Cosmos (ATOM) is among the most voguish projects and digital currencies (cryptocurrencies) over the past couple of months. The initial surge started on March 13th, the moment at which the mainnet that had been more than three years in schedule went live.
Cosmos is a distinctively ambitious project in an industry of ambitious projects. It is looking to become the blockchain platform that pulls all the other blockchains together in its blockchain interoperability platform. It is a platform that is not only usable, but, to a great extent, scalable as well.
Be that as it may, the question that lingers is, are there chances that they really are able execute on such grand ambitions?
This paper, as a comprehensive review of Cosmos blockchain project, will shed light on the project’s underlying technology, as well as its traction, market, economics, and development roadmap. It will as well further analyze the use cases and adoption potential for the ATOM coin.
Cosmos Basics and the Underlying Technology
Cosmos terms itself the most customizable, scalable, powerful and interoperable ecosystem in so far as interconnected blockchains are concerned. It is a decentralized network of independent blockchains fueled by Tendermint and other Byzantine Fault Tolerant algorithms. It is the Byzantine Fault Tolerance (BFT) algorithm that capacitates a blockchain to reach consensus even in an environment that potentially comprises of malicious nodes.
The Cosmos Network, also referred to as the Cosmos Hub, has the potential to become the “Internet of Blockchains.” Cosmos is the first blockchain to be launched on the Cosmos Network and its primary role entails linking other blockchains, referred to as zones in the Cosmos Network. The moment these links are complete, tokens are now in a position to be quickly and securely transferred from one zone to another in a seamless manner.
In classical BFT algorithms, each node has a similar weight. In Tendermint, nodes have a non-negative amount of voting power, and nodes that have positive voting power are referred to as validators. Validators contribute in the consensus protocol by broadcasting cryptographic signatures, or votes, to agree upon the next block.
The voting powers of the validators are resolved at genesis, or are changed deterministically by the blockchain, depending on the application. For instance, in a PoS system like the Cosmos Hub, the voting power may be established based on the amount of staking tokens bonded as collateral.
Tendermint is a partially synchronous Byzantine Fault Tolerance consensus protocol derived from the DLS consensus algorithm. Tendermint is notable for its simplicity, performance, and fork-accountability. The protocol requires a fixed known set of validators, in which case each validator is discerned by their public key. Validators attempt to reach consensus on one block at a time, in which case a block comprises of a list of transactions.
Voting for consensus on a block takes place in rounds. Each round has a round-leader, or proposer, who proposes a block. The validators as such vote in phases on whether the proposed block warrants acceptance, contrary to which they proceed to the next round. A round’s proposer is selected deterministically from the ordered list of validators, according to their voting power.
Tendermint’s security is derived from its implementation of optimal BFT via super-majority (>⅔) voting and a locking mechanism. Jointly, they ascertain that:
- An equivalent of a third or more of the voting power must be Byzantine to bring about a violation of safety, in which case over 2 values are committed.
- In the event any set of validators ever succeeds in violating safety, or merely tries to so do, they can be identified by the protocol. Most noteworthy, the latter is inclusive of both voting for conflicting blocks and broadcasting unwarranted votes.
Regardless of its strong guarantees, Tendermint offers phenomenal performance. In benchmarks of 64 nodes distributed throughout the expanse of seven datacenters on five continents, on commodity cloud instances, the Tendermint consensus is able to execute thousands of transactions in a second, with commit latencies on the order of 1 to 2 seconds.
Strikingly, performance of well over a thousand transactions in a second is maintained even in severe adversarial conditions, with validators crashing or broadcasting maliciously crafted votes.
- Light Clients
A key advantage of Tendermint’s consensus algorithm is simplified light client security, making it an apt candidate for mobile and IoT use cases. Whereas a Bitcoin light client must synchronize chains of block headers and identify the one with the most proof of work, Tendermint light clients need only to keep pace with changes to the validator set, and consequently ratify the >⅔ PreCommits in the latest block to establish the most recent state.
Succinct light client proofs as well capacitate inter-blockchain communication.
