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What Is Cosmos (ATOM)?

Read 6 min
Blockchain on an orange background
— Lack of scalability and interoperability of blockchains has long been a concern for blockchains. 

— Low scalability results in apps and platforms being unable to handle large inflow of user traffic and high cost of usage.

— Lack of interoperability, on the other hand, results in users being segregated across different networks that do not permit the transfer of assets and information across each other.

— Cosmos is a blockchain network and a suite of tools and kits that aims to create an internet of scalable, interoperable blockchains and decentralized applications.

Interoperability is the ability of a digital system — in this case, a blockchain — to interact and communicate data with other similar digital systems despite their slight differences. It is the one thing whose importance most of us didn’t realize until we stepped into the crypto and blockchain space.

Blockchains and blockchain-based applications have had a hard time achieving interoperability. Initially, we only had the Bitcoin network and interoperability wasn’t needed. Then, one good day, Ethereum tagged along and allowed people to build applications on top of a blockchain network. But its scalability and flexibility concerns led to the creation of multiple other blockchains, each having a unique value proposition such as high scalability, gaming and NFT-focused design, low fees, and so on. 

Blockchains like Ethereum attracted wide user bases due to their unique benefits. However, all these blockchains exist like separate islands spread throughout an ocean in some pre-internet era. Communication between them is extremely complicated and scarce.

That’s where the Cosmos ecosystem comes in. In its quest to enable communication between networks, it offers a broader scope for blockchains to create a Web3 infrastructure.

The History of Cosmos Blockchain

Cosmos was founded way back in 2014, when most of us didn’t even know blockchains or cryptocurrencies were a thing. Behind this project was Jae Kwon, who laid the groundwork for Cosmos through his years of detailed research; his objective was to build a blockchain that was not as energy-intensive as Bitcoin. 

This research eventually led to the creation of what is today called Cosmos.

Cosmos has a central vision of creating an “internet of blockchains”, and it seems this might not be a dream for long. The CEO of Tendermint – the central developer behind Cosmos – gave an exciting glance into the future, suggesting we’ll be seeing around 200 different chains connected through Cosmos in the future. But before we get into its future plans, let’s attack the basics.

What Is Cosmos?

In short, this blockchain network with a complete set of tools that serve two primary purposes:

Enabling blockchains to communicate data with each other and create an internet of blockchains; making it less complex and time-consuming to create scalable and efficient blockchains and decentralized applications (dApps). Basically, Cosmos allows blockchains to interoperate, while letting them maintain their sovereignty and governance. 

You know, how in a food court, no one has to pick one specific outlet. Instead, you get all your favorite food brands in the same place and you can order from either one or multiple of those in one go. In a way, Cosmos is like that food court but instead of food outlets, it’s offering blockchains.

So how does it achieve this exactly? Let’s find out.

How Does Cosmos Work?

As mentioned earlier, Cosmos isn’t just a blockchain network. It is a complete package of tools that simplifies blockchain development and allows different networks to communicate with each other. Three of the main pillars of Cosmos are Tendermint Core, the Cosmos SDK, and IBC. So how do they work and what are they for?


Tendermint is a specific type of proof-of-stake consensus mechanism; but it’s also responsible for some specific things. To explain, if you could visualize a blockchain, you’d see it as a sort of “stack” of three different layers, each handling one element of the job: networking, consensus and governance, and application.

 In basic terms, Tendermint integrates the consensus and networking layer of Cosmos into one, separating out the application layer. This means that a dev can create a new blockchain to integrate with the existing Cosmos ecosystem by using Tendermint Core (the two integrated layers) as a base, and only altering the application layer. 

In simple terms, it means that any developer can build new blockchains on Cosmos without wasting hundreds of hours building everything from scratch. 

Meanwhile, it also allows developers to create apps using any popular language. This makes Cosmos a highly flexible network.

Cosmos SDK

Cosmos SDK (software development kit) is a set of tools that allows you to build Cosmos-compatible decentralized applications without having to write every line of code from scratch. To clarify, the Cosmos SDK offers open-source modules. Essentially, these are pre-written lines of code that help developers build apps like lego. All you have to do is plug them into your application.

