The Cosmonaut Quest — Cosmos Network Overview

If you are a Blockchain Technology believer, investor or enthusiast, you have obviously heard of Cosmos ecosystem and its governance token ATOM. I hope you are bullish as I am on this ecosystem and what its future holds.

For all others who are not following Cosmos developments, there is a lot going on at the moment and its unique design and use cases are pushing new projects in all directions. Cosmos Network is one of the chains working to optimize use cases and bring crypto to the masses. They call themselves “The Internet of Blockchains”. (https://cosmos.network)

As a one of a kind project, Cosmos aims to create an “internet of blockchains”: a network of communicating chains, decentralized and scalable.

A full overview of Cosmos Network is presented below updated at the beginning of 2022, one of most important years for the crypto adoption.

Cosmos: Internet of Blockchains

Among the countless projects of the blockchain world, only a few deserve an honorable mention: Cosmos is undoubtedly one of them. It is an original project, with high potential and that aims to solve several problems of other well-known realities.

Let’s take as an example Ethereum, the main blockchain referenced for everything related to dApp and smart contracts. Despite the fact that the majority of crypto liquidity can be found there, the success of Ethereum and its projects brings, however, several criticalities.

1. Customization

The first one is in customization, or better, in optimization. Ethereum finds itself having to manage very different platforms and cannot “customize” itself according to various needs. Therefore, the development teams of these realities must necessarily look for a compromise that brings together chain and project. In short, Ethereum is versatile up to a certain point and unique needs cannot be satisfied or either are not optimized.

1. Scalability

Ethereum must process a huge amount of operations without any help. Beyond a certain point, the chain finds an insurmountable limit which is scalability and network users (especially newcomers) are therefore penalized.

1. Governance

The decision-making dependence of each dApp or platform on the blockchain makes every step more difficult to take both for protocols and development teams. Governance therefore encounters brakes.

These problems and limits inevitably fall on the user and investor: we are well aware of the slow transactions, the prohibitive gas fees and the difficulties to operate within the Ethereum network.

The arrival of Ethereum 2.0 will certainly lead to an improvements, however will be available in an optimal version in few years.

As always, from problems arise opportunities.

And the best opportunity is: Cosmos Network.

Cosmos Network: an introduction

The concept behind Cosmos is simple: instead of having a blockchain that manages all the various projects, each application has its own blockchain and communicates with the entire network.

Therefore more than one single blockchain, Cosmos is a network of multiple chains that interoperate and communicate with each other.

And thanks to its features, it guarantees security, speed, scalability and cost-effectiveness of each transaction.

For example, Osmosis (the biggest DEX on Cosmos) has its own blockchain that manages all the operations of the platform. However, it communicates with the entire Cosmos network, which benefits security and interoperability between different platforms and currencies.

Again, each application can have an ad hoc built environment, tailored to its needs.

How is this possible? Let’s clarify in detail how Cosmos works.

How does Cosmos Network work?

A classic blockchain can be seen as a set of nodes where information flows. Confirmation of that particular transaction must come from each of them, so that high standards of security can be guaranteed.

At the base of a blockchain there is Networking, the beating heart that allows the propagation of transactions and consensus.

The Consensus is the “layer” that makes possible the confirmation of transactions and the guarantee of their veracity. More generally, it is the Consensus that makes it possible for nodes to align themselves on the state of the system.

Above these two blocks we finally find the Applications. This is why they meet the limitations presented in the previous paragraph.

Cosmos is instead an ecosystem of different blockchains. They always work through nodes but, at the same time, they are connected to each other. By doing so, you get the advantages we have already mentioned and that we will see again later.

What is the structure of Cosmos?

The innovations of this network are obtained thanks to several tools introduced by Cosmos Network in the crypto space, including Tendermint, Cosmos SDK and the IBC protocol. These tools for the most part the reason why Cosmos has such a huge impact. Let’s see them briefly.

Tendermint BFT is the solution that makes possible a more agile development of blockchain and applications.

Again, as a comparison with Ethereum, the introduction of EVM (Ethereum Virtual Machine) went to make smart contract development accessible to everyone, giving birth to numerous dApps. However, the blockchain remained very difficult to fork and/or customize due to the frame complexity with the result that Networking and Consensus layers remain complex to interpret and write.

Tendermint BFT packages these two blocks, creating a kind of engine that the developer can use to create both applications and real blockchains in an easier way.

Cosmos uses this tool to be able to develop its concept of blockchain networks and thanks to the relative ease proposed, programmers can create platforms of various types and finalities. This is a simplistic view of this topic as technicalities are not the main point for this general introduction.

The acronym BFT stands for Byzantine Fault Tolerant and it is the consensus algorithm used in Tendermint BFT. It guarantees the regular operation of the chain up to a limit of 1/3 of malicious nodes in the chain. Therefore, simply put, the security standard is high even in the presence of threats.

Although Tendermint greatly facilitates the work of the teams, building an application from scratch would still require a lot of effort. Cosmos aimed to reduce it as much as possible for the community.

Cosmos SDK is another fundamental piece of the homonymous network. Cosmos SDK is a framework for fast and easy development. It is an environment in which there can be found many “pre-packaged” modules available. Depending on the needs of the project, developers can take these building blocks, combine them with each other and modify them accordingly.

You get two main advantages:

1. Do not start from scratch but leverage something ready-made.
2. Reduced bugs and related initial issues since there is no need have to write the app from scratch.

Frameworks are widely used in a variety of areas in the programming world. The genius idea of the Cosmos team was to create the best possible in the blockchain domain for everyone to be able to connect to it. Cosmos SDK is very popular and has made possible the birth of several successful projects.