There are 3 fundamental elements that form the Cosmos Network, as discussed below:
- The Tendermint Core:
The Tendermint Core is a software implementation containing the Tendermint BFT algorithm for consensus and the IBC (Inter-Blockchain Communication) protocol, which connects the consensus and networking layers to foster communication between the hub and all the zones.
- ABCI (Application Blockchain Interface):
The ABCI gives room for decentralized applications (dApps) to be replicated in a variety of programming languages. Owing to the fact that the Application Blockchain Interface is not limited to any particular programming language, developers are empowered to come up with the application portion of their blockchain in whatever programming language. This interface serves as the connection between Tendermint Core and the Cosmos SDK.
What’s more, the ABCI makes it possible to easily swap out the consensus layer of any existing blockchain stack.
We draw an analogy with the renowned digital currency, Bitcoin. Bitcoin is a digital currency blockchain in which each node maintains an entirely audited Unspent Transaction Output (UTXO) database. On the off chance one wanted to create a Bitcoin-like system on top of ABCI, Tendermint Core would be responsible for:
- Sharing blocks and transactions between nodes.
- Establishing a canonical/immutable order of transactions (the blockchain)
In the meantime, the ABCI application would be responsible for the following processes:
- Maintaining the UTXO database
- Validating cryptographic signatures of transactions
- Preventing transactions from spending non-existent funds
- Allowing clients to query the UTXO database
Tendermint has the capacity to decompose the blockchain model by offering a very simple API between the application process and consensus process.
- Cosmos SDK:
This serves as the application layer of the Cosmos Network. Most noteworthy, it serves to offer blockchain developers a basic blockchain framework. In addition, it alleviates complexity by providing the most common blockchain functionalities, for instance, governance, tokens, and staking. Developers then add additional desired features by creating plugins.
Cosmos SDK operates on the basis of 2 key principles, as discussed below:
Cosmos SDK’s objective entails coming up with an ecosystem of modules that enables developers to effortlessly spin up application-specific blockchains without the hassle of having to code every bit of functionality of their app from scratch. Anyone is in a position to create a module for the Cosmos SDK. What’s implementing ready built modules in your blockchain is as easy as importing them into your application. For instance, the Tendermint team is developing a series of basic modules that are required for the Cosmos Hub. These modules can be used by any developer as they build their own application.
In addition, developers are able create new modules to tailor their apps. As the Cosmos network grows, the ecosystem of SDK modules will as well expand, making it increasingly easier to develop complex blockchain apps.
- Capabilities-based security:
Capabilities constrain the security boundaries between modules, giving room for developers to not only better reason about the composability of modules but limit the scope of malicious or unexpected interactions as well.
In addition, the Cosmos SDK also comes bundled with a set of useful developer tools for building command line interfaces (CLI), REST servers as well as a variety of other commonly used utility libraries.
Most significantly, as a final remark, the Cosmos SDK, as is the case with all Cosmos tools, is modeled to be modular. Presently, it allows developers to build on top of Tendermint Core. Be that as it may, it can be used with any other consensus engines that implement the Application Blockchain Interface. As time goes by, we expect multiple Software Development Kits to turn out, built with a variety of architecture models and compatible with multiple consensus engines, the entirety of them within a single ecosystem, the Cosmos Network.
On the whole, whereas the Tendermint Core provides consensus on the Cosmos Hub, zone blockchains maintain their own consensus without needing to implement Tendermint.
The Cosmos SDK provides developers with the means to build a blockchain and decentralized applications while only worrying about the application layer. With the addition of the ABCI application state is managed in a separate consensus process, giving room for Cosmos to support a vast range of scripting languages and cryptocurrencies.
Blockchains connected to the Cosmos Hub will be able to communicate with each other using the Interblockchain Communication Protocol, void of regard for what consensus algorithm is implemented. This will make it possible for the transfer of assets between blockchains to take place, whereas preserving any contractual features they may have.
IBC works optimally with blockchains that have high finality such as PoS (Proof-of-Stake) blockchains, but is as well implementable with PoW-based (Proof-of-Work) blockchains via the use of peg zones. An example of this is Ethermint, which essentially is a Tendermint-based Ethereum with its Proof-of-Work features stripped out and working on top of Proof-of-Stake consensus.
