Cosmos

What is Cosmos (ATOM)?

Cosmos is a key element of the blockchain industry, providing a framework on which some of the top blockchain projects have established themselves.

The naming of Cosmos’ native token, ATOM, reflects this vision of interconnectivity. Cosmos provides developers with a modular framework that makes decentralized applications much easier to work with.

Cosmos itself is often described as the “Internet of Blockchains”, connecting independent blockchains together to build an interoperable future.

This approach of enabling blockchains to communicate, share data, and transact with each other aims to reduce the competition between blockchain projects. Moreover, it aims to lessen, if not end, the tribalism and maximalism so dominant among proponents.

When Was Cosmos Launched?

Cosmos conducted an ICO in April 2017 with considerable success, raising $17 million in under half an hour. The fundraiser ran for two weeks, and the project was up and running with its genesis following a few weeks later.

Having been in testnet for a year and a half, Cosmos conducted its first major network-wide test called "Game of Stakes" in late 2018. Cosmos went to the mainnet in March of the following year.

Almost two years later, in February 2021, Cosmos launched Stargate. Included within this update was the first public launch of the Inter-Blockchain Communication protocol that is central to its vision.

Who are the Founders of Cosmos?

Jae Kwon, a Cornell alum majoring in computer science, partnered with Zarko Milosevic and Ethan Buchanan to found Cosmos.

The trio began collaborating in 2014 thanks to Kwon’s work on Byzantine Fault Tolerance. In short, BFT is a property of a system that can resist a certain number of the system’s nodes failing or acting maliciously.

Thanks to his research, Kwon founded a company called Tendermint, which pioneered the introduction of BFT systems into the blockchain space.

Kwon’s partner in this endeavor was Buchanan, and Milosevic was brought on board for Cosmos thanks to his own research on BFT. 

How Does Cosmos Work?

Rather than just being a simple blockchain, Cosmos is a complete technology stack that allows blockchains to connect and share data with each other. It also lets developers create their own blockchains quickly and easily.

This easy development process, along with interoperability, creates a focus on application-specific blockchains being built using Cosmos rather than on more general-purpose chains.

What Makes Cosmos Unique?

Cosmos is most often compared to Polkadot, a blockchain project with a very well-regarded founder and a similar focus on the interoperability of blockchains.

Polkadot founder Dr. Gavin Wood even coined the term Web3, which is increasingly manifesting itself in modern vernacular.

However, Cosmos differs from even Polkadot due to the sovereignty of independent blockchains. These individual chains, called Zones, have to secure themselves and have their own validators and governance. Polkadot’s parachains, meanwhile, rely on the Polkadot main chain for security.

In the Cosmos ecosystem, blockchains communicate with each other using a model that uses a Hub and Zones. In this model, Zones communicate with each other using a trusted Hub. This system of communication is called IBC, or the Inter-Blockchain Communication protocol.

While Zones are the name given to individual blockchains building atop Cosmos, the Cosmos Hub is actually its own proof-of-stake blockchain. It functions as the centerpiece of the Cosmos ecosystem.

There are a significant number of well-known projects in the blockchain space that use IBC, including Osmosis, Terra, Cronos, Injective, Secret, Akash, Gravity Bridge, and Regen.

Another key component of the Cosmos ecosystem is the Cosmos Software Development Kit. Known as the Cosmos SDK, it is an open-source framework for building custom public and permissioned blockchains within the Cosmos ecosystem using Tendermint Core.

How is the Cosmos Network Secured?

Tendermint Core, used by Cosmos for building consensus, is software that consistently and securely replicates an application on many machines.

As mentioned previously, Tendermint is the product of the Byzantine Fault Tolerance design, meaning it is resilient even if one-third of nodes fail.

It also provides very high transaction throughput thanks to instant finality consensus. This means that transactions are finalized and cannot be changed as soon as blocks are created.

Tendermint Core supports both proof-of-stake and proof-of-authority protocols, meaning that Zones can be PoA in design.

However, the Cosmos Hub itself is PoS with 125 validators empowered by ATOM stakes that are either self-bonded or delegated to them.

Validators charge delegators a fee from 0% to 100% of the total rewards earned by delegators, but also specify a maximum rate of change in delegator fee per day. Validators earn between 8% and 10% APY on Cosmos Hub.

