What Is Cosmos (ATOM)?
ATOM is the native token of Cosmos, which is a network of independent blockchains. If you’re wondering about the current Cosmos price, check out the ATOM price chart above.
Cosmos is aimed at solving issues created by the Proof-of-Work consensus mechanism. This involves slow and costly transactions as well as networks that are not environmentally friendly or scalable.
In addition to that, the Cosmos crypto project aims to simplify blockchain technology for developers. It achieves that by providing them with a modular framework.
However, the major goal of the project is to create a network of as many blockchains as possible which would allow them to easily communicate with each other. Exactly for this reason Cosmos is often referred to as Blockchain 3.0.
In order to simplify communication between blockchains within Cosmos, it employs the Inter-Blockchain Communication (IBC) protocol. It provides the Cosmos ecosystem with a strong interchain infrastructure, linking various blockchains and enabling transactions amongst a web of interconnected chains.
The Story of Cosmos
The Cosmos whitepaper was released in 2016. A year later, the initial token sale was held. The founders of Cosmos are Jae Kwon, Zarko Milosevic, and Ethan Buchman. They are also the founders of Tendermint, which is the main contributor to the Cosmos network. Tendermint is an open-source blockchain launcher that enables you to create applications in any language. Jae Kwon was the CEO of Tendermint, however, he gave away his position in 2020, remaining only the principal architect of the project. Peng Zhong stepped into his place as the CEO of the project.
Besides, Jae Kwon, Zarko Milosevic, and Ethan Buchman also developed the Interchain Foundation, which is a non-profit organization that’s in charge of the development of the Cosmos network.
How Does Cosmos Work?
The network of Cosmos is constructed out of parallel blockchains. These blockchains are referred to as zones. Each zone is connected to central blockchains that are referred to as hubs. The very first hub on the Cosmos network was developed in 2019 and called the Cosmos Hub.
Cosmos is extremely interoperable with various crypto assets and applications. You can connect any blockchain system to Cosmos by creating a new zone, which allows for direct token transfers between different zones without the use of a middleman.
Blockchains within the Cosmos network are driven by various Byzantine Fault-Tolerant (BFT) consensus protocols. Each blockchain can choose its own BFT protocol. Essentially, BFT enables the network to continuously reach a consensus even if some of the system nodes disagree with it.
The three main tools that assist while creating blockchains on the Cosmos network include:
- Inter-Blockchain Communication protocol (IBC). It’s compatible with any blockchain engine that offers instant finality, and it enables the transfer of value or data between different blockchains;
- Tendermint Core. It’s a BFT consensus mechanism that completes a transaction once a new block is created. Thus, it provides users with instant finality;
- Cosmos SDK. It’s a framework that makes it easier to create secure blockchain apps on the Tendermint Core.
The Purpose of ATOM Coins
ATOM coins contribute to the security of the Cosmos blockchain. By staking ATOM coins, holders are able to generate staking rewards in addition to securing the network. How does it work? Essentially, the cost of attacking the network increases when more ATOM are collateralized since there is simply more value at risk. Thus, it’s not convenient for hackers to breach the network because it would be too costly. Talking about rewards, stakers can either get new ATOM tokens or a portion from transaction fees collected on the Cosmos Hub.
Moreover, ATOM can also be used as a governance token. This means that its holders are able to get access to the voting processes considering various changes to the network. They are able to do that by staking.
Lastly, ATOM can be used to prevent spam. This is achieved by using ATOM to pay for fees. The cost of the fees usually varies based on how much computing is necessary for transactions.
Besides, don't forget that you can look at the Cosmos price chart above to see the current ATOM price.
Tokenomics of ATOM
Since there is no fixed maximum supply for the ATOM coins, more can be produced whenever there is a demand. This makes the ATOM coins inflationary. Though the coins cannot be mined, they can only be earned through staking.
In terms of distribution of the initial token supply, the majority (75%) is dedicated to private and public sales, while the remaining (25%) is distributed among the initial donors, the Interchain Foundation, and Tendermint.
Overall, there were two private sales and one public sale of ATOM tokens in 2017. During the sales, the company managed to gather $17 million.
Again, before buying any tokens, take a look at the Cosmos price chart above. The ATOM price is prone to fluctuation because it is volatile. However, considering how volatile the entire crypto market is, and how any factors affecting it would have an impact on the values of all active crypto assets, price fluctuations are to be expected.
The Interchain Accounts Upgrade
As mentioned before, the Cosmos network employs the IBC protocol, which was launched in April 2021. It’s the protocol that revolves around blockchain interoperability. In essence, it enables a blockchain to control an account on another blockchain.
The Interchain Accounts upgrade (announced in February 2022) facilitated the first-ever connection between Cosmos blockchains utilizing the standardized IBC protocol.
The goal of the upgrade was to provide composability in IBC which enables upgrading individual applications without the need to upgrade the entire chain. Besides, users can vote, stake, swap, and do many more things with their tokens using Interchain Accounts on other blockchains.