More about the Tendermint Algorithm
Tendermint is the first PoS consensus algorithm created using the Practical Byzantine Fault Tolerant (PBFT) algorithm, first proposed in 1999 by Castro and Liskov following a comprehensive thirty years of research. This BFT-based Proof-of-Stake protocol assigns the right to propose new blocks in a pseudo-random fashion to validators in a multi-round voting process.
Nonetheless, finalizing and committing those blocks necessitates a supermajority of validators signing off on the proposed block. In the case of Cosmos, this is 2/3 of the quorum. Reaching consensus in such a manner is bound to take a number of rounds to finalize blocks. A Byzantine Fault Tolerant system is only able to tolerate up to one-third failures, with failures comprising of malicious and arbitrary behaviors.
The Tendermint algorithm has the following features:
- A safety threshold of 1/3 of validators
- Compatibility with both public and private blockchains
- Consensus safety
- Prioritization of consistency
- Instant finality in less than 3 seconds
Cosmos uses a PoS consensus referred to as delegated PoS that categorizes the stakers into groups of validators and delegators. The delegators determine which validators will participate in consensus and the validators work to verify transactions as well as add new blocks to the blockchain.
Validators and delegators are rewarded in the form of ATOM tokens, but the Cosmos Network is modeled in such a manner that a wrapped form of any digital currency could hypothetically be used as a reward token. In this system any node found to be operating in a maliciously is detached from the network and its tokens are taken away.
Product and Traction
Cosmos strives to solve both scalability and usability issues as regards blockchain technology. Scalability has been the greatest issue among the world’s largest blockchains over the past few years, and none have been able to implement a solution yet that capacitates them to get anywhere near the scale they will need to accommodate mainstream adoption rates.
When usability is considered, both developers and users are limited. Whereas developers lack flexibility when creating decentralized, users have been limited by the lack of easily accessible applications. Cosmos is confident that it is able to resolve this via the use of the Go programming language and a multi-layer structure.
Cosmos markets itself as a decentralized network of independent parallel blockchains which are fueled by Byzantine Fault Tolerant consensus algorithms such as Tendermint.
Cosmos Network strives to solve scalability, usability and sovereignty limitations of the extant blockchain infrastructure. World’s blockchain giants, Bitcoin and Ethereum, are a prime example of the scalability problem, with the former being able to process only seven transactions in a second and the latter struggling with anything greater than 25.
In so far as usability is concerned, it’s a known fact that developers don’t have much flexibility when developing modern blockchain applications; Cosmos implements a multi-layer structure and the Go programming language to resolve this problem.
Lastly, the issue as regards sovereignty stems from blockchain apps being laboriously dependent on the governance of their underlying environment. Cosmos’s layered structure capacitates each app to have its own blockchain, independent from the main chain. Check out this speech by Gautier Marin-Dagannaud, the Product Engineer at Tendermint, to have a more comprehensive of this.
There is an enormous push behind the Cosmos project, being inclusive of several companies, teams, and foundations. Whereas, the idea for Cosmos came from Jae Kwon and Ethen Buchman, the main support for Cosmos comes from the Swiss non-profit foundation, the Interchain Foundation (ICF).
ICF has contracted with All In Bits Inc. (dba Tendermint Inc.) to develop the Cosmos Network as well as the ecosystem that surrounds it. The ecosystem is particularly broad as you’ll see later. The connection is made slightly clearer given that Jae and Ethen are the founders of Tendermint. The broader Tendermint team is indeed quite large comprising of more than 30 members.
- Jae Kwon, CEO and Founder:
Jae Kwon created Tendermint to save the world from unnecessarily wasting electricity to secure distributed ledgers. Along the way, he realized that using quorums and cryptography rather than energy and hashing affords many benefits for instance speed and scalability.
- University – Cornell University.
- Area of Specialization/Field of Study – BS. Computer Science (2001 – 2005).
- Activities – Robocup (AI robots playing soccer).
