers are looking at Cosmos and developing decentralized applications (dApps) on top of it is because of these attributes. By creating a user-friendly environment, Cosmos aims to show developers that creating blockchain technology can be less complex, and by using its tools, developers can fully customize their decentralized applications and build them the way they want.
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Functioning of the Chain
The Cosmos Network is an constantly expanding ecosystem of interconnected blockchains and decentralized applications (dApps).
Cosmos offers open-source tools to help developers create their own blockchains and decentralized applications instead of relying on one particular blockchain. These apps are called zones. Developers can build Cosmos apps with a toolkit called the Cosmos SDK, which makes development easier. With the Cosmos SDK, time is saved, and time is money. On Cosmos, developers have maximum freedom and flexibility to create and add features.
Zones are connected via hubs and the Cosmos Hub is the main hub. Each zone is connected to the Cosmos Hub, which keeps track of its state. Each zone can operate independently, which means it can verify transactions, distribute crypto assets, and change its blockchain on its own.
Cosmos SDK and Cosmos Hub secure the network using Tendermint Byzantine Fault Tolerance (BFT), which is the name of the Cosmos consensus Proof-of-Stake (PoS) protocol. Tendermint BFT algorithm verifies transactions and creates blocks on a blockchain. With Tendermint BFT, developers can also create blockchains without coding them from scratch.
To facilitate secure communication between blockchains, Cosmos uses Inter-Blockchain Communication (IBC). The IBC protocol connects blockchains to the Cosmos Hub and enables data transfer. Through this process, users can safely and freely exchange assets and data. Even if blockchains have different applications, validators, and consensus mechanisms, they can still communicate with each other and exchange data. IBC enables the creation of cross-chain applications.
Here is a brief description of how each part of the Cosmos functions:
Tendermint enables developers to create blockchains without having to write any code from scratch. Tendermint integrates all the basic processes of creating a blockchain into one development package, making things easier and more efficient.
Tendermint Byzantine Fault Tolerance (BFT) is a core feature of the Tendermint. Essentially, it is a Proof-of-Stake (PoS) control mechanism that ensures computers are always in sync with Cosmos Hub. Validators in BFT insert blocks of transactions into the chain as they take turns.
Cosmos SDK is a Software Development Kit based on a modular concept. This allows developers to integrate different modules to create the type of blockchain they require while still being able to use different programming languages.
Cosmos Hub and Zone. The Cosmos Hub was the first blockchain in the Cosmos network, and it acts as a middleman for all the other blockchains.
- In 2014, Jae Kwon was the first to apply Byzantine Fault Tolerance (BFT) research to public blockchain "Proof of Stake" (PoS), which he then founded Tendermint Inc (All in Bits Inc). In terms of its implementation of the BFT consensus algorithm and Proof-of-Stake cryptoeconomics, Tendermint BFT is one of the most advanced. It was launched to resolve the speed, scalability, and environmental concerns associated with Proof of Work (PoW) blockchains like Bitcoin and Ethereum at the time.
- In 2015, Ethan Buchman, Zarko Milosevic and Jae Kwon co-developed Tandermint. By utilizing the Application Blockchain Interface (ABCI), the Tendermint BFT can be connected to applications written in any language.
- In 2016, a white paper entitled "Cosmos: A Network of Distributed Ledgers" was published. During Shanghai Blockchain Week, Cosmos was awarded the "Most Innovative Project" award. In that same year, the Interchain Foundation (ICF) was established in order to support the development of Cosmos and the ecosystem that will contribute to the creation of the Cosmos Network. In order to make Cosmos a reality, the Interchain Foundation (ICF) contracted with Tendermint Inc.
- In 2017, ICF raised 16.8 million USD in 30 minutes to fund the Cosmos Network. According to reports, it was one of the most successful fundraising events of its time. A prototype Cosmos SDK is being developed this year.
- In 2018, Tendermint Inc. pioneered Inter-Blockchain Communication (IBC), a cross-chain data transfer mechanism for Cosmos. They also launched 20 public test networks to demonstrate the functionality of their product.
- Since 2019, Cosmos has gained momentum, as evidenced by the numerous successful projects that have been built on top of it. The world's biggest cryptocurrency exchange, Binance, announced Binance Smart Chain, a blockchain built on the Tendermint BFT and Cosmos SDK. The Cosmos Hub was launched on March 13.
