Cosmos

Cosmos

Tendermint
Tendermint
What is Cosmos?

Jay Kwon (Co-founder)

“Each individual blockchain maintains control of its own governance, but is interoperable with other blockchains in the network. Blockchains that do not utilize BFT algorithms can be connected to the Cosmos network via “adaptor” blockchains. Cosmos was not designed for one particular use case, but to be adaptable to suit many different use cases.”
  • The Internet of Blockchains (IOB)
  • A decentralized ecosystem of independent blockchains that can scale and connect to one another
    • This includes blockchains built on Cosmos and external blockchains as well like Bitcoin and Ethereum
      • External blockchains are connect through what is called a Peg Zone
  • Proof-of-Stake protocol: You can delegate your tokens into a validator pool and earn rewards on your holdings
    • The more ATOM you stake, the more you earn
    • Staking locks up your ATOM
      • If you want to unstake, the cooling off period is 21 days
Layers of Cosmos
  • Dual-Layer Blockchain ecosystem with native token $ATOM to power its transactions
    • First Layer: Tendermint BFT - Packages the networking and consensus layers of the blockchain into a generic engine
      • BFT stands for Byzantine Fault-Tolerance
        • Byzantine faults within distributed systems are some of the most difficult to deal with
        • A BFT consensus algorithm guarantees safety of the network against malicious operators of the network
        • Allows developers to focus on application development instead of the protocol which makes the network run
    • Second Layer (Application Layer): Cosmos SDK (Software Development Kit) - Used for individuals to create their own blockchains
      • This will translate many different popular programming languages such as Java, C++, and others into a language Cosmos is able to understand
How does Cosmos fit into the overall ecosystem? Why is there a need?
“If there is a bug in the application, nothing can be done about it without the approval of the governance of the Ethereum platform itself. If the application requires a new feature in the Ethereum Virtual Machine, it again has to rely entirely on the governance of the Ethereum platform to accept it.”
Scalability
  • Increase throughput: the # of transactions a network can process within a certain period of time
Allows developers to build individual blockchains with their own custom governance structures
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  • Enables them to transact with each other via a common and generic consensus networking layer through what they call Hubs and Zones
    • Allows entirely separate blockchains to transfer tokens to each other with an IBC connection (Inter Blockchain Communication protocol)
      • Can be thought of the glue that holds everything together
      • Allows separate blockchains to transfer tokens
      • Hubs are specialized blockchains to connect zones together
        • Helps increase speed because once a zone creates an IBC connection with the hub, it can connect to any other zone that’s attached to the hub
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Ability to interact with other blockchains outside the ecosystems
  • Includes interacting with BTC, ETH, TRX, etc.
  • This is done through a Cosmos created proxy like chain called a Peg-Zone
    • “A Peg-Zone” is a blockchain that tracks the state of another blockchain. The Peg-Zone itself has fast-finality and is therefore compatible with IBC. Its role is to establish finality for the blockchain it bridges.”
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    • Ex: If you wanted to trade $LLAMA from the llama chain for $TACO from the taco chain, it is now possible with Cosmos facilitating it
      • Assets can be on the Cosmos network, a proof-of-work chain like Bitcoin or Ethereum, or a proof-of-stake network like NEO, ADA, etc.
Individual needs are diverse
  • Developers have diverse set of needs depending on what they want to build. Cosmos makes this possible by interchain interoperability.
What is Cosmos Native Token?

The ATOM is the Cosmos Hub’s primary token and secures the Hub’s valuable interchain services. If you hold ATOM, you can temporarily lock them up to contribute to the security of the Cosmos Hub using a mechanism called Staking. In exchange for locking your ATOM, you receive rewards in newly minted ATOM and a share of the transaction fees that are collected by the blockchain. However, staking is not risk free.

Cosmos Hub

At the heart of the Cosmos ecosystem is the Cosmos Hub and its native ATOM token. The Cosmos Hub pioneered a new era in the blockchain industry by becoming the first public Proof-of-Stake (PoS) blockchain built on top of a Byzantine Fault Tolerant consensus engine. The Cosmos Hub is set to play a major role in the interchain by offering a wide variety of services and features:

  • Staking – The Hub’s staking module is one of the most efficient PoS implementations in the world, built on top of the Tendermint BFT consensus engine. ATOM holders can secure the chain by locking their ATOM in exchange for transaction fees
  • Voting – Staking ATOM gives rights to participate in the open governance process, which governs the evolution of the network
  • Interchain Accounts – Interchain Accounts are the accounts of the IBC-enabled world, allowing blockchains to securely control accounts on other chains over IBC. Users can access the entire Interchain through their single Cosmos Hub account. One account, for all the chains.
  • Gravity DEX – The Cosmos Hub’s Gravity DEX will enable users to swap tokens coming from all over the interchain. This service improves on existing designs by combining AMM features (like that of Uniswap) with an orderbook-based model, providing a richer and more efficient trading experience.
  • Gravity Bridge – Backed by billions of dollars of ATOM staked on the Cosmos Hub, the Gravity Bridge will be the most secure, efficient, and decentralized cross chain bridge to Ethereum. It will enable Cosmos assets to flow into the Ethereum ecosystem as ERC-20 tokens and, conversely, native ERC-20 tokens to flow in the Cosmos ecosystem.
  • Interchain Staking – ATOM stakers will be able to validate chains that request it (called child-chains) on an opt-in basis, with their ATOM delegation as collateral. In exchange for securing child-chains, ATOM stakers will be rewarded with additional rewards.
  • Chain Name Service – Just like domain names, blockchain names are needed and can be managed on the Cosmos Hub
  • Staking Derivatives – Staking Derivatives will be an important primitive in the cross-chain Defi space. At their core, staking derivatives are claims against staked ATOM. Just like staked ATOM, staking derivatives accrue staking rewards – but unlike staked ATOM, staking derivatives are liquid, meaning they can be transferred.

Each new service on the Hub generates fees, and fees generate rewards. The more activity on the Hub, the more fees paid out by services and the more rewards ATOM stakers receive.

What is the ATOM Token?

The ATOM token is the Cosmos Hub’s primary token and secures the Hub’s valuable interchain services. Holders of ATOM can stake their tokens to contribute to the security of the network, receiving rewards in return. Additionally, ATOM stakers are granted the right to vote on Cosmos Hub’s governance decisions. Typical APY 9.7% of staked ATOM annually. Staking rewards are generated and distributed to staked ATOM holders in two ways:

  • Transaction fees – Transaction fees collected on the Cosmos Hub are distributed to staked ATOM holders
  • Newly created ATOM – The total supply of ATOM is inflated to reward stakers. ATOM holders that do not stake do not receive rewards, meaning their ATOM gets diluted over time.

ATOM Token Distribution

Public Fundraiser: 67.9%

All in Bits, Inc. (dba Tendermint): 10.0%

Interchain Foundation: 10.0%

Strategic: 7.0%

Seed: 5.1%

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How to get $ATOM tokens