- Ethan Buchman, Co-Founder:
Ethan visualizes consensus algorithms as a 21st century approach to fostering social cohesion. He is spirited to empower humans with futuristic ways to coordinate and reach consensus at scale.
- University – University of Guelph.
- Field of Study – Biophysics (2010 – 2013).
- Peng Zhong, Chief Design Officer:
Zong’s aim is to cogently increase the adoption of blockchain technology through better usability design. He aspires to transform cutting-edge technology into mundane things that everyone is able to use.
- University – Humboldt State University (2006 – 2007).
- Areas of Specialization – MATH 110, Calculus II, MATH 210, Calculus III.
- Anton Kaliaev , Software Engineer:
Anton Kaliaev is a software engineer with over 6 years’ experience working in web, video processing, and telecom industries. He has extensive knowledge, which he hopes will help him make Tendermint better.
- University – Ulyanovsk State Technical University.
- Field of Study – Computer Science. Grade 4.87 (2005 – 2010).
- Activities – Came up with a translator of Java source code into C# and vice versa.
- Jim Yang,
Jim Yang is renowned as the Co-Founder of Identyx, where he served as the company’s Chief Executive Officer until its acquisition by Red Hat. Most noteworthy, Identyx developed an open-source enterprise identity management software. He is as well the former founder and CEO of ChatX, a mobile messaging studio.
- University – The University of Texas at Austin.
- Field of Study – BSc. Computer Science.
- Christine Chiang, Community Architect:
Christine is the content creator as well as communications lead for the Cosmos project, the Internet of Blockchains.
- University – University of California, San Diego.
- Field of Study – BSc. Management Science (2007 – 2011).
- Activities and Societies – Dir. Communications – Undergraduate Investment Society, Sixth College Technology Committee, Clinton Global Initiative University, Moneythink.
- Hugh Rooney, Advisor:
Hugh is extensively experienced in the application of leading-edge technologies to a wide range of business problems in both the public and private industries. He was as well one of the founders of Infobright, a “Big Data Analytics” company.
Lastly, there is the IRIS Foundation, which has garnered support from ICF to develop the Cosmos Hub IRISnet, which is meant to foster the construction of distributed business apps. The entirety these entities work together very closely and it can be difficult to differentiate between the various organizations and how they contribute to the development of the Cosmos project.
The team is as well rather active in so far as community engagement is concerned. They run an active official blog where they delineate all of the key development updates. They additionally have a Twitter account and Telegram Channel.
Cosmos has had no problems attracting collaborations. There is a massive no. of projects already building atop the Cosmos network and part of its ecosystem. Discussed below are just a few examples of such projects:
- The Binance Chain, which is the token-emitting platform of the decentralized Binance Launchpad project, is built on the Cosmos ecosystem.
- e-Money is a European issuer of stablecoins. Their stablecoins are backed by fiat currency and are distinctive in the sense that they bear interest and are secured by an insolvency fund.
- IOV is coming up a protocol between blockchains and wallets that will make it possible to send as well as receive any cryptocurrency from a single address of value.
- IRISnet is a BPoS blockchain that was built using the Cosmos SDK and will bring about interoperability between blockchains to provide a foundation for the next generation of distributed business applications.
- Kava is working with the Cosmos network to provide cryptocurrency wallets, exchanges, and blockchains with the liquidity and interoperability of Interledger technology.
- Loom began on the Ethereum blockchain and later switched to Cosmos to take advantage of the Tendermint technology in its development of highly scalable-games and user-facing dApps.
Other projects are aimed at tokenizing the music industry (Playlist), coming up with a truly decentralized P2P network (Sentinel Network), creating a decentralized autonomous content economy (Lino), building a social network to determine when information is true or not (TruStory), and launching a stablecoin meant for mainstream adoption (Terra).
There is a more comprehensive list of almost 100 projects looking to build atop the Cosmos Network and Tendermint technology that can be found here.
The ATOM Token
The Cosmos team conducted an ICO in April 2017, raising $17.3 million USD in a mere 28 minutes as they sold 168 million tokens at $0.098 USD per unit. The team as well retained 50 million worth of tokens for themselves for purposes of funding strategic partnerships and business development.
