Cosmos

Cosmos describes itself as a solution to some of the blockchain sector’s “hardest problems.” It seeks to counter “slow, expensive, unscalable and environmentally harmful” proof-of-work systems, such as Bitcoin’s, by providing an ecosystem of linked blockchains.

The initiative also strives to simplify blockchain development for creators through a modular structure that clarifies decentralized applications. Additionally, its Interblockchain Communication protocol facilitates interaction between different blockchain networks, aiming to stop industry fragmentation.

The project’s roots trace back to 2014 with the founding of Tendermint, a key network contributor. A Cosmos white paper appeared in 2016, followed by a token sale the next year. ATOM tokens are generated via a hybrid proof-of-stake mechanism; they secure the Cosmos Hub, the network’s primary blockchain, and play a part in its governance.

Jae Kwon, Zarko Milosevic and Ethan Buchman co-founded Tendermint, which serves as the entry point to the Cosmos ecosystem. While Kwon remains listed as the principal architect, he resigned from his CEO role in 2020. He states that he is still involved with the project but is primarily dedicating his attention to other ventures. Peng Zhong has taken over as Tendermint’s CEO, and the board of directors underwent a significant refresh. Their objectives aim to improve the developer experience, foster an enthusiastic Cosmos community, and produce educational materials to help more people understand the network’s capabilities.

The Cosmos network is structured around three distinct layers: application, networking, and consensus. The application layer handles transaction processing and network state updates, whereas the networking layer facilitates communication among transactions and blockchains. Meanwhile, the consensus layer ensures that nodes reach an agreement on the system's present state. To link these layers and allow developers to create dApps, Cosmos employs a collection of open-source tools.

A key issue within the crypto sector is the fragmentation among blockchain networks. While hundreds exist, very few possess the ability to interact with one another. Cosmos seeks to reverse this trend by enabling such communication.

Often labeled “Blockchain 3.0,” Cosmos places a significant emphasis on user-friendly infrastructure. The Cosmos software development kit prioritizes modularity, allowing developers to construct networks using pre-existing code modules. The team hopes this approach will make building complex applications easier in the long run.

Scalability is also a central focus, aiming to process significantly more transactions per second than older blockchains such as Bitcoin and Ethereum. For mainstream adoption to occur, blockchains must handle demand at levels comparable to, or exceeding, current payment processors and websites.

The total supply of ATOM is fixed at exactly 260,906,513. As of the time of writing, approximately 203,121,910 of these tokens are in circulation. Rather than being mined, these coins are generated through staking.

Funding was secured via two private sales in January 2017 and a public sale in April 2017, raising a combined $16 million. This equates to roughly $0.10 per ATOM. Regarding distribution, investors received about 80% of the tokens, while the remaining 20% was divided between All In Bits and the Interchain Foundation.

The Tendermint team’s technical paper likens ATOM tokens to Bitcoin mining ASICs, describing them as “virtualized hardware (economic capital)” required to act as a keeper on the network.

The Cosmos Network relies on a proof-of-stake consensus mechanism for security. Validators who lock up larger amounts of ATOM tokens have a greater probability of being selected to validate transactions and receive rewards. Conversely, nodes detected engaging in dishonest behavior face penalties, which may include the loss of their staked tokens.

You can currently purchase Cosmos (ATOM) on several prominent exchanges, with Binance, Coinbase and OKEx being popular choices for buyers.

A key component of this layered architecture is the Tendermint BFT engine, which enables developers to construct blockchains without coding them from the ground up. Tendermint consolidates critical blockchain functions—such as the p2p network, consensus algorithm, and transaction processing—into a single package. This simplifies the creation of blockchain applications by eliminating the need to start from scratch.

The Cosmos Hub was the initial blockchain launched on the Cosmos network. It acts as an intermediary for the various independent blockchains, called "zones," created within the ecosystem. Validators on the Cosmos Hub maintain consensus across all zones and receive fees for this service. ATOM is the native token of the Cosmos Hub and is used to pay these fees.

Tendermint Core serves as the heart of Tendermint, employing a Proof-of-Stake (PoS) governance mechanism to keep the computers operating the Cosmos Hub synchronized. It utilizes the Tendermint Byzantine Fault Tolerance (BFT) consensus algorithm, a variation of PoS. In this system, validators take turns adding new blocks of transactions to the chain.

The Cosmos team developed the Cosmos software development kit (SDK), which leverages Tendermint’s consensus algorithm for blockchain creation. Built on a modular philosophy, the SDK allows developers to insert various modules to construct the specific type of blockchain they require. It also supports multiple programming languages, making it accessible to a broader developer base.

On Feb. 17, 2022, the Interchain Foundation, a non-profit within the Cosmos ecosystem, announced the release of the Interchain Accounts upgrade. The Inter-Blockchain Communications (IBC) protocol, launched in April 2021, is the Cosmos standard for blockchain interoperability and allows one blockchain to control an account on another chain. Currently, 38 projects use IBC, including Terra, Crypto.org chain and Gravity bridge. The Interchain Accounts upgrade represents the largest update to the ecosystem since Stargate, which first enabled Cosmos blockchains to connect via the standardized IBC protocol. With Interchain Accounts, users can stake, vote, swap tokens and perform other actions on different blockchains. The upgrade aims to “enable composability in IBC [which] allows innovation in distinct applications to be deployed without needing to upgrade the entire Interchain.”