What is Cosmos? What it is and how it works

Developed since 2017, Cosmos has emerged as one of the projects that the investor community is interested in within the crypto market. With the goal of becoming the Internet of blockchains, Cosmos has gradually evolved into a unique Layer 1 blockchain that can connect with various other blockchains.

So, what is Cosmos? What makes ATOM special? Let’s explore this Layer 1 blockchain project together through the article below on AZCoin.

What is Cosmos?

Cosmos is an independent Layer 1 blockchain platform that can facilitate interoperability with other blockchains through open-source tools to optimize transactions. Based on the concept of the Internet of blockchains, Cosmos paves a new direction for Layer 1, making it easier for developers to access the crypto market.

The main goal of Cosmos is to support developers by providing a solution for building blockchains for specific applications without the need to create smart contracts on another chain.

The Cosmos network consists of independent blockchains, called Cosmos Hub zones. A Proof of Stake (PoS) blockchain, the first zone created, acts as an intermediary for all other zones in the network.

Core features of the Cosmos project

Following the Internet of blockchains model, Cosmos allows Dapp developers to build their own blockchains, enabling decentralization, enhancing interaction capabilities, and fostering connectivity throughout the ecosystem. To assist developers, Cosmos provides tools such as:

• Tendermint: This is a pre-built toolset within Cosmos, consisting of the Tendermint Core consensus system and a common application interface called Application BlockChain Interface (ABCI). These tools are used to deploy data layers and implement consensus mechanisms, simplifying the development process and offering developers highly compatible pre-generated modules.
• Cosmos SDK: This is a development framework that streamlines the process of creating blockchain applications, allowing developers to easily customize and adapt blockchain solutions.
• InterBlockchain Communication Protocol (IBC): This protocol enables interaction between different blockchains within the Cosmos ecosystem, promoting trustless interaction and connectivity between blockchains.

The impact of Cosmos SDK on the crypto market

Cosmos SDK is utilized for building blockchain applications. Implementing an application on Cosmos can be done in 3 steps.

• Creating a blockchain: Developers can customize their own model or use existing models to build a blockchain.
• Deployment and customization of blockchain: Customizing and deploying a blockchain using Cosmos SDK can cater to a range of industries such as gaming, healthcare, prediction markets, cross-border payments, and real estate.
• Compatibility with Cosmos: After deploying a specialized blockchain for an application, Cosmos SDK allows for expanding the user base by connecting to the Cosmos ecosystem through IBC.

Information about ATOM token

Basic details of ATOM token

• Token name: Cosmos Hub
• Token: ATOM
• Blockchain: Cosmos
• Smart contract: To be updated
• Total supply: Unlimited
• Circulating supply: 292,586,163 ATOM

Distribution of ATOM tokens

• Community Fundraising: 67.9%
• Seed: 5.1%
• Strategic: 7%
• Tendermint Team: 10%
• Interchain Foundation: 10%

The purpose of ATOM token

ATOM token is identified as the native token of Cosmos Hub, aiming to ensure security for interactions between blockchains on Cosmos Hub. There are 3 main areas where ATOM leverages to enhance the strength of Cosmos Hub.

• Preventing spam and fee mechanism: ATOM acts as a payment fee to prevent spam transactions. This mechanism can adjust fees based on the computational power required for each transaction.
• Staking: An important use case of ATOM is the staking mechanism, which helps protect Cosmos Hub through the staking process. The more ATOM users stake, the more rewards they can earn from block rewards.
• Governance: ATOM stakeholders have the right to vote on all proposed changes on Cosmos Hub.

How to buy ATOM tokens

You can purchase ATOM tokens on various exchanges such as CEX Binance, Bybit, OKX, Bitget, and DEX Osmosis, Slingshot Finance. The process of purchase is similar to USDC, DAI coin,… You can check out the reviews of crypto exchanges by visiting the best crypto exchanges 2024 page on the website.

Storage for ATOM tokens

Users can store and interact with the Cosmos ecosystem by using Keplr Wallet, Leap Cosmos Wallet, or Cosmostation.

Project Cosmos development team

• Jae Kwon – CEO and Founder of Cosmos. With experience at Google and Apple, he is a computer scientist and software engineer with a broad vision for the future of blockchain. Jae Kwon believes that Cosmos is the key to unlocking a comprehensive and decentralized blockchain ecosystem.
• Zarko Milosevic – CTO of Cosmos. Formerly working at Google and Microsoft, he was a seasoned software engineer, an expert in distributed systems, and the key designer and developer of the Tendermint platform.
• Ethan Buchman – Co-Founder. With experience at Google and Facebook, he is a leading blockchain expert responsible for developing the protocols and applications of Cosmos.

Cosmos Investors

In April 2017, Cosmos ATOM successfully completed its Initial Coin Offering (ICO) and raised a total of $173 million from the Ethereum community. During this significant event, they managed to sell a total of 80 million ATOM tokens at a price of $0.1 per token.

This fundraising effort provides crucial resources for the strong development of the Cosmos Network, aiming to expand diverse blockchains and decentralized applications within their ecosystem.

Furthermore, the Cosmos project is backed by major investment funds such as Paradigm, Binance Labs, and Coinbase Ventures. The Interchain Foundation in Switzerland is also collaborating on treasury management for this project.

Current Status of ATOM

September 2022 marked a significant step in Cosmos’ development journey with the release of Whitepaper 20, focusing on optimizing the value and performance of the blockchain ecosystem. Updates include infrastructure improvements, MEV solutions, and changes to tokenomics through a new ATOM issuance mechanism.

Cosmos aims to enhance connectivity between blockchains and maintain a balance of interlinking and system security. The Cosmos 20 update is designed to facilitate sustainable ecosystem growth with notable technical and economic improvements.

In July 2023, Cosmos transitioned the Stride network to the Interchain Security ICS mechanism, a significant milestone. However, there is ongoing debate within the community regarding the efficiency of ICS, particularly concerning operational costs.

Stride, the first network to undergo the conversion, utilizes ICS to leverage security from ATOM’s validator system. This new mechanism promises enhanced security without using the native STRIDE token.

Debates revolve around node operation costs, especially for upcoming Consumer Chains. Security mechanisms like Replicate Security, Opin, and Mesh Security are being considered to address this issue.

Despite recent infrastructure updates like Wormhole building appchain Gateway and integrating Circuit Breaker Module, financial issues remain a focal point of debate in the Cosmos community. Solutions may involve increasing the price of the ATOM token and attracting more investment.

Cosmos is facing challenges regarding costs and security in implementing Interchain Security, with potential solutions lying in financial support and further infrastructure improvements.

Summary

Cosmos aims to create an Internet of blockchains by promoting safe interaction between Layer 1 blockchains. Through this article, AZCoin hopes readers have gained basic information about the project to make their investment decisions. If you have any inquiries, please reach out to us through the contact page or leave a comment. Good luck with your crypto and ATOM investments!