The ATOM token was rather distinctive, however, owing to the fact that the actual tokens were not released up till after the mainnet went live. There were a number of exchanges trading IOU tokens for ATOM prior to their release, but the actual token went live on March 14th, 2019.
2 days later it attained an all-time high of $8.31 USD but dropped from that level rather rapidly. It surged once again to just about $7 USD on April 22, 2019 when investors learnt that the token had been listed on the Binance Exchange. The price dropped back again; nonetheless, trade volumes have been increasing steadily. As of May 6, 2019, the price is back to $4.82 USD.
There is no market capitalization on the number of the ATOM tokens that have been scheduled for release as the team plans on increasing the number of the tokens annually based on an inflationary structure.
As much as the ATOM was only released the other day, there are a number of wallet options to select from. The most secure choice entails using the Ledger Nano S hardware wallet. Be that as it may, there are quite a number of mobile wallets available, for instance, imToken, Cosmostation, and WeTez. The latter is as well inclusive of the IOV and Lunagram wallets whose developments are underway and will be released in the very near future.
If you are interested in acquiring some ATOM can do so pretty easily as the token is already listed on dozens of exchanges. The largest trading volumes can be found on Hotbit, Binance, Huobi Global, Bibox, Gate.io and OKEx.
Project Development & Roadmap
Needless to say, for a majority of these blockchain projects, the proof lies in the pudding. In a bid to get a sense of basically how much work is underway, we need to take a look into the commits of the project code.
One of the most efficient ways to get a sense of this activity is via the project’s commit activity on their public GitHub. In the case of Cosmos, there are quite a number of various GitHub repositories both from the main project to the Tendermint repositories.
I decided to take a sneak peak into these to see the amount of activity that is present. Below are just some of the most active repos in the ecosystem.
This is without doubt rather extensive and depicts just how much work has been underway as far the protocol goes. Most importantly, don’t forget that whereas these are merely 3 of the top repositories, there are more than 86 repositories in entirety!
Debatably, there is hardly this level of advancement on various other projects, being inclusive of those with larger Initial Coin Offerings (ICOs). This ought to additionally fortify the conception that this is anything but a run-of-the-mill ICO and blockchain project.
This voluminous and frenetic coding exercise is most likely related to their ambitious roadmap. Over the past year the team behind the Cosmos project has been realizing various milestones almost to perfection.
There are as well quite a number upgrade proposals that are lying ahead for the project. These are inclusive of, among others, Hub Support for the Inter-Blockchain Communication (IBC) protocol which will capacitate a number of the SDK applications to connect to the Hub.
The launch of the Cosmos mainnet was accompanied by a lot of excitement among the community as is evidence in the surge in the price of the ATOM token. The unsolicited inclusion of the coin at Binance and dozens of other exchanges, as well as the swift jump of ATOM to the #15 spot in total market capitalization supports the premise that this is a serious project worthy of following and investing in.
The move to the mainnet takes Cosmos to its next development phase. With the network having stabilized, the community has already voted to facilitate ATOM transfers. The next phase primarily entails enabling Interblockchain Communication (IBC) and as such, the main net launch will have concluded.
What’s more, there are plans to release an official staking wallet that will allow for transactions to be carried out on the Cosmos Hub. The moment the first version of production as regards Cosmos is released, complete with the first Cosmos Network blockchain, the project will enter the so-called the “Galactic Era”.
On the off chance the Galactic Era is realized, the project’s development team will commence work on a decentralized cryptocurrency exchange as well as bridges for both Ethereum and Bitcoin.
There is no doubt the Tendermint and Cosmos teams are extremely serious about what they are doing. Whereas a number would still term the project as vaporware for a lack of features listed in the whitepaper, there are dozens of partner projects who believe in the Cosmos Network and have begun using it.
On the assumption that Cosmos can pull off becoming the internet of blockchains, it will inhabit an extremely important and powerful position in so far as the future of blockchain development and technology are concerned.
Thus far, the Cosmos project seems to have remained on track to do just that, and if the excitement of the community is any gauge this could be a project to watch closely in coming months and years.