My experience with Cosmos Network has been positive from the start. Interoperability between the different blockchains works very well. If there is a huge load on one of the blockchains built on Cosmos, for example due to an airdrop or NFT mint, the speed of the other blockchains will not be impacted. In the past, I have participated in an airdrop of $STARS based on Stargaze, which is a layer 1 (L1) blockchain based on Cosmos for NFT minting and trading. As a result of a surge, this blockchain was unavailable for a few hours. However, it did not affect the other Cosmos blockchains, which is a positive. Nevertheless, I would not consider not being able to send $STARS to Osmosis to be a positive experience. It is likely that similar problems will occur with other blockchains built on Cosmos during larger events. Anyway, Cosmos is one of my favorite blockchains at the moment, and I am looking forward to seeing how the developers resolve these issues.
Creation of Cosmos was done by Jae Kwon, Ethan Buchman, and Zarko Milosevic.
The Cosmos team is currently divided between three companies:
Interchain Foundation (ICF) is a Swiss non-profit organization established to support the development of the Cosmos ecosystem. The ICF accepts grant applications.
Tendermint Inc (All in Bits Inc) is a software development company that develops the Cosmos Network.
The IRIS Foundation Ltd; is supported by ICF in the development of the IRISnet. Cosmos SDK and Tendermint consensus layer are used to build IRISnet's service infrastructure and protocol. The goal is to become one of the first regional Cosmos network nodes outside of the Cosmos Hub. It aims to simplify and support DeFi application creation.
Jae Kwon is a blockchain software architect, co-founder of Tendermint, and president of the Interchain Foundation. Graduated from Cornell University. He was a professional developer in the field of computer science. He is also a co-founder of iDoneThis. As part of his collaboration with Ethan Buchman and Zarko Milosevic, he developed the Tendermint BFT consensus algorithm. Today, the original trio continues to contribute their knowledge and experience to the Cosmos Network. They have assembled a team of experienced and knowledgeable individuals, which is abundantly evident from how it is progressing on a daily basis.
$ATOM is the governance token for the Cosmos Hub. What is its purpose?
- $ATOM is used to pay network fees.
- By staking $ATOM, validators in Cosmos Hub are able to verify transactions and secure the network. Through Interchain Security, Cosmos Hub security will also be utilized to increase the security of emerging blockchains.
- Through its governance votes, $ATOM holders can participate in the future of Cosmos Hub.
Revenue & Tokenomics
Vesting and coins release
Initial total supply – 236 198 958,12 $ATOM
Seed sale allocation – 12 000 000 $ATOM (5,08 %)
Coin price for seed sale – 0.025 USD / $ATOM
Seed sale contribution – 300 000 USD
Strategic Allocation – 16 618 400 $ATOM (7,03 %)
Strategic allocation price – 0.08 USD / $ATOM
Public fundraising April 2017
Allocation for public sale – 160 293 050 $ATOM (67,86 %)
Public sale price > 0.10 USD / $ATOM
Amount collected for public sale – 16 029 300 USD
All in Bits, Inc. (dba Tendermint) raised 10.03 % of the total supply (vesting over 22 months)
Interchain Foundation raised 10 % of the total supply.
The number of coins in circulation (29.01.2023) - 286 370 297 $ATOM
$ATOM does not have a set max supply.
ATOM 2.0. The future of Cosmos?
A move to ATOM 2.0 has been considered in recent months. There will be a transition phase of 36 months until a stable emission rate is reached. A new emission configuration would consist of starting at 10 million $ATOM per month and decreasing by 10 % each month until we reach 300 000 $ATOM per month.
The aim is to establish a new Cosmos Hub Treasury that will encourage innovation, support, and expand the network in the coming years. Since these extra $ATOM will be deposited into the Cosmos Hub Treasury, they shouldn't affect the price of $ATOM in any way.
The move to ATOM 2.0 has sparked a lot of debate about whether this is the right move and whether investors will be harmed as their staking rewards in $ATOM start to decrease after 9 months. This should be partially addressed by Interchain Security, which will validate newly created blockchains via Cosmos validators, and these chains will pay for it with their native coins. $ATOM stakers will receive coins of the networks which are secured by Cosmos. As a result, the $ATOM stakers will receive very small rewards after the extremely inflationary period that is expected to last for the first nine months after the transition to ATOM 2.0. Also, the rewards will be enhanced by the assets of the blockchains secured by Cosmos validators.
Additionally, Cosmos assured investors that nothing in this documentation would occur overnight. Over the next several months and years, everything will be gradually developed, improved, and implemented in phases.
Read more about ATOM 2.0 here.
Centralized exchange (CEX) listings - Binance, Coinbase, OKEx, Kraken, Huobi, Poloniex, Bitfinex, Crypto.com, KuCoin, Gate.io...