What is the Use of ATOM?

Staking is one of the main uses of ATOM. Validators have to self-bond a minimum of 1 ATOM, but need a minimum of 14,000 ATOM staked to become part of the active set of validators.

This amount can be reached via self-bonding, a delegation from smallholders, or a combination of the two.

By delegating ATOM to validators and thereby staking it, holders can also take part in governance. Once a proposal receives 512 ATOM (to eliminate spam) in deposits, it may be voted upon.

Who Controls Cosmos?

While governance dictates network development, the Cosmos ecosystem is controlled by the Interchain Foundation.

ICF is a Switzerland-based non-profit led by Cosmos co-founder Jae Kwon, with Ethan Buchanan listed as Vice-President.

How Much ATOM Is In Circulation?

The total supply of ATOM does not have a maximum cap. Instead, tokens are regularly created via staking.

Tokens are staked in order to participate in governance and are locked up for a minimum period of 21 days.

In its 2017 ICO, Cosmos outlined a plan for token distribution that was executed on Genesis Day. 

This included 10% of the ATOM distribution going to the development of ICF and Tendermint, 5% going to Initial Donors, and 75% going to Pre-Fundraiser Donors and Fundraiser Donors.

The suggested price per ATOM started at $0.10. Early bird investors got a 15% discount, whereas strategic investors got a 25% discount. As such, they only paid $0.085 and $0.075 respectively.

How Do You Buy ATOM?

You can buy ATOM across most, if not all, major cryptocurrency exchanges. It typically has trading pairs with major cryptocurrencies, along with stablecoins and fiat currencies.

Another way to get ATOM is to earn it via staking, although that would require you to already own some ATOM.

Is It Possible to Buy ATOM Instantly?

Cosmos is a very fast blockchain, advertising a high throughput of several thousand transactions per second and a transaction time of around two seconds.

This means that, as far as instant transactions go, Cosmos is one of the best blockchains to use. ATOM purchases on-chain won’t take more than two or three seconds to settle!

However, purchasing on a centralized exchange and then withdrawing back to your private wallet may take longer.

Exchanges, especially the most reputable ones, often have to take various KYC (Know Your Customer) and AML (Anti Money Laundering) steps before clearing withdrawals. In turn, this can slow things down.

How Do You Store ATOM?

Like many cryptocurrencies, ATOM can be stored in a wallet. You can use several types of wallets:

• Cold wallet. Cold wallets keep private keys offline and out of the reach of potential attackers. They could be electronic devices not connected to the internet, paper, or some other physical copy of the private key.
• Hot wallet. Unlike cold wallets, these need to be online in order for you to use them. They could be desktop clients or online/web wallets that store credentials with the online wallet provider. Cosmostation is one of the notable ATOM wallets that allows staking and voting.
• Exchange wallet. These are forms of online or web wallets, but they don’t actually hold your ATOM. Instead, they are simply an electronic representation of your trades, while actual funds are stored in the wallet of the exchange itself. When sending funds to an exchange account, there may be some form of identification system or memo in place to ensure that the funds reach the correct user.

Cosmos Energy Consumption

One of the reasons Jae Kwon entered the area of BFT and conceptualized Tendermint was to find a solution to the massive power draw of proof-of-work cryptocurrencies.

Cosmos is one of the breeds of proof-of-stake blockchains that doesn’t require raw computing power for security.

Instead, it relies on economic and game-theoretic incentives and disincentives for behaving according to the protocol.

As a result, Cosmos consumes far less electricity than the likes of Bitcoin and Ethereum, requiring only as much power as required by its 125 or so validators to operate their nodes. Individual delegators, meanwhile, don’t even need to stay connected to the network.

Is Cosmos a Good Investment?

Cosmos is considered a vital part of the blockchain space, given that it forms the framework for so many other innovative projects.

Investing in the ATOM token itself could be looked at as an indirect way to take advantage of this. While ATOM doesn’t secure or provide any major utility across the Cosmos Zones, it does play a vital role in securing the Cosmos Hub, through which interoperability is assured.

Having risen from strategic investor prices of just $0.075 to an all-time high to date of close to $45, Cosmos has proven to be a lucrative investment for many, and especially so for early backers.

However, the lack of a maximum token cap means that ATOM is an inflationary token, which many investors view as a constant dilution of supply.