Cosmos

Gentlemen Capital
5 min readJul 1, 2022

Founded in 2014 by Jae Kwon, Cosmos is a network of interoperable blockchains. Cosmos uses Tendermint BFT which is PoS based consensus algorithm. Tendermint BFT is an open-source platform and can be used by any project.

To create a network of blockchains Cosmos provides CosmosSDK (the application layer) and Tendermint SDK (the network and consensus layer) to give complete tools to launch a public or private blockchain. All the blockchains will implement IBCI (inter blockchain communication interface) so that they can transfer tokens and data between each other seamlessly.

The Interchain Foundation (ICF) is a Swiss non-profit foundation that was formed to support the development of Cosmos and the ecosystem that will contribute to the Cosmos Network. The ICF is accepting applications for grants.

Founder

Jae Kwon is a blockchain software architect and co-founder of Tendermint, and the president of the Interchain Foundation.

After graduating from Cornell in 2005 with a B.S. degree in computer science, he worked as a professional developer in Silicon Valley, including at Alexa, and at Yelp where he led the mobile application development team. He also cofounded iDoneThis, a productivity service.

Jae has worked on numerous open-source projects, including a CoffeeScript compiler/interpreter written in Javascript, an end-to-end encrypted email system called Scramble.io, and a cryptocurrency exchange. These projects were inspired by the cryptopunk hacker ethos, which ultimately led to the current work with Tendermint.

Jae has been working on a project he created in 2014, called Tendermint. He initially invented and refined (with Ethan Buchman and Zarko Milosevic) the Tendermint consensus algorithm and implementation with the aim of liberating the blockchain from the costs and drawbacks of proof-of-work mining. His mission is to make this technology more accessible, in order to accelerate the adoption of decentralized ledger technology.

Jae is also the President of the Interchain Foundation, based in Zug, Switzerland. The InterchainFoundation (aka ICF) was founded with the mission to promote the vision of Cosmos, the internet of blockchains, to enable public blockchain interoperability and scalability.

Jae Kwon was the first person who applied Byzantine Fault Tolerance (BFT) research in a “Proof of Stake” (PoS) public blockchain context, and went on to found Tendermint Inc (All in Bits Inc).

All in Bits Inc (dba Tendermint Inc) is a software development company contracted by the ICF to develop the Cosmos Network.

Tendermint BFT is the most advanced implementation of BFT consensus algorithm and Proof-of-Stake (PoS) crypto economics to date. The project launched to address the speed, scalability, and environmental issues associated with Bitcoin and Ethereum’s “Proof of Work” (PoW)

Over 50 projects have been created using COSMOS SDK, including Binance Smart Chain, Luna, Crypto.com(Cronos) and Thor Chain.
Jae Kwon left Tendermint in 2020 to focus on another project called Gnolang which will use a new programm language Jae created. Tendermint recently rebranded in Ignite and Jae took back the ownership of Tendermint which now change the focus on incubating projects build on COSMOS.
Cosmos raised around 50mil$ during various sales in 2018 and Ignite recently raised 150mil$ from various VC”s.
Their mainnet went live in March 2019 and is still technically in development. Cosmos has few milestones left in his roadmap and this is primarely because Ignite spend a lot of time, energy and money developing technologies such as Cosmos SDK and Cosmos IBC.

Cosmos is using a PoS blockchain which can process up to 10k transactions/sec, secured by 150 validators, which is the maximum Cosmos blockchain can support for the moment.
Cosmos wants to be a interoperability hub for other Cosmos projects, which is achieved by IBC(Inter blockchain communication protocol), meaning many IBC chains are connected with eachother rather than gravitating on a single hub. Most of this activity is taking place on Osmosis, a decentralized exchange with his own blockchain and acts as it”s own interoperability hub. Osmosis coin is not available on any exchange,and that means that only way to use the Osmosis Dex is to buy ATOM and bridge it over to Osmosis coin. Basically, Cosmos became more an interoperability bridge rather than his achivement to be an interoperability hub.

Tokenomics

Atom had an initial supply of 236 mil of tokens when it’s mainnet launched.Around 80% has been sold to early investors and 20% went to Ignite and Interchain Foundation.
Atom finished his vesting in Feb 2021 and 40% of the actual circulating supply is held by top 25 wallets, most probably most of the wallets belongs to exchanges.
Atom is inflationary with no max supply. The inflation rate likewise depends on the amount of Atom being staked as a percentage of it’s total supply. In this moment the inflation rate is about 10% with 62% of Atom staked (294mil of tokens).
Cosmos early investors saw more than a 400X return with the average IDO price of 10cents per Atom. Since his mainnet launch Atom supply increase with 60 mil of tokens, so, on an average of 10$ per token, we may have a sell pressure of 600 mil$ + additional sell pressure from Ignite and Interchain to support their development. But there is a lot of demand for Cosmos as well.

The main income is coming from:

1) Institutions — Grayscale
2) All new projects build on Cosmos which are airdropping their coins to all ATOM holders
3) All new projects creates liquidity provision and yield farming.
4) Osmosis itself has around 50 mil Atom deposited as liquidity and it is impossible to know for how much this amount of ATOM has been bought, most probably hundreds of millions of dollars buying pressure, and this came only from Osmosis

Atom has a medium size market cap, which is leading to less money to push up the price in percentage terms.

Challenges

  1. Development — constant delay on development.
    2) Competition for developers — which is basically coming from their own ecosystem
    Many of the successful crypto projects on Cosmos ecosystem has been founded by former members of Ignite, meaning the developers has been splited off from Cosmos core team, to create their own crypto project. Of course, as mentioned above, this includes Jae Kwon, the founder itself which is building now another crypto project called Gnolang.
    3) Regulation — they took a 3.75 score, out of 5 in terms of security. For reference XRP(Ripple) has a score of 4.0 out of 5 and we all know what is going on with SEC.

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