The Uniqueness of the Chain
One of Cosmos' main objectives is to solve one of the largest problems associated with blockchains, namely interoperability - the ability to communicate between blockchains. As a result of Cosmos' innovative work, mutual interoperability between blockchains has been achieved. It also refers to itself as "Blockchain 3.0" and provides users with easy-to-use infrastructure.
With Cosmos, developers are provided with a modular environment that simplifies the creation of new blockchains by utilizing existing code components. Therefore, Cosmos is a popular blockchain for developing new applications since its features make it much easier to develop complex applications on it than on other blockchains.
The Cosmos ecosystem also prioritizes scalability, which is supposed to enable the blockchain to handle significantly more transactions than other blockchains such as Ethereum or Bitcoin.
The Inter-Blockchain Communications (IBC) protocol, which has already undergone a number of updates, is another significant advantage of Cosmos. The IBC was officially launched in April 2021 and plays a critical role in the interoperability of blockchains on Cosmos. Users can exchange coins, stake, vote, and use other features across individual blockchains. Also, the IBC facilitates the application of innovations across a variety of applications without requiring a complete upgrade of the interchain.
The novelty of Interchain Security makes Cosmos even more significant. With Interchain Security, independent projects are able to build on the Cosmos Hub, while Liquid Staking enables $ATOM to become a leading interchain reserve asset. In the next segment, you will learn more about Interchain Security and how it is protected.
How the Network is Secured
Cosmos uses the Proof-of-Stake (PoS) consensus algorithm. Verifying transactions is done by validator nodes that ensure safe operation. The first 150 validators with the largest stack of $ATOM are selected for transaction verification. Whenever a node commits an act of dishonesty, it will be punished through a process known as slashing. In this case, the validator will be penalized with the loss of a certain amount of stacked $ATOM.
In this section, we discuss Cosmos' newly introduced feature - Interchain Security.
Interchain security is a significant benefit for the security of dApps, allowing for new innovations and across-chains opportunities.
As we mentioned earlier, Cosmos blockchains are based on a Proof-of-Stake consensus algorithm, whose security is maintained by validators. The greater the market capitalization of the native coin staked by the validators, the more difficult it is for an attacker to attack a given blockchain, since an attacker would require more capital to do so.
This is the exact issue facing new blockchains emerging on Cosmos, as some may have difficulty maintaining high market capitalizations for their coins and are therefore more vulnerable to attacks. It may be difficult for new blockchains to attract validators, and when they do so, they offer highly inflationary rewards to encourage them. Momentarily, this will increase the market capitalization of the native coin as the security of the chain and the strength of the validators with it. This could cause more harm than good in the long run, due to the fact that high rewards can lead to sell pressure, which may discourage investors from investing in the first place. In the event of selling pressure, the market capitalization will fall and their security is in the initial stages.
The Interchain Security solution is designed to meet the challenge of securing new blockchains by allowing validators of larger blockchains to provide security to smaller ones. With Interchain Security, smaller chains will be able to reduce their upfront costs and concentrate on their own development. Having more high-quality projects means that the entire Cosmos is more secure. As compensation, these blockchains will provide them with a share of the staking fees and rewards. To secure these blockchains, the same asset as on the Cosmos Hub will be used - $ATOM, as well as protection against fraudulent validators, who will be punished by slashing. These validators will be penalized by the loss of staked $ATOM.
Staking opportunities – Almost all CEXs are able to stake $ATOM.
If possible, you should avoid this option and stake your $ATOM outside of centralized exchanges. If you have already purchased your $ATOM on a CEX, please send them to your Web 3.0 wallet supported by the Cosmos ecosystem. Once you've got them in your Web 3.0 wallet, check out the list of validators 1 or 2. I will tell you how to pick the right one below.
How to become a delegate and its benefits?
I recommend using the Keplr wallet to delegate $ATOM, through which you can select the validator.
In exchange for delegating your $ATOM, you can receive an average annual return (APY) of approximately 20%, less the commissions you pay to the validator for managing your assets. You must, however, keep in mind that after you reclaim your coins, you will have to wait 21 days before your coins are once again liquid. It is possible for delegates to change the validator they are staking coins with immediately by clicking redelegate, without having to wait 21 days.
How to choose the right validator?
- Review the validator's name, description, website, and community references.
- Check what percentage of your rewards will be paid to the validator as commission. After this, check the maximum commission change rate and the total maximum commission for the validator.
- Validators must stake the minimum amount of $ATOM. If they do not meet this minimum, their entire pool will be untied, as well as all of their delegates. The purpose of this rule is to protect the delegates.
How to become a validator and its benefits?
