Cosmos is a Proof-of-Stake (PoS) blockchain that tries to address the interoperability and scalability issues of conventional blockchain systems. As the Internet of Blockchains, Cosmos will allow multiple independent, PoS blockchains to be able to interact with each other in its ecosystem.
Each independent blockchain is called a “Zone” and can be connected to the Cosmos Hub, the first zone created. Cosmos Hub keeps track of all connected zones and any inter-zone asset transfer or communication should go through the hub.
Tendermint is a PoS consensus algorithm used in the Cosmos blockchain which is easy to scale. The ecosystem is fueled by the Atom token which is used throughout the ecosystem for various purposes such as paying fees or earning governance rights.
Let’s take a quick look at Cosmos blockchain and its history and features. We will also talk about ATOM, the native cryptocurrency of the Cosmos ecosystem.
Dubbed the Internet of Blockchains, Cosmos tries to address the interoperability issue of blockchain systems by bringing them together in a secure and open-source environment. With Cosmos, independent blockchains can exist parallel to one another and securely interact with each other through the network.
Cosmos is powered by the Tendermint BFT consensus algorithm which is based on the proof-of-stake (PoS) mechanism. As a Byzantine Fault Tolerance (BFT) protocol, Tendermint will be able to resume its functionality if some of the members (machines) of its network are down or compromised.
Each independent blockchain in the Cosmos ecosystem is called a “Zone” which works based on the Tendermint consensus mechanism. Cosmos Hub is the first zone created that keeps track of all other zones and their latest state.
Each zone can communicate with other zones in the Cosmos ecosystem through the Cosmos Hub. This communication happens using a mechanism called Inter-blockchain Communication ( IBC).
As you can see in the image below, each zone can communicate with other zones by sending and receiving messages through Cosmos Hub using the IBC mechanism.
Cosmos has also released the Cosmos SDK, a framework that allows blockchain developers and enthusