What is Cosmos (ATOM)?
Cosmos is essentially a decentralized network of independent blockchains. It was designed to be modular, scalable, and interoperable. In fact, at the time of this writing, it’s currently the leader when it comes to interoperability.
Developers within the Cosmos ecosystem are able to make use of a number of innovative technologies, including Tendermint, the Cosmos SDK, and Inter-Blockchain Communication (IBC).
The Cosmos SDK (Software Development Kit) is a modular framework for building custom blockchains. It is written in the Go programming language and provides a set of pre-built modules that developers can make use of.
Blockchains that are built out with this SDK have the ability to communicate and exchange data with each other. This means that a developer can create a customized and independent blockchain, yet still enjoy interoperability with a growing list of other chains that are also built on the network.
Tendermint is a software program that was created by Jae Kwon, who is also the co-founder of Cosmos. It can be used to create blockchain applications that are secure and scalable. It consists of a consensus engine, which is responsible for reaching agreement on the state of the blockchain, and an application interface, which is used to communicate with the application logic of the blockchain.
The consensus engine is based on the Byzantine Fault Tolerance (BFT) consensus algorithm, which is designed to be highly resistant to network failures and malicious attacks. It works by having a set of validators that propose and vote on the next block of transactions that should be added to the blockchain. If a sufficient number of validators agree on the proposed block, it is added to the blockchain and the validators are rewarded for their work.
The application interface is a set of APIs that allows developers to build their own blockchain applications on top of the Tendermint consensus engine. It provides a simple and easy-to-use interface for developers to interact with the consensus engine and to build their own custom blockchain applications.
Inter-Blockchain Communication (IBC) is a protocol that allows different blockchains to communicate and exchange data with each other.
The IBC protocol defines a set of rules and standards that blockchains must follow in order to communicate with each other. It specifies how data is transferred between blockchains, how the authenticity of the data is verified, and how the security of the communication is ensured.
By using IBC, blockchains on the Cosmos platform can communicate and exchange data, creating a decentralized network of blockchains that is more powerful and flexible than any single blockchain could be on its own.
Who started Cosmos?
The Cosmos ecosystem was developed by a team of software engineers and blockchain experts led by co-founders Ethan Buchman and Jae Kwon.
Kwon has a background in distributed systems and cryptography. He is the CEO of Tendermint Inc., which is a company that develops and supports the Tendermint platform – the function of which is discussed above.
Buchman has a background in software development. He co-founded Cosmos with Kwon in 2014 and has played a key role in the development of the Cosmos platform.
The Cosmos team also includes a number of other software engineers and blockchain experts who have contributed to the development of the platform and its key technologies.
What are the uses of the Cosmos network?
As Cosmos enables developers to easily create their own customized blockchains, the use cases are similar to any other smart contract platform. Decentralized applications (dApps) can be built – which can serve a variety of different functions.
The interoperability benefits Cosmos offers make it an excellent backbone for the development of decentralized exchanges as well, as the IBC (Inter-Blockchain Communication) enables the chains to interact with one another.
The Osmosis DEX is a perfect example of this. Tokens from independent chains can easily be swapped with one another. Try the Osmosis DEX if you haven’t already, it’s a great user experience.
The chains built with Cosmos enjoy low transaction fees and the ability to process approximately 10,000 transactions per second. At the time of this writing, the base layer of Ethereum enables about 30 transactions per second. Of course, there are now level 2 protocols (like Polygon) that help to scale that.
The Cosmos Ecosystem
The Cosmos ecosystem is larger than most people initially expect. Some of the most well known projects in the space are built using Cosmos’ suite of tools.
A few examples are Luna, Thorchain, Cronos (crypto.com) and even Binance Chain. When Luna and UST crashed, there are a couple things worth noting that serve as a testament to just how robust and capable Cosmos is.
- Even given the massive amount of transactions that were taking place, the chain held up and people were able to transact without any major glitches.
- The crash of Luna didn’t effect any of the other Cosmos-built chains from a functionality standpoint. They all held strong – which relates to the fact that while the chains are interoperable with each other, they’re also INDEPENDENT of each other.
A quick search through the “cosmos ecosystem” tag on CoinGecko will show you over a hundred projects built using Cosmos, and this doesn’t include other projects that work in unity with it.
What is the ATOM token used for?
ATOM is the native token powering Cosmos. Here’s how..
- It secures the network: ATOM tokens are used to secure the Cosmos network by staking them as collateral. Node operators on the network must stake a certain amount of ATOM tokens as a security deposit, and if they behave dishonestly or provide unreliable data, their deposit may be slashed. This helps to ensure the security and reliability of the network.
- Facilitating transactions: ATOM tokens can be used to facilitate transactions on the Cosmos network, including transactions between different blockchains on the network.
- Incentivizing node operators: ATOM tokens are used to incentivize node operators to contribute to the network. When a smart contract selects a node to fulfill a data request, the node operator earns a fee in the form of ATOM tokens. This helps to ensure that there is a sufficient number of node operators on the network to meet the demand for data.
- Paying transaction fees: ATOM tokens can be used to pay transaction fees on the Cosmos network. These fees are paid by the smart contracts that use the network and are used to cover the costs of running and maintaining the network.
Interchain Security: The ATOM token will soon get even more use, as new projects on the network will no longer be required use their own validator set. Instead, they can utilize the already existing validators on the Cosmos Hub to secure their transactions. Delegators who stake their ATOM will soon receive more rewards.
ATOM Staking Rewards
The ATOM token can easily be delegated to validators in order to earn staking rewards. There’s no minimum requirement, and rewards are generated in real time. As I type this, the current reward rate is 20.52% – though this seems to fluctuate.
Staking can be done using a variety of wallets, though I would suggest using Keplr as it can be synced up with your Ledger hardware wallet.
Airdrops: A major benefit to staking the ATOM token is that by doing so, you’ll automatically be qualified for a high amount of airdrops. Essentially what this means is that you’ll become eligible to receive free tokens for projects that are being built within the ecosystem. To stay up to date with these airdrops, you can use a sites such as airdrops.one and cosmosairdrops.io.
Overall Thoughts
I like Cosmos, and I like the co-founder, Jae Kwon. He seems to be in this for the right reasons. He frequently criticizes the corrupt system and establishment players, and says he wants to build great technology that enables people to achieve more freedom.
Cosmos itself is a pleasure to use. It’s smooth and they have some excellent applications already build out. The staking rewards for most Cosmos-based projects are excellent as well, which provides the ability to generate some meaningful passive income.