Finally, thanks to its adaptability, Cosmos SDK makes it possible for developers to import EVM thanks to Ethermint allowing to bring protocol own smart contracts to Ethermint effortlessly. Not only the connection between Cosmos and Ethereum is strong. New projects are born on Cosmos with the intention to also connect to Bitcoin, have a look to Nomic protocol (link).

Last but not least, we come to the IBC protocol, which stands for Inter Blockchain Communication protocol and works as interoperability standard for all chains built with it.

This system allows you to move tokens or data between different chains. The passage of tokens is developed in several stages and aims to ensure security and regularity.

The Cosmos ecosystem allows users to move tokens easily, without the need for bridges or synthetic assets. As an example, if we sent Luna tokens from Terra Station to Keplr, the main Cosmos wallet, we would get the native coin, not a synthetic asset with value bonded to Luna. And this obviously has critical advantage for long term investment.

So, what is Cosmos Network ?

Cosmos Network is an innovative blockchain project that solves several problems present in many other protocols and chains. It creates a blockchain network and makes it possible thanks to the tools provided by the triad at the base of it: Tendermint, Cosmos SDK and IBC protocol.

The structure of Cosmos Network is depicted in the image above.

Hubs are blockchains built with the purpose of connecting the various Zones together.

Zones are heterogeneous blockchains built to serve equally diverse purposes.

The first hub launched is the Cosmos Hub, a chain that uses the Proof-of-stake consensus algorithm and has ATOM as its coin.

Potentially, any blockchain could interact with the Cosmos ecosystem.

At this moment roughly 36 independent chains are under Cosmos Network crypto-umbrella. The ongoing projects and their interconnections can be found on mapofzones.com (screenshot as below)

Cosmos Governance token: ATOM

Now a brief overview about ATOM, the coin of Cosmos Hub.

The supply is around 260 million tokens almost all already in circulation, which is very important as it means the ATOM token will become less and less inflationary. Currently, annual inflation ranges between 7%-20%, depending on how many ATOM are being staked as a percentage of the network. This high inflation was intentional with the purpose to dinsincetivize spaculation and incentivize staking and enganing with the network using ATOM.

Usually, a blockchain uses its own coin to pay gas fees: Bitcoin has BTC, Ethereum has ETH, Solana has SOL, Cardano has ADA, etc. Users using the blockchain in question need to buy the relevant currency to operate, helping to increase demand (and consequently the price).

However, given the particular structure of Cosmos explained in previous paragraphs, each chain has its own token intended for the payment of gas fees. Therefore, ATOM found itself in a somewhat peculiar situation and its intrinsic value left some doubts until last year.

Important announcements have been made for 2022. ATOM will have particular relevance in managing and improving the security standards of the whole network, thus gaining more traction and price movement.

The market has reacted well and the Cosmonauts community has benefited a lot from this new trend. ATOM can be purchased on major exchanges such as Crypto.com (which was born as part of the Cosmos and is now one of the most important exchanges in the crypto space).

The coin’s stake yields around 9/14% per year which is a good return, compared to other major coins such as Cardano where the usual stake yields for ADA are around 5%.

A deeper look: What are the most promising projects built on Cosmos?

Cosmos Network, as mentioned many times it is not one single blockchain but a blockchains network, this means several projects are built based on Cosmos framework and many of them offering use cases and applications both on security, DeFi and NFTs (the last one still very early.

Among those, my personal favourites are the following:

• Terra (Luna) ecosystem (home of the biggest algorithmic stable coins, such as UST)
• Anchor Protocol (arguably the current best lending protocol in the space, built on Terra)
• Mirror Protocol (protocol dedicated to synthetic derivatives, built on Terra)
• Osmosis (major DEX for Cosmos)
• Juno (community driven open source platform for interoperable smart contracts)

Other notable mentions are the following:

• Desmos (the blockchain that aims to revolutionize the world of social media)
• Secret (the first blockchain data privacy by default permissionless and privacy-preserving)
• Stargaze (the first interoperable Layer 1 for NFTs)

Over 50 cryptocurrencies (and counting) were built using Cosmos SDK (previously explained) including Binance Smart Chain, Crypto.com chain and THORchain.

My suggestion: take your time to check what is currently going on in Cosmos universe and do your own research before jumping in. However, in case you’re already investing in cryptocurrencies, you should consider adding ATOM to your portfolio (not financial advice).

Conclusions and the challenge: Where do we start?

After this introduction, it is impossible not to be impressed by how much Cosmos network is innovative and able to eliminate the limits of the classic single blockchains.

The network that is created is full of projects that are able to develop at their best thanks to the structure offered by Cosmos and this reality seems ready to take off definitively.

The crypto space has started to become more and more important only since the last few years, where institutional investors and even countries have jumped in this innovative space.

With so many various projects and chains it is difficult choose where to focus. After studying cryptocurrencies since 2017 and using several DeFi platforms and protocols, I came to my conclusions and identified my investments targets.

However it is difficult to start, and to keep up with everything going on in the cryptoverse.

For this reason, both for me and for everyone interested I am going to run an experiment and share the result weekly with all readers and curious minds.

I will open a new crypto portfolio (in full disclosure, not my main one) on Cosmos Network. I will share my strategy, its results and its methods.

In my next article, I will introduce you to this journey:

The Cosmonaut Quest

Why am I doing this? Cosmos network has all the cards in order to continue its journey and become more and more one of the pillars of the blockchain world.

Therefore I plan to load up on this ecosystem for the long term and accumulate Cosmos tokens.

And if anything, I aim to be inspirational for crypto newbies who have struggle to operate on these networks, are afraid to trying, or think it is too late to enter this space.

Everything will start with as less as 55 ATOM tokens. 55 ATOMs for 5 years plan.

What do you think about this network? And are you excited to follow this story?