Inter-blockchain Communication Protocol

Next, Cosmos also benefits from something called the Inter-blockchain Communication (IBC) protocol. Put simply, it allows every blockchain in the Cosmos ecosystem to communicate with each other. The idea behind it is to connect all kinds of blockchains regardless of their consensus mechanism.

To achieve this, IBC relies on the concept of Hubs and Zones. Zones are all the different blockchains in the Cosmos ecosystem while hubs are specialized middleware blockchains designed to connect Zones.

Zones must be connected by a common Hub to allow the transfer of assets from one to another.

And the first of the Cosmos ecosystem is the Cosmos Hub — a proof-of-stake blockchain, powered by its native token ATOM.

The IBC protocol includes over 50 blockchains today including Osmosis, Injective and the Secret Network.

Cosmos Token: What is ATOM?

ATOM is the native coin of the cosmos ecosystem. Firstly, it powers the cosmos hub, the first blockchain in its ecosystem. This means you’ll need to pay your gas fees in ATOM in order to use the network. Fortunately, gas fees in the Cosmos ecosystem are minimal compared to similar chains, meaning it’s easy to access countless blockchains from this single ecosystem. 

Next, ATOM also acts as a governance token. To clarify, Cosmos hub has a governance mechanism which allows all holders of ATOM to take part in the decision making process. This means simply by holding ATOM you can help decide the future of the chain.

Finally, ATOM is also the coin used for staking on the Cosmos Hub blockchain. As a proof-of stake network, Cosmos requires validators to lock up its native coin as collateral for validating transactions. Without this staking mechanism, the whole security of the blockchain would be at stake, so ATOM’s role here is extremely important. 

Let’s see how staking works in the Cosmos ecosystem.

Staking ATOM

To become a validator on the Cosmos Hub network, you must stake ATOM, just like any other proof-of-stake network. Then in return for staking, validators receive rewards in ATOM. Then, the Tendermint consensus mechanism chooses which validator will create a block using “delegrators”. Essentially, delegators vote on who they think should create the next block, and the top 125 validators in the network will win this right.

Using this method, both validators and delegates can receive rewards. However, both validators and delegators can also  receive punishment if they don’t act appropriately. This is a process known as slashing, where the validator and delegates can lose a part of their assets if the validator misbehaves. 

As such, it is important to take a good look into who you are delegating to. In the unfortunate event that you’d undergo such a slashing, you could lose between 0.01% and 5% of your delegation.

How to Buy and Manage ATOM

If you want to get started with the Cosmos ecosystem, you’ll need to buy and manage some if its native coin ATOM. The most secure and accessible to do both of these things is via the Ledger ecosystem. To explain, when you buy any crypto through Ledger Live, you can transact with confidence, knowing that Ledger Live provides a secure gateway to apps and services such as on-ramps. Not only that, Ledger Live also works with your Ledger device, meaning you benefit from Ledger’s security model. That means when you buy crypto in Ledger Live, it is immediately protected by your Ledger device. Your device keeps your private keys offline, plus, its top-quality components, guaranteeing your safety from not just online hacks but physical hacks too. 

Beyond that, the Ledger ecosystem can also help you access countless apps and services within the Cosmos ecosystem. With the Earn section, you can start staking ATOM in Ledger Live to earn passive rewards. Then, you can also access Cosmos ecosystem dapps, and even other IBC chains that are interoperable with Cosmos Hub.

In short, no matter your plans, the Ledger Ecosystem will help you buy Cosmos, and manage it, with ease.

Cosmos: The Internet Of Blockchains

Cosmos is a unique blockchain ecosystem. Its focus on interoperability sets it apart from so many other networks, each with complicated ways to send assets between them. Instead this ecosystem has interoperability at its heart, allowing its users to swap between chains practically seamlessly. This is a game-changer, as even for experienced users, moving assets between chains is a painstaking process. For new users, it’s practically rocket science. 

The very idea of Web3 is to offer decentralization and freedom from central entities’ grip over the internet. Thus, a framework that enables the interoperability of blockchains is the one thing that can ensure that Web3 exists as one cohesive, decentralized infrastructure.

The Cosmos Ecosystem aims to solve this issue, and so far, it seems to be succeeding. With a busy ecosystem full of tools, developers,, the Cosmos ecosystem is still growing to empower its users. 

Knowledge is Power.

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