Cosmos runs an ecosystem of parallel blockchains that can scale and communicate with one another.
While some dApps can interoperate with each other, a majority are operating in isolation.
Dubbed the “internet of blockchains,” Cosmos creates a network of these crypto platforms.
Rather than prioritizing its own network, it aims to be the hub for interconnected dApps and services sharing data and tokens programmatically, with no central party facilitating the activity.
Each new independent blockchain created in Cosmos is then tethered to the Cosmos Hub, which keeps a record of the state of each zone.
The network has three layers:
- The Application layer processes transactions and updates the state of the network.
- The Networking layer allows communication between transactions and blockchains.
- The Consensus layer enables nodes to agree on the current state of the system.
Cosmos uses a set of open-source tools to tie all these layers together and enable developers to build blockchain applications in the network.
What is the Cosmos (ATOM) token?
The Cosmos Hub is powered by its native ATOM cryptocurrency, which plays a role in maintaining interoperability between the zones in the network.
It can also be used for holding, staking, sending, and spending.
By holding and staking ATOM, users gain the ability to vote on network upgrades. Each vote is proportional to the amount of tokens they stake.
In addition, Cosmos rewards validators with ATOM based on how many tokens they are staking.
Delegators also receive a small percentage of this reward.
How does Cosmos work?
Cosmos Hub employs an innovation called the Inter-Blockchain communication (IBC) protocol to connect the dApps within the network.
Through this, all the connected dApps and services are able to tap into a single decentralized data source and freely exchange assets across blockchains in the network.
The consensus mechanism of Cosmos is called Tendermint, which is a BFT (Byzantine fault tolerance) protocol. This eliminates any inequality among stakeholders and ensures equal access to the network’s benefits.
Tendermint uses a proof of stake (PoS) algorithm, which is faster than the traditional proof of work (PoW) used by the likes of Bitcoin. It also keeps every entity in the network in sync, as each of them automatically becomes a potential validating node.
However, being a validating node does not guarantee the right to participate in the Cosmos network’s decision-making process. To do so, a validating node must first stake ATOM tokens.
In addition, a node must also be among the top 100 nodes with the highest amount of staked ATOM in order to gain voting power.
Those who do not make it to the top 100 but want to participate in the validation process can opt to delegate their ATOM to eligible nodes of their choice to earn a portion of the rewards.
In 2014, developers Jae Kwon, Ethan Buchman, and Zarko Milozevic conceptualized Tendermint, the consensus algorithm that went on to power the Cosmos network.
Kwon graduated from Cornell University with a degree in Computer Science, then worked as a professional developer in Silicon Valley.
Aside from leading the mobile application development team at Yelp, he co-founded the productivity service iDoneThis.
Prior to working on Tendermint, Ethan Buchman studied machine learning, dynamical systems theory, and neuroscience at the University of Guelph in Canada.
Zarko Milozevic holds a master’s degree in Computer Science and has a Ph.D. in Distributed and Fault-Tolerant Systems.
He has worked as a software engineer and research scientist in Tendermint before currently serving as Chief Scientist at Informal Systems.
The Interchain Foundation (ICF), which is a Swiss non-profit that funds open-source blockchain projects, helped develop and launch Cosmos.
Kwon stepped down as CEO in 2020 to focus on other initiatives and was replaced by Peng Zhong, who has been in the company as Chief Design Officer since 2019.
Notable Investors: Dragonfly Capital, Blocktree Capital, Block0, Dokia Capital, Polychain Capital, Paradigm
- Circulating supply: 286M ATOM (updated Oct. 2022)
- Inflation rate: 5.72%
- Total supply: Unlimited