What is Cosmos(ATOM)?
Cosmos is a network of sovereign blockchains that communicate via IBC, an interoperability protocol modeled after TCP/IP, for secure data and value transfer.
It aims to offer an antidote to “slow, expensive, unscalable and environmentally harmful” proof-of-work protocols, like those used by Bitcoin, by offering an ecosystem of connected blockchains.
What is ATOM?
ATOM is the native token of Cosmos Hub, the PoS blockchain that constitutes one of many hubs on the Cosmos network. Since the PoS consensus mechanism requires validators to own ATOM to participate in the validation process, the main purpose of ATOM is the security and sustainability of the Cosmos Hub network.
ATOM owners can stake their tokens to ensure network security, and in return, get a portion of the network transaction fees and block rewards distributed for validation. The token is also necessary for taking part in Cosmos Hub governance. ATOM owners can delegate their tokens or actively take part in governance by holding ATOM in their wallets.
What is IBC?
Inter Blockchain Communication Protocol (IBC) brings a robust interchain infrastructure to the Cosmos ecosystem, bridging different blockchains and facilitating exchanges between a
network of interconnected chains. Last fall, IBC saw a huge surge in popularity, recording over 780,000 transactions between August and September. Each month since then, IBC has broken its previous month’s record, logging 1 million transfers less than a month after that.
What are ZONES?
Cosmos is designed to operate as a network of zones and hubs. Zones are application-specific blockchains with sovereign security and governance models while hubs are intermediary blockchains that observe the state of connected zones and facilitate asset transfer between them.
Cosmos is not a blockchain but a toolbox to design new blockchains. However, Cosmos Hub is the first PoS blockchain that works as a hub between zones and contains a multi-asset ledger, and lets other subsequent zones interact with each other through the inter-blockchain communication protocol, IBC.
Their interaction is powered by Tendermint Core, a secure consensus protocol that provides fast finality and is easily adaptable with Proof-of-Stake (PoS) blockchain. Interacting with the IBC protocol requires chains to have a consensus mechanism that offers fast finality, meaning that Cosmos cannot use IBC for asset transfers between proof-of-work blockchains like Ethereum and Bitcoin.
In order to bypass this shortcoming, Cosmos introduces account-based blockchains called peg zones (Peggy) and offer fast finality by implementing finality thresholds to blockchains with probabilistic finality.
Staking Rewards
ATOM has one of the highest paying rewards for staking, this is one of the reasons why people HODL Atom. This motivates people to HODL for the long term. As the overall market recovers, people will start staking again, and buying pressure will pump the price of ATOM.
ZONES
These are zones or Blockchains. These are built using Cosmos SDK, there are more than 50 Blockchains built using Cosmos SDK. The most famous is Binance Smart Chain, Osmosis, Cronos, and Many others.
IBC makes it possible to do cross-blockchain transactions in a fraction of a second. Unlike, Eth tokens these are separate blockchains that have staking built in. These are very attractive to retail investors and institutional investors.
Roadmap
Interchain Security to bring more value to ATOM Stakers
The interchain security implementation remains the most crucial breakthrough in accruing value to ATOM holders.
The feature will allow independent blockchains, called consumer chains in the Cosmos ecosystem, to rent security from the validators of the Cosmos hub. Existing Cosmos SDK-based blockchains can choose to be consumer chains too.
This will bring additional staking rewards for ATOM holders.
Price Prediction
Based on our analysis by cryptocurrency experts regarding the price of Cosmos, ATOM is expected to reach at least 100$ in the near future.
In the medium term, on the last day of 2023, ATOM could have an average trading price of $120.29, the lowest possible price of $100, and the highest possible price of $138.
On June 22, dYdX — the largest decentralized perpetual exchange by trading volume — announced it would be launching the upcoming V4b iteration on its own proof-of-stake blockchain built using the Cosmos SDK. ATOM will not directly accrue value from dYdX Chain immediately, as there are no indications that the platform intends to leverage interchain security.
An upgrade enabling chains to utilize the Cosmos Hub validator set secure app-specific networks is expected to roll out in Q3, and the news still serves as a source of significant validation for Cosmos’s app-chain model.
Given that dYdX was one of the first prominent applications to adopt Ethereum L2, it is likely it is an indicator that more teams and projects will migrate to or build on Cosmos. Assuming this is the case, it is likely that some will leverage interchain security once it goes live, helping drive demand for Hub block space and ATOM.
Given its role within Cosmos, it is likely that investors will see ATOM as a way to gain broad, indexed exposure to the growth of its ecosystem as a whole.
Cosmos Ecosystem
The Cosmos ecosystem is a decentralized and interoperable network of independent blockchains, applications, and services.
The Cosmos ecosystem is a decentralized network designed to connect various blockchains as part of an ambitious drive to power an ‘Internet of blockchains’. Using a novel technology called Inter-Blockchain Communication (IBC) protocol, Cosmos is able to facilitate seamless interaction and exchange of information between chains in its ecosystem.
At the same time, Cosmos also offers tools that can drastically streamline and speed up the development of purpose-built blockchains, as part of a bid to reimagine what building blockchain applications can really be.
ATOM Demand Drivers
It appears that ATOM’s strongest demand driver these days is all the ongoing airdrops for up-and-coming Cosmos projects, including Jae Kwon’s GNO Land, which are only given to those who hold or stake ATOM in participating wallets such as Keplr wallet.
A secondary demand driver for ATOM is as a bridge currency to all the up-and-coming Cosmos ecosystems on more general use case blockchains such as Evmos and Kava, which support Ethereum smart contracts and have seen hundreds of millions of dollars in total value locked.
Cosmos is “best positioned” to benefit from the “increasing number of app-chains” in the blockchain sector, said cryptocurrency research firm Delphi Digital, after announcing that its research and development arm will build on Cosmos.
Note that any analyst and algorithm-based cosmos price predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research.
Always conduct your own due diligence. Your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size, and investment goals. And never invest money that you cannot afford to lose.
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Frequently Asked Questions
Is Cosmos ATOM a good investment?
Whether a high-risk asset like ATOM is a suitable investment for you would depend on your risk tolerance, investing goals and timeframes, experience in cryptocurrency markets, and other personal circumstances. Always conduct your own due diligence before investing. And never invest money that you cannot afford to lose.
Will the ATOM price go up?
Based on our analysis by cryptocurrency experts regarding the price of Cosmos, ATOM is expected to reach at least 100$ in the near future.
Should I invest in Cosmos ATOM?
Whether cosmos is a suitable investment for you would depend on your risk tolerance, investing goals and timeframes, experience in cryptocurrency markets, and other personal circumstances. Always conduct your own due diligence before investing.