Cosmos (ATOM) — What It Is and How It Works

Key Takeaways:

• Cosmos is a blockchain ecosystem with a mission to establish the ‘Internet of Blockchains’ by enabling secure communication and interoperability amongst various blockchains.
  
• The Cosmos Network features 180 active validators and hosts over 249 interchain apps and services.
  
• Key components like Tendermint and the Cosmos SDK simplify networking, consensus, and application development, making it easier to create customised blockchain solutions.
  
• The ATOM token serves as the native cryptocurrency of the Cosmos Hub, the first Cosmos-based blockchain on the Cosmos Network.
  
• Its versatile utility includes paying transaction fees, staking for network security, and on-chain governance decisions.

What Is Cosmos?

The Cosmos Network is a collection of interconnected blockchain ecosystems linked through the Cosmos Hub. Its core mission is to serve as the ‘Internet of Blockchains’, fostering seamless and secure communication, data sharing, and transaction execution between different independent blockchains — all facilitated by the Cosmos Hub and secured by more than 180 validators. Its native token is ATOM.

The ATOM token is used to pay transaction fees on the Cosmos Network, and staking ATOM contributes to the security of the network. ATOM holders can also vote on proposals presented by the Cosmos Hub.

Over 249 interchain apps and services exist within the Cosmos ecosystem.

How Does Cosmos Work?

By design, Cosmos allows decentralised application (dapp) developers to build their own blockchains, which enables decentralisation and interoperability throughout the ecosystem.

• Tendermint: Tendermint is a set of ready-made developer tools in Cosmos composed of a consensus engine (Tendermint Core) and a generic application interface, known as Application BlockChain Interface (ABCI). These tools are used to implement networking and consensus layers, simplifying the development process and offering developers prebuilt engines for applications.
  
• Cosmos SDK: Cosmos SDK is a development framework that simplifies the process of creating blockchain applications, allowing developers to build custom blockchain solutions with greater ease and flexibility. Cosmos SDK is known for its modularity and emphasis on security, with networks like Cronos, a Layer-1 blockchain, utilising the Cosmos SDK framework.
  
• Inter-Blockchain Communication Protocol (IBC): IBC is a protocol that enables communication between different blockchains within the Cosmos ecosystem. It promotes interoperability and trustless connections between blockchains.

Cosmos SDK and Use Cases in the Cryptocurrency Industry

Cosmos SDK is used for building blockchain applications. Launching applications in Cosmos can be done in three steps:

1. Creating a Custom Blockchain: Developers can customise their models or prebuilt models to build a blockchain.
   
2. Launching a Custom Blockchain: Cosmos SDK accommodates different use cases when it comes to launching a custom blockchain. This includes applications for gaming, healthcare, prediction markets, cross-border payments, and real estate.
   
3. Connecting to the Cosmos Network: After launching an application-specific blockchain, Cosmos SDK allows for the growth of a user base and an increase in liquidity by connecting to the Cosmos Network through the IBC, opening doors to over 100 IBC-enabled chains.

How does Cronos utilise the Cosmos SDK framework?

1. Cronos is an Ethereum Virtual Machine (EVM) chain built on the Cosmos SDK framework that allows the chain to enjoy the benefit of both Ethereum and Cosmos ecosystems.
   
2. Cosmos SDK utilises Tendermint to allow for instant finality, where transactions are confirmed in a few seconds and at a lower cost compared to Ethereum.
   
3. Users can enjoy seamless digital asset and token transfers within the Cosmos ecosystem and across other Layer-1 and Layer-2 EVM chains through the IBC Protocol.

Cosmos Ecosystem

The Cosmos ecosystem has been continuously growing over the years. Aside from the Cosmos Hub, there are several blockchain projects in the network, which include: 

• Cronos: An EVM-compatible blockchain built on the Cosmos SDK, which allows for the rapid porting of apps and smart contracts from Ethereum and other EVM-compatible chains.
  
• Celestia: The world’s first modular data availability blockchain network.
  
• Injective: A Layer-1 blockchain network custom built to support the next generation of decentralised finance (DeFi) applications.
  
• THORChain: A decentralised cross-chain liquidity protocol enabling users to swap assets between different blockchain networks.
  
• Nomic: A Layer-1 blockchain that offers a decentralised, non-custodial Bitcoin bridge to Cosmos, allowing users to turn their native BTC into nBTC (IBC-compatible token).

Users can check out the Cosmos website for a full list of applications and projects built on the Cosmos ecosystem.

What Is the ATOM Token?

The Cosmos Hub is the first Cosmos-based blockchain to launch on the Cosmos Network. ATOM is the native token of the Cosmos Hub.

Features and Utility of the ATOM Token

• ATOM is used to pay transaction fees on the Cosmos Network.
  
• Staking ATOM contributes to the security of the network; stakers earn rewards based on the amount of ATOM staked.
  
• ATOM stakers and validators receive a share of the transaction fees generated by chains that use the Interchain Security feature offered by the Cosmos Hub.
  
• ATOM holders can vote on proposals presented by the Cosmos Hub.

Tokenomics of the ATOM Token

• ICO: The Interchain Foundation (ICF) raised US$16.8 million for the funding of the Cosmos Network in 2017

• Initial Total ATOM Supply: 236,198,958

• Current ATOM Supply: 292,586,163

• Inflation Rate: 14.22%

Distribution: The distribution of the ATOM token is as follows:

• Public Contributors: 67.9%

• All in Bits Inc.: 10%

• ICF: 10%

• Strategic and Early Adopters: 7.1%

• Seed Contributors: 5%

Cosmos Price

ATOM has shown substantial growth potential over the years. Historically, ATOM’s traded price range was bound between US$1 to US$9. The token’s price had a record low of US$1.66 in March 2020, but had a breakthrough year in 2021, when it reached an all-time high (ATH) of around US$44.38 in September 2021.

How to Trade ATOM

ATOM is listed in the Crypto.com App, joining the growing list of 250-plus supported cryptocurrencies and stablecoins, including Bitcoin (BTC), Ethereum (ETH), Polkadot (DOT), USD Coin (USDC), and Cronos (CRO).

Crypto.com App users can now purchase ATOM at true cost with USD, EUR, GBP, and 20-plus other fiat currencies and spend it at over 80 million merchants globally using the Crypto.com Visa Card.

Alternatively, users can also trade ATOM on the Crypto.com Exchange.

Conclusion

Cosmos (ATOM) is a visionary blockchain ecosystem aiming to create an ‘Internet of Blockchains’ by fostering secure communication and interoperability between diverse blockchains. With key components like Tendermint and Cosmos SDK, it simplifies networking, consensus, and application development, enabling the creation of customised blockchain solutions. 

The ATOM token serves as the native cryptocurrency of the Cosmos Hub, providing utility in transaction fees, staking for network security, and governance participation. This innovative project is driving the future of blockchain interconnectivity and decentralisation.

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