Any participant in the network can become a validator. They do so by submitting a create-validator transaction, where they need to fill in the following data: validator PubKey, validator address, validator name, initial commission rate, maximum commission rate, maximum commission rate change rate, minimum amount of $ATOM - the amount below which the validator cannot fall, otherwise it will be excluded from active validators, and optional information, such as a description of the validator and its web address.
The 150 candidates with the highest stakes are selected from all the validation candidates submitted. Their validator privileges will be lost if their stake drops below the first 150. Validators who are not in the top 150 cannot participate in consensus or generate rewards until they are again among the top 150 validators. It is possible for this number to change over time as a result of governance voting.
What is the motivation to become a validator?
- There is a proportionately higher income for validators than for their delegates. They receive commissions from their delegates as a reward for their services. Validators are free to set the amount of this commission as they see fit.
- Validators contribute to the security of the Cosmos ecosystem through their work.
- Validators play a significant role in the governance of votes.
You can find more information about validation in the Cosmos ecosystem here.
You can find a detailed Road Map for 2022 and 2023 here.
Cosmos' Road Map might look a bit chaotic to some people. Let us translate this into human terms. Among the most significant changes mentioned in the Road Map is Interchain Security, which we previously discussed in section 'Chain Security’. Please take the time to read about this feature in more detail above again. The Road Map also mentions the preparation of liquid staking modules and various upgrades and enhancements to the Cosmos SDK and Inter-Blockchain Communications (IBC). Perhaps they will also add ATOM 2.0 in the near future.
The Cosmos ecosystem contains more than 263 apps, blockchains, wallets and explorers created by developers and contributors worldwide.
According to Total Value Locked (TVL), the three largest blockchains in the Cosmos ecosystem are:
- Cronos – 450.92m USD
- Kava – 213.16m USD
- Osmosis – 193.09m USD
The website provides a number of tutorials for building your own chain using Cosmos. Cosmos is committed to building high-quality blockchains, and therefore, it makes every effort to support developers, such as through free online courses. Additionally, they provide grants that can be applied for directly on the platform.
Cosmos is one of the most popular blockchain for developers, and its community is full of talented individuals who can share information and learn from one another. Many of them join the official Cosmos Discord to seek advice or provide assistance to others. The administrators and moderators of the Discord server are active, responsive, and helpful. Since Cosmos has branched out into dozens of blockchains and hundreds of decentralized applications, you will find members of the community almost anywhere. I have had a very positive experience with the Cosmos community. Although, in tough times, when things do not work as expected, toxic individuals emerge from the crowd to spread negativity within the ecosystem, but we have somehow got used to it in the cryptocurrency world.
Cosmos has gained popularity among several companies, and they have also formed partnerships together. Many of these companies are using Cosmos assets to develop their own blockchains or dApps. Cosmos partners include Binance Smart Chain, Akash Network, Fission Labs, Informal Systems, Interchain GmbH, Iqlusion, Regen Network, Tendermint, Sentinel, IRISnet, and many others.
Ledger Nano S/X – a hardware wallet (HW) Ledger will ensure that your assets are protected as much as possible. Connecting the hardware wallet and the software wallet (SW) is the best and most secure option.
Keplr Wallet – the Keplr wallet is a software wallet and it is the best choice for the Cosmos decentralized finance (DeFi) ecosystem. With it, you can hold, send, receive, move, and stake your coins across various blockchains built on Cosmos. The Keplr wallet is compatible with Ledger Nano S/X hardware wallets. Klepr and Ledger wallets are all you need to get started in decentralized finance on the Cosmos blockchain. The official Keplr wallet website can be found here.
In case you are interested in other supported wallets, you can find them at this link.
Cosmos' name is already well known in the cryptocurrency world, although some marketing work would certainly be beneficial. My personal opinion of this blockchain is that its poor marketing is probably its only major drawback.
I am always pleased to receive notification of a new upgrade for one of my favorite blockchains, which indicates developer activity and even better if that upgrade also makes sense for the future of the blockchain. Cosmos uses these notifications frequently.
In order to create new applications, developers choose the best environment, and this is what Cosmos provides for those interested in creating their own blockchains or decentralized applications (dApps). For these tasks, Cosmos has developed tools like Tendermint, which allows developers to create blockchains without having to code them from scratch, or the Cosmos SDK tool, which is a Software Development Kit that allows developers to create blockchains using several different programming languages. Is it possible to create your own independent blockchain with your own rules and features? On Cosmos, it is possible.
Cosmos is designed to facilitate inter-blockchain communication between all blockchains and applications. In the near future, it will include Interchain Security, which will give emerging blockchains a huge advantage and increase the utility of $ATOM. You can be sure that we will keep you updated on all the future steps of the Cosmos Network.