COSMOS Network Review
The ATOM is the base unit of the Cosmos Hub, which can be further subdivided into 1 million micro ATOM (uATOM).
- Cosmos Network is an ecosystem focused on the scalability and usability of blockchain solutions. Its core products are Tendermint consensus, the Cosmos SDK, and Interblockchain Communication (IBC), built with the vision of enabling an "Internet of Blockchains"
- Featuring a Bonded Proof-of-Stake mechanism, Cosmos utilizes a "Hub-and-Zone" model to allow for interblockchain transactions to occur
KEY FEATURES & HIGHLIGHTS
- Tendermint Core: Tendermint Core is a ready-to-use blockchain engine featuring the eponymous practical byzantine fault tolerant consensus protocol. This core can be used to build both public and private blockchains. The consensus mechanism offers instant finality and security, prioritizing safety over liveness.
- Cosmos SDK: The Cosmos SDK is a package of tools that expedites the building process for developers that want to create their own blockchains for their own apps.
- Interblockchain Communication: Giving developers more tools to build their own blockchains, the next component of the Cosmos project is to improve the interoperability of different chains, enabling transactions to occur across chains and layers. Utilizing a combination of zones, one can transact freely in a crypto ecosystem across IBC-compatible chains.
WHAT IS ATOM?
The Cosmos project aims to create an entire ecosystem around a blockchain running on Tendermint BFT consensus to make blockchains easier to use, from providing developer SDKs to enabling interblockchain communication via a "Hub-and-Zone" model. The Cosmos chain will serve as the first hub, through which other chains and tokens can transfer information using Interblockchain Communication.
Token Governance & Use of Funds
The All in Bits (team) tokens are earmarked specifically for the continued support of Tendermint and building of tools such as the Cosmos SDK and the underlying technology for the ecosystem. Tokens given to team members are non-transferrable for 12 months, but can be staked and used in governance. The rest of All in Bits' tokens are vesting for 22 months with a 2 month cliff after mainnet launch.
Conversely, the Interchain Foundation is a non-profit entity to encourage and support open and decentralized networks, and as such has funded projects such as sponsoring Cosmos' Game of Stakes testnet competition.
The All in Bits team uses a multisignature wallet to hold the team's allocation of ATOM tokens.
Token Overview & Use Cases
In this proof-of-stake system, the ATOM token is used as a work token, whereby users can stake their ATOM or delegate their ATOM to other validators who are participating in validation.
- Based on aggregate token share delegated to a given validator, each validator will have a proportional "voting share" that translates into the proportionate opportunities to validate blocks on the network and earn the accompanying block rewards, much like in Proof-of-Work systems where hashrate proportions determines the relative likelihood of finding the next block.
- Validators then pass back the proportional block rewards (less a network tax for a reserve pool) back to the delegators, whose token bondings contribute to the aggregate voting share of the validators. Much like a pool in PoW networks, the validators take a fee for the work of aggregating the voting share.
- The network tax will go towards a reserve pool that can be used to increase the security around the Cosmos Network.
- As of the current time of writing, the median delegator commission fee sits at 10% for the active validator set.
- Validators compete not only on fees, but also uptime. In the beginning, only 100 validator slots will be available upon mainnet launch for the first year (growing to 300 over the next 10 years), and thus the validators that demonstrate high uptime are selected as the genesis validators. To remain active, they must maintain high uptime, or risk unbonding of their delegated tokens and "jailing" of their validator status.
The network inflation rate is bounded, with a minimum of 7%, and a maximum of 20%; the block reward is adjusted to achieve a target network staking participation rate of 2/3 (66.66%). All staked tokens require 21 days to "unbond", so that stakers cannot sell their tokens right away after staking.
Cosmos tokens are also used for on-chain governance; for example, token holders recently voted for the proposal of enabling token transfers.
The project may also release or airdrop a secondary token called the Photon, specifically for transaction fees. This token has not yet been finalized as of the time of writing. Photons in the long run would be generated by validators and stakers for their transaction processing. The specifics of the Photon will be determined via on-chain governance.
BLOCKCHAIN & NETWORK DATA
Cosmos and Tendermint have several projects that have been building within their ecosystem. For example, projects like the Binance Dex, FOAM, and Sentinel run on Tendermint-powered blockchains.
Other projects, such as IRIS Network are already building services and support around the Cosmos system for easier adoption in specific targeted geographies.
A full list of 84 projects building on / with Cosmos can be found on this list.
Cosmos' Interblockchain Communication (IBC) works by bonding an amount of ATOM, then relaying a proof of the ATOM bonding to a second chain, and then validation of this proof, before a corresponding amount is released on the second chain. This makes it easier to issue and create tokens representing assets on other chains. IBC is compatible with fast-finality chains, meaning blockchains with instant or near-instant confirmation times where a transaction is certain to be final within a short period of time; however, chains running on Proof-of-Work that do not have fast finality can still be used in IBC with the help of "Peg Zones" that impose a "finality threshold" for some number of blocks to assume that transactions are effectively final, similar to how accepting parties (such as exchanges) require deposits of Bitcoin to receive a certain number of confirmations to reduce the risk of any double spends or other attacks. This "pseudofinality" from this threshold is relayed back to the Cosmos ecosystem using the peg zones.
While the first peg zone for Ethereum started in 2018, other chains such as Loom have already announced compatibility with the Cosmos Hub.