Cosmos ($ATOM) aims to address some of the most pressing challenges in the space by creating an ecosystem of interconnected blockchains. It is a decentralised network of independent, parallel blockchains, each powered by Byzantine Fault Tolerance (BFT) consensus algorithms. This innovative approach is a significant leap from the traditional, isolated blockchain models. It offers an ecosystem where blockchains can scale and interoperate with each other.
Cosmos was conceptualised to enable seamless communication between distributed ledgers without the need for a centralised server. The founders of Cosmos envisioned it as the “Internet of blockchains”, a platform where open-source blockchains could interact and transact efficiently. At the heart of Cosmos is its native cryptocurrency, $ATOM, which plays a crucial role in securing and governing the ecosystem of blockchains.
How was Cosmos created?
The development and launch of Cosmos were spearheaded by the Interchain Foundation (ICF), a Swiss non-profit organisation dedicated to funding open-source blockchain projects. The platform was co-founded by developers Jae Kwon and Ethan Buchman in 2014, who also created Tendermint, the consensus algorithm integral to Cosmos.
The Cosmos white paper, authored by Kwon and Buchman, laid the foundation for the network, which officially launched its software in 2019. The project gained significant financial support through a two-week initial coin offering (ICO) of the $ATOM token in 2017, raising over $17 million. Additionally, Tendermint Inc. secured $9 million in a Series A funding round in 2019 to further the development of Cosmos.
How does Cosmos function?
Cosmos operates on a three-layered structure:
- Application Layer: This layer processes transactions and updates the network’s state.
- Networking Layer: It facilitates communication between transactions and blockchains.
- Consensus Layer: This layer ensures that nodes agree on the system’s current state.
Central to Cosmos’s architecture is Tendermint BFT, a consensus engine that allows developers to build blockchains without starting from scratch. Tendermint BFT secures the network, validates transactions, and commits blocks to the blockchain, interfacing with applications through the Application Blockchain Interface.
Cosmos Hub and Tendermint Core
The Cosmos Hub, the first blockchain launched on the Cosmos network, acts as an intermediary among the independent blockchains within the network, known as “zones”. Each zone can autonomously handle essential functions like authenticating transactions and creating new tokens. The Cosmos Hub maintains interoperability within the network by tracking the states of these zones. Tendermint Core, a proof-of-stake (PoS) governance mechanism, is crucial for maintaining the distributed network of computers running the Cosmos Hub in sync.
Validator nodes, which power the blockchain and vote on changes, need to stake $ATOM to participate. The voting power of these nodes is proportional to the amount of $ATOM staked. Users can delegate their tokens to validators, earning a portion of the block reward while influencing validator voting. This incentivises validators to act honestly, as users can easily switch their delegation based on voting preferences.
Inter-Blockchain Communication Protocol
The Inter-Blockchain Communication (IBC) protocol is a key mechanism in Cosmos, enabling secure and free information flow between connected zones. This protocol ensures that blockchains with different applications and consensus mechanisms can exchange data seamlessly.
Cosmos SDK
The Cosmos Software Development Kit (SDK) is another vital component, allowing developers to build blockchains using the Tendermint consensus algorithm. The SDK offers common blockchain functionalities like staking and governance, while also supporting custom plugins for additional features.
The Cosmos ecosystem
The Cosmos ecosystem is a rapidly expanding network comprising a variety of blockchain projects and applications. Each of these projects leverages the unique features of Cosmos, such as interoperability and scalability, to offer innovative solutions across different sectors. Some of the key projects within the ecosystem are:
- Cronos: Cronos is an Ethereum Virtual Machine (EVM)-compatible blockchain built on the Cosmos SDK. It stands out for its ability to enable the rapid porting of apps and smart contracts from Ethereum and other EVM-compatible chains. This feature significantly lowers the barrier for developers looking to migrate to a more scalable and interoperable environment.
- Celestia: Celestia is notable for being the world’s first modular data availability blockchain network. It introduces a novel concept where the consensus and data availability layers are decoupled, allowing developers to deploy their own blockchains with customisable execution layers.
- Injective: Injective is a Layer-1 blockchain network specifically designed to support the next generation of DeFi applications. It offers a fully decentralised platform for creating and trading various financial products such as derivatives, futures, and spot trading pairs.
- THORChain: THORChain is a decentralised liquidity protocol that enables users to swap assets across different blockchain networks without relying on centralised intermediaries. It supports cross-chain trading, allowing for greater liquidity and accessibility in the crypto market.
- Nomic: Nomic is a Layer-1 blockchain offering a decentralised, non-custodial Bitcoin bridge to the Cosmos network. This bridge allows users to convert their native Bitcoin into nBTC, an IBC-compatible token, facilitating Bitcoin’s integration into the Cosmos ecosystem.
