Cosmos Network (ATOM)

1. What is Cosmos (ATOM)?

ATOM is the native asset of the Cosmos Hub, which can be further subdivided into 1 million micro ATOM (uATOM).

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.

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.

At its core, it features:

• 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.

2. Blockchain and network data

Cosmos and Tendermint have several projects that have been building within their ecosystem. For example, projects like 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.

3. Economics and supply

3.1 Key metrics

3.2 Token supply distribution

• Seed tokens comprise 5.08% of total supply.
• Strategic tokens comprise 7.03% of total supply.
• Public Fundraiser tokens comprise 67.86% of total supply.
• All in Bits, Inc. (dba Tendermint) received 10.03% of total supply.
• Interchain Foundation received 10% of total supply.

ATOM token distribution (%)

Private sale overview

• Seed Round: Sale conducted at a rate of 1 ATOM = 0.025 USD and raised a total of USD 300,000, selling 5.08% of total token supply
• Strategic: Sale conducted at a rate of 1 ATOM = 0.08 USD and raised a total of USD $1.3295 MM, selling 7.03% of the total token supply.

Public sale overview

• Public Fundraiser sale was conducted in April 2017 for a total raise of ~$16 MM USD worth of ETH at ~$0.10 per ATOM for 67.86% of the total token supply.

3.3 Token governance and 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 team uses a multisignature wallet to hold the team's allocation of ATOM tokens.

3.4 Token overview and 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.

4. Roadmap, updates, and business development

Cosmos' milestones, both upcoming and past, can all be found on the project's website.

As of time of writing, the next milestones for Cosmos are to propose support for IBC, and a full transfer of governance to the entire Cosmos token holder community.

The project's original roadmap from early 2017 can be found here.

For a full picture of the launch of Cosmos network, please refer to this Medium primer.

5. Project team

As per the Cosmos website disclaimer, "the development of the Cosmos project is led primarily by Tendermint Inc." - a private, for-profit entity, but the funding for the development comes from the Interchain Foundation, a Swiss non-profit.

The full Tendermint team, profiles, and backgrounds can be found on the Tendermint website.

6. Cosmos' activity and community overview

6.1 Development activity

Cosmos has several public repos, ranging from its public SDKs, to documentation for its migration from testnets to mainnet.

6.2 Social and community data

Strategy

Cosmos's main community focus has been to create tools for developers to use its SDK.

The team has encouraged various Hubs to provide localized support in Asia, particularly in the Chinese and Korean communities.

The Tendermint team, primarily based in Berkeley, California, also is active in the Bay Area blockchain community. The Interchain Foundation, based in Switzerland, also provides unique access to collaboration with other chains to adopt / adapt to IBC standards. Together, the cohesive goal (across team, foundation, and Hubs) is to increase blockchain interoperability and enable more dApps working within a more cohesive blockchain ecosystem.

Social media channels

Twitter
Cosmos Blog
Medium (Interchain Foundation)
Reddit
Telegram
Youtube Channel
Cosmos Forum

7. Appendix

7.1 General

• Whitepaper
• Cosmos Academy
• Cosmos SDK Documentation

7.2 Block and validator explorers

• Hubble by Figment Network
• Big Dipper

7.3 Demos

• How to Build a Plasma MVP Chain with Cosmos SDK | Aditya Sripal
• Intro to the Cosmos Network (Slides) | Sunny Aggarwal
• Cosmos: Many Chains, One Ecosystem
• How to Build a Blockchain App with Cosmos SDK
• Introduction to Cosmos Governance - a tutorial on staking
• Cosmos Interoperability via Interblockchain Communication with Sunny Aggarwal | EDCON Toronto 2018
• How to Vote on a Governance Proposal

7.4 Medium articles

• Launch Communications - June Community Update
• Cosmos Validator Economics — Bridging the Economic System of Old into the New Age of Blockchains
• Tendermint Explained — Bringing BFT-based PoS to the Public Blockchain Domain
• Understanding the value proposition of Cosmos
• Why application-specific blockchains make sense
• Technology Choices When Building Your Own Blockchain
• LotionJS Beta Release
• "Hello World!" The Cosmos-SDK is Ready for Takeoff
• The Technicals of Interoperability—Introducing the Ethereum Peg Zone
• Update on Launch Timeline
• A Tour of Cosmos for Developers
• Consensus Compare: Casper vs. Tendermint
• Understanding the Basics of a Proof-of-Stake Security Model