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Originally launched in 2016, Cosmos is one of the first proof-of-stake blockchains.
Cosmos (ATOM) is designed to address some of the most significant challenges facing the blockchain industry today, such as scalability, usability, and interoperability. Its core mission is to serve as the 'Internet of Blockchains,' enabling seamless and secure communication, data sharing, and transaction execution between different blockchain networks.
The ATOM token plays a crucial role in maintaining this interoperability, serving various functions including staking for network security, governance participation, and paying transaction fees within the Cosmos ecosystem.
Developers Jae Kwon and Ethan Buchman co-founded the Cosmos network in 2014. The duo embarked on creating Tendermint, a consensus algorithm that became the foundational technology for powering the Cosmos network.
What does Cosmos (ATOM) do?
Cosmos aims to empower developers to build decentralized applications on sovereign blockchains that can communicate and transact with each other as part of a larger, interconnected network. This approach not only enhances the functionality and reach of individual blockchain projects, but also contributes to the overall vision of a decentralized, interoperable future.
The Cosmos network employs several key technologies to realize its vision:
Tendermint Core: This consensus algorithm allows for high-performance, secure, and consistent network operations. It's the foundation upon which the Cosmos Hub, the central blockchain of the Cosmos ecosystem, operates.
Inter-Blockchain Communication (IBC) Protocol: IBC facilitates the transfer of assets and data between independent blockchains, enabling them to interoperate seamlessly. This protocol is vital for achieving the vision of an interconnected blockchain ecosystem.
Cosmos SDK: This developer-friendly framework enables the building of blockchain applications with ease. It's modular, allowing developers to create custom, scalable, and interoperable blockchain solutions tailored to specific use cases.
The distribution of ATOM is structured to support the network's development, growth, and decentralization. Below is a breakdown of the distribution of ATOM:
Seed Tokens: Seed tokens constitute 5.08% of the total supply. These are typically allocated to early investors who supported the project during its initial stages before a broader public offering.
Strategic Tokens: Strategic tokens make up 7.03% of the total supply. This allocation is usually reserved for partners and entities that play a strategic role in the development and expansion of the Cosmos ecosystem.
Public Fundraiser Tokens: These tokens comprise a significant portion of the total supply, with specific figures indicating that public contributors hold 67.9%. This reflects the tokens distributed through public sales or fundraisers, allowing a broad base of participants to invest in and hold ATOM.
Cosmos aims to create an Internet of Blockchains – basically, a network of interconnected blockchains built for the decentralized future. Blockchains historically work in silos. They are hard to build and can only handle a small amount of transactions per second. Cosmos solves these problems with a new technical vision – by allowing them to run on their own dedicated blockchains.
Cosmos (ATOM) operates on a Proof of Stake (PoS) consensus mechanism. This approach is designed to be more energy-efficient compared to the Proof of Work (PoW) model used by other blockchain networks. In Cosmos' PoS system, validators are selected to create new blocks and validate transactions based on the amount of ATOM they hold and "stake" as collateral. This method aims to achieve network security and consensus without the extensive computational effort required by PoW systems.
Coinsquare has introduced a secure and regulated way for Canadians to stake Cosmos. By simply holding ATOM in your account, you can earn up to 11.23% in rewards. These rewards are automatically deposited back into your account and paid out every 12 hours. Calculate your staking rewards with Coinsquare's Rewards Calculator.
Cosmos (ATOM) has mechanisms in place that can be seen as both inflationary and deflationary, depending on various factors such as staking rewards, community proposals, and token burns.
Inflationary Aspects: Cosmos operates on a Proof of Stake (PoS) model where new ATOM tokens are created as staking rewards. This process is inherently inflationary as it increases the total supply of ATOM over time. The inflation rate is designed to encourage participation in the network's security through staking. However, discussions within the Cosmos community and recent proposals suggest an intention to adjust this inflation rate. For instance, there has been a proposal to potentially reduce the minimum inflation rate for ATOM to 0% per annum, indicating efforts to manage or reduce inflationary pressures.
Deflationary Measures: Despite the inflationary nature of staking rewards, Cosmos has implemented or proposed measures that could introduce deflationary pressure on the ATOM supply. For example, the Cosmos community has approved proposals to cap the Atom inflation rate, with one such proposal reducing the maximum inflation from about 14% to a maximum of 10%. Additionally, mechanisms like token burning can also contribute to deflationary pressure.
The balance between these inflationary and deflationary mechanisms is crucial for the economic stability of the Cosmos network. It aims to incentivize participation and secure the network while also managing the total supply of ATOM to support its value. The ongoing community engagement and proposals to adjust inflation rates reflect Cosmos' adaptive approach to achieving this balance.
The specifics of how and when ATOM tokens are burned can evolve over time as the Cosmos network grows and adapts to new challenges and opportunities.
Here are the primary ways in which ATOM tokens currently get burned:
The Cosmos (ATOM) roadmap for 2024 focuses on several key strategic themes and developments aimed at enhancing the Cosmos network's functionality and interoperability. Here are the main highlights:
Development of Atomic IBC: A significant focus is on developing Atomic Inter-Blockchain Communication (IBC) to bring lower cost operation and atomic composability to the Cosmos ecosystem. This development aims to improve the efficiency and interoperability between different blockchains within the Cosmos network.
Continued Development of Interchain Security: The roadmap prioritizes the continued development of Interchain Security, which has become a critical aspect of product and governance decisions within the Cosmos ecosystem. This feature is designed to enhance the security and trustworthiness of the interconnected blockchain networks.
Enhancing Cosmos Hub Functionality: Efforts will be made to enhance the functionality of the Cosmos Hub by focusing on key areas such as liquidity, economic security, and usability. These improvements are aimed at making the Cosmos Hub more robust and user-friendly for developers and users alike.
Strategic Projects and Commitments: The roadmap also highlights strategic projects and commitments, such as the ATOM Halving and the introduction of projects like Neutron. These initiatives underscore Cosmos' commitment to security, sustainability, and innovation within the blockchain space.
Aiming to Surpass Competitors: With the developments outlined in the 2024 roadmap, Cosmos aims to position itself ahead of competitors like Ethereum and Solana by enhancing its infrastructure and capabilities, making it a more attractive platform for developers and users looking for advanced blockchain solutions.
Like other crypto assets, there are some general risks associated with investing in ATOM.
We describe many of these general risks in ATOM’s Crypto Asset Statement including risks relating to: volatility; access, loss or theft; control of processing power; settlement of transactions on crypto asset networks; momentum pricing; private keys; internet disruptions; faulty code; network development and support; regulatory risk; network forks; air drops; voting rights; cybersecurity incidents and other systems and technology problems; unforeseeable risks.
While we tried to describe the key risks associated with ATOM here and in our risk statement, these aren’t all the risks associated with trading in ATOM. You should also always do your own research on ATOM to make sure you are comfortable investing in it.
Get live price data and learn how to buy ATOM in Canada through Coinsquare's Comprehensive Guide.
