ATOM 2.0

What happens to the Cosmos network after the revamp?

Well, the crypto space is an ever-evolving one!

Recently, the new whitepaper of the Cosmos 2.0 was released at the Cosmoverse Conference in Medellin, Colombia. The paper highlights the significant improvisations to the Cosmos Hub — the kernel of the Cosmos Network on which everything is built. A primary change includes incorporating interchain security functionalities within the Hub, which will be shared by the interconnected blockchains in the Cosmos network.

In addition, the paper focuses on the new aspect of liquidity staking to be introduced in ATOM, the native token of Cosmos.

With the new changes implemented, the Hub will play an integral role in fostering liquidity and interchain security. That said, according to Co-founder of Cosmos, Ethan Buchman, “the Hub is still not going to dominate the interchain or own the interchain or bring everyone under its umbrella..it’s trying to offer services to the larger interchain that help enables it, help support it and help it thrive and grow.”

Highlights of the Event

  • Co-founder of Cosmos, Ethan Buchman mentioned the three phases of Cosmos and what the Ecosystem has in store for future. The network is phased into three stages — the initiation, the integration, and the illumination stages. Of these, currently, it is in the integration phase wherein more developer communities have been included through the conception and development of Tendermint. The focus is on bringing in more collaboration by implementing collaborative finance, which will pave the way for sustainable political economies in the near future.
  • Co-founder of Osmosis, Sunny Aggrawal talked about mesh security and building mesh networks in the Cosmos ecosystem. He threw light on the Interchain security V3 proposing the idea that Osmosis could have its own validators and offer security to the Cosmos Hub.
  • Co-founder of Sommelier, Zaki Manian spoke on the bullishness of ATOM, Cosmos’s native token, and highlighted the three segments of the ATOM economic model — the adoption of liquid staking, the allocation model, and diverting MEV into ATOM.
  • Co-founder of Agoric_, Dean Tribble, spoke about the importance of web3 development and how developers can contribute effectively to the web3 ecosystem.
  • Portfolio Manager at Ruta N_, Carlos Jaramillo presented an impressive vision of developing a software valley, a smart city that would make data-driven decisions using technologies like AI, ML, Big Data, IoT, developing digital highways, bringing nations together to combat the economic crisis and more. Ruta N_ is focused on improving the quality of life in Medellin through science, technology, and innovation.
  • Director of Blockchain Education at Platzi, Angela Ocando, and Country Manager of Colombia_Bitso, also highlighted the significance of the evolving Web3.

Let’s look at the changes planned across various arenas of the Cosmos Network, as a part of the revamp.

The Cosmos Hub

At the outset, Cosmos Hub was the first blockchain to be built on Cosmos, which served as a bridge connecting to other blockchains. That said, the Cosmos Hub had initially suffered an identity crisis. While most people staked its native token ATOM to secure the Cosmos network, the use of the network itself remained in question.

Launched in 2019, the Hub was the only blockchain in the Cosmos chain. Since then, several other interconnected blockchains within the Cosmos network have copied the pattern of code from the Hub and added it to theirs, making some modifications to serve specific product features or use cases.

One example is that of the Osmosis chain, which used the Hub’s code pattern to use to cater to some of its Decentralized Finance (DeFi) features, such as currency exchange. Yet another case is Regen, an app-chain that used the Hub’s code for its on-chain carbon credit market.

In this regard, with the Cosmos network having grown so far, the community has decided to reject any modifications to the Hub’s code and stopped any upgrades as that could impact the sovereignty of other blockchains in the Cosmos network.

The idea is to keep the Cosmos Hub as the only home of the Cosmos neighborhood, and other entities (other blockchains) in the neighborhood could utilize the “home” (hub) and incorporate new functionalities.

Interchain Security

As a part of the Hub’s value proposition, the Cosmos 2.0 whitepaper highlights interchain security as a new Cosmos feature.

All chains in the Cosmos network use the Proof-of-Stake consensus approach. Therefore, users need to stake the native tokens to be able to process the transactions and secure the network. For example, Osmosis validators stake OSMO tokens while Regen validators stake REGEN tokens.

As a matter of fact, chains with more validators are more secure. That said, the Cosmos Hub, due to its greater degree of maturity and holding the privilege of being the first chain in the Cosmos network, has acquired more diverse validators than any other chain in the network.

According to Cosmos 2.0, the launch of interchain security on the Cosmos Hub opens the doors for other chains to borrow validators from the Hub instead of finding their own. In a way, this not only helps in preventing attacks but also decentralizes interchain security in the long term.

Value-addition to ATOM

The whitepaper on Cosmos 2.0 also focuses on enhancing the value of ATOM, Cosmos’s native token.

Until now, users had a perception of ATOM only as an index of the Cosmos ecosystem. However, the whitepaper highlights the investment ideology when the inclusion of the concept of interchain security into the Hub and letting other interconnected blockchains utilize it will completely change speculators’ perspective on ATOM.

With the interchange security being extended to other blockchains, they derive a direct alignment with ATOM, inherit the robust security around ATOM, are a part of the economic community built around the Cosmos chain and the ATOM token, and leverage the security of the chain.

Another key feature that the whitepaper states about leveraging ATOM tokens are liquid staking. At present, the users stake the ATOM tokens with validators to earn interest. However, that results in the tokens being locked up in the network for a specific duration, which means they are not saleable during that time.

Various external apps provide liquid staking features that allow users to indirectly trade their staked assets, such as through a derivative token.

In Cosmos 2.0, the platform states about embedding the liquid staking feature into the network’s code. The utility of liquid staking in the software code will grant a rewarding user experience to those who enter the process. The larger goal is to leverage the dual qualities of security and liquidity that the ATOM token would offer and extend the functionalities to other tokens in the Cosmos ecosystem.

Cosmos token Airdrops

A primary reason for the growing popularity of ATOM is that when new zones launch, they often airdrop tokens into the addresses of those staking the main token $ATOM. This is to increase liquidity and interest. The people whose wallet addresses are that ATOM stakers are essentially power users for the new zones that are getting started in the Cosmos ecosystem.

Price of ATOM

The price of ATOM, the native token of Cosmos, has been fluctuating and declining in the last few months. This is because of the bear market in the second half of 2022 and also that most investors believe that though Cosmos network is awesome, however, there isn’t much utility of ATOM as such.

That said, with the revamp of Cosmos and the changes to ATOM, its price is gaining traction and outperforming the other blockchains.

Final thoughts

Cosmos network as an ecosystem will witness a transformation once the changes discussed in the Whitepaper are implemented. The role and significance of the Hub would magnify, and other interconnected chains would be benefited through the interchain security model. With regard to ATOM, it is expected to grow tremendously in price due to these robust features. However, how the price fluctuates is for the future to speak.

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