The early days of blockchain technology have largely been dominated by the core principles introduces by Bitcoin. The original blockchain network was created with only one thing in mind; To provide a decentralized alternative to the traditional financial system. This was the start of something new, as this idea resonated throughout the tech community, gathering thousands of passionated evangelist and developers, who intended to take this novel technology to its next level. A new era was born!
Fast forward some years, the total market cap of all blockchain networks combined have surpassed $1 trillion dollars. The Cosmos Ecosystem plays an important role of this revolution with a market cap of just over $4 billion dollars. In 2016, Jae Kwan and Ethan Buckman founded the cosmos ecosystem with the idea of creating an easy environment for developing blockchain applications. Furthermore, the Cosmos Ecosystem would set out to become an internet of blockchains.
What is Cosmos ?
In a nutshell, Cosmos is a blockchain that uses a proof of stake consensus mechanism to empower its community of developers and users, to build and scale its ultimate vision of becoming an internet of blockchains. But what is an internet of blockchains? According to Cosmos, some of the hardest problems facing the blockchain industry is the slow, unscalable and environmentally harmfull proof of work chains, those like Bitcoin, and by offering an eco-system of connected blockchains, you can solve these issues by making blockchain technology less complex and difficult for developers, thanks to a framework that demystifies decentralized apps and focus on a more easy-to-use developing environment. Last but not least, an Interblockchain Communication protocol (IBC) makes it easier for blockchain networks to communicate with each other — preventing fragmentation in the industry. This is where Cosmos really stands out from the rest, having created this tool, that makes it possible for several blockchains to communicate together. For example, most blockchains like Ethereum or Concordium cannot communicate with each-other, making it impossible to transact with each-other and thus, creating this fragmentation between users of these blockchains, whereas Cosmos, with its invention of the interblockchain communication protocol (IBC) made it possible to transact and communicate with fx. the Ethereum blockchain, making it possible for users on the Cosmos network to use applications build on the Ethereum blockchain and vice versa. Ultimately, this means that users don’t have to invest and buy several tokens on different blockchains to be able to enjoy the benefits of each individual blockchain, but only have one account, in which they can use across several blockchains, creating an internet of blockchains.
ATOM is Cosmos’ native token. ATOM can be used for staking and making transactions on the network. The validators on Cosmos earn ATOM as staking rewards in return for securing and participating in the network. The current APY sits at around 20%. ATOM has a market cap of over $4 billion dollars. The current token supply in circulation sits around 286M ATOM and there is no official data about its total supply cap. Currently, ATOM trades at around $13. When ATOM hits it peak in 2021, it had appreciated more than 1200% from its all-time low, when it was trading at around $1 in march 2020. ATOM hit an all-time high of $44.70 in September 2021.
Inflation: Cosmos Hub has a multi-token model with a hyper-inflationary staking token, which is the ATOM ranging from 7% to 20%. The fewer ATOMs are staked, the more hyper-inflationary Cosmos becomes. With 0% of the ATOMs staked, Cosmos Hub will have a 20% inflation rate. With 67% of the ATOMs staked, the inflation rate drops to 7% and just remains constant for the rest.
A leading provider for the future of DeFi (Decentralized Finance)
As mentioned, Cosmos vision is to provide a modular framework for developers to come in and start using its tech. This is done by using its own Cosmos SDK (Software developing kit) which makes it easy for developers to spin up their own application-specific blockchains on top of the Cosmos eco-system. One thing that we have seen over the past years, is the development of various decentralized applications and projects built on top of the Cosmos Eco-system. Currently, there are more than 40 active “app chains” in the Cosmos eco-system, and with the help of the Inter-Blockchain Communication protocol (IBC) launched in April 2021, these app chains can connect, transact and exchange tokens and data seamlessly. In the following section, we will list some of the most promising projects.
Based on volume, the biggest contributor to the Cosmos ecosystem has been Osmosis, a decentralized AMM (automated market maker) exchange bringing all the IBC assets in one place. On Osmosis, users deposit IBC assets such as ATOM, OSMO or WETH(Wrapped Ether) to liquidity pools and then traders can switch between these assets. Everything in one place, using one wallet, decentralized and anonymous.
Recently, as the rest of the industry, Osmosis suffered from the downfall of Terra and UST because UST was the dominant stablecoin in the Cosmos ecosystem and also in the Osmosis markets. Ever since the collaps of Terra, the protocol have incentivize users to bridge Ethereum assets such as USDC and WETH through Axelar, another app-chain in the Cosmos Eco-system, to Osmosis with the promise of high-yield returns.
Another interesting project in the Cosmos ecosystem is Axelar, which is trying to become a universal bridging infrastructure for the whole blockchain ecosystem
Imagine if you could send a message from your WhatsApp account to the receiver’s Signal account or instagram account? Or if all your web3 activity could be done through one account, a web3 version of WeChat? Basically, Axelar is trying to be, for the blockchain industry, what Iphone did for us; we don’t need to carry a separate music player, map, camera etc. with us anymore. All in one single platform.
If Axelar succeeds, it could completely do away with the silos of different blockchains from the user’s perspective and the necessity of having multiple private keys for different blockchains.
Some of the key characteristics of the Cosmos network:
- Cosmos SDK: A developer-friendly framework making it easy for people to write their application-specific blockchain.
- Tendermint: BFT consensus protocol and its software implementation named Tendermint Core.
- IBC: Sidechain protocol enabling blockchains to communicate with each other. IBC was released with the launch of the Stargate upgrade on February 18th 2021. The launch of Stargate completes the original roadmap laid out in the Cosmos Whitepaper. With IBC, there are 200+ projects already building on the Cosmos SDK, representing $40bn+, that will be able to connect with each other.
- Cosmos Hub: the name of one of the blockchains connected to the ecosystem, this one being built by the Cosmos team, keeps a record of the total number of tokens in each zone. It is different from Cosmos Network, also called Cosmos, which designates the whole ecosystem.
We are very excited about where Cosmos it headed in the space. It has a solid development platform and many developers within its community. With its development of the Cosmos SDK and IBC protocol, they are at the forefront of leading decentralized finance and this new era of a digital economy. We at Myrmidon Staking, will support this journey by enabling ATOM staking soon at our platform https://myrmidonstaking.com/ to continue its development and growth in the blockchain industry.