What’s Happening in the Cosmos Ecosystem? An Early 2022 Review
Cryptocurrency markets got hit hard in January 2022, appearing to some to be at the beginning of a bear market. Downmarket or not, the Cosmos ecosystem and its $ATOM token is an outlier.
Between December 15 and February 6, $ATOM gained over 47% in value. In that same time frame, Bitcoin lost almost 12% in value, and Ether lost just under 21%. Why is this happening?
The following guest post is written by Dan Edelback, who joins us to discuss several potential causes for the growing popularity of the Cosmos ecosystem. Dan is the CEO of Exidio and the Co-Founder of the Sentinel dVPN. Exidio is an end-to-end encrypted VPN technology that leverages open-source code and decentralized networks, with the goal of ushering secure access to Web 3.0 in a transparent manner. The Sentinel Network is built using the Cosmos SDK.
Cosmos Is King
Cosmos was designed to be an ecosystem of interoperable but autonomous blockchains that can exchange information and tokens between each other in a permissionless manner. Its focus is on autonomy, sovereignty, and scalability.
Cosmos aims to be the “Internet of Blockchains,” and has now attracted 260 decentralized applications onto its blockchain. One reason for this growth is that it has become easier for smaller teams to build on Cosmos since an upgrade last April called the Inter-Blockchain Communication (IBC) protocol in tandem with the Cosmos Software Development Kit (SDK).
Cosmos, which features a proof-of-stake consensus mechanism, provides the Cosmos SDK to developers to enable cross-chain bridges between Ethereum Virtual Machine (EVM) compatible blockchains. There are dozens of such chains, some of the bigger names include:
- Ethereum Classic
- Binance Smart Chain
- IoTeX Network
- BitTorrent Chain
- Kucoin Chain (KCC)
On the one hand, there has been a lot of competition between various crypto camps across social media. While on the other hand, innovative projects such as Cosmos and Polkadot see the future of global crypto adoption coming from cross-chain networks that build bridges between blockchains. This process proves a superior user experience, whether they wish to use Ether, Binance Coin, Matic or ATOM tokens, due to the easy integration of crypto-currencies and allowing groups of all sizes to engage.
In the Polkadot system, there is a more sophisticated governance system where DOT holders have a lot more power. Polkadot enables the ability to connect to up to 100 other parachains, but to become a parachain the project is going to need a lot of DOT tokens and to be able to win an auction to become a parachain. With the infrastructure demand, Polkadot users are required to have already invested more than Cosmos.
Cosmos IBC is fundamentally different from Polkadot’s system. With Cosmos, there is a permissionless cross-chain exchange of data, which makes it possible for any Cosmos team to send data to any Cosmos chain. Developers are able to build a new chain at any time and then launch it and send its tokens to the Cosmos Hub, and the Cosmos Hub is able to transact with and send new ATOM tokens to this new chain that just got created. Cosmos holders have no control over who uses the Cosmos SDK.
Done right, cross-chain bridges like Cosmos’ IBC protocol has the added benefit of increasing scalability allowing many more users to be onboarded.
Ethereum Problems and Ethereum Killers
Unlike Cosmos, Ethereum tokens are among the groups most impacted by current crypto-market instability and fluctuations. Despite a lot of attention on the subject for the past year, the London Hard Fork, and numerous statements from founder Vitalik Buterin, plans and proposes new ideas to fix the existing challenges to the Ethereum and course-correct high Ethereum gas fees. However, these efforts have not resolved the problem.
This persistent problem is an increasingly important issue as decentralized applications built for decentralized finance, decentralized exchanges, NFTs and blockchain-based video games became mainstream over the past two years. Decentralized financial tools have resulted in a significant increase in popularity. As of this writing, there have been over $5 million in fees in the past 24 hours on OpenSea alone. OpenSea is the largest NFT marketplace and is built on Ethereum.
Entering the void created by these issues with Ethereum are the so-called “Ethereum killers.” In other words, blockchains that are designed to be the home for decentralized applications, in the same way that Ethereum does and which provide more speed and lower transaction fees. Some key examples of these are the Binance Smart Chain, Solana and Cosmos.
Web 3.0 And Its Role In Crypto Stability
Web 3.0 is the latest buzzword in the crypto and tech space. To dive in, first let’s look at the history of the web and define a few terms.
Web 1.0 refers to the first stage of the Internet where most websites were written by web developers and designers. Most users simply viewed web pages. The worldwide web exploded in 1995, and became a global phenomenon.
Web 2.0 refers to the web as we know it today – dynamic websites where most data is entered by the users. This started with social media sites such as Facebook, MySpace, Twitter, and LinkedIn. Even sites like YouTube and Amazon are built on the same model. In a way, users have become the product.
Companies owning these websites store massive volumes of data on their users and sell this to advertisers. Many companies make billions of dollars in advertising revenue while the user is given a great user experience but does not share in the profits, and often has no choice on who owns their privacy and data.
Web 3.0 is a concept based on taking the principles of decentralized finance and applying them to the decentralization of social media and the web. What if a more fair profit and ownership sharing system existed? What if users had rights to their own data privacy and sovereignty, with the right to choose to share their data or not, and if they did, to own their data and be able to at least share in the income generated from it. This is the hope of a new, better, safer, and more fair online reality.
Building with Cosmos on Web.3
One project building on Cosmos, Sentinel, has the mission to enable private and censorship-resistant internet access. Through building Web 3.0 infrastructure, Sentinel seeks to ensure online privacy rights and security.
VPNs are built for the purpose of online privacy of their users. However, they are often created by centralized companies that keep user info like other Web 2.0 gatekeepers.
Sentinel Network is designed to solve this with its decentralized platform, which is built using the Cosmos SDK. The Sentinel ecosystem is a global network of autonomous decentralized virtual private network (dVPN) applications. The native token of the Sentinel ecosystem is the $DVPN token.
Sentinel Network allows anyone across the globe to mine $DVPN tokens with their unused bandwidth, thus enabling individuals to monetize residential or commercial bandwidth by providing it to a network of distributed and decentralized dVPN applications built on the Sentinel framework.
Final Thoughts: The Future of Cosmos (ATOM)
Through a diverse array of DApps, Cosmos seeks to gain significant market share from Ethereum and other decentralized application blockchains. Its cross-chain bridges and network specifications offer high speeds and low costs to projects.
Can Cosmos continue to grow and effectively compete with Ethereum, Binance Smart Chain, and Solana? While there is no crystal ball, things have looked good since mid-December. Thus it would be a mistake to ignore what is occurring on Cosmos.
This article is Originally posted on CoinCentral.com
Author: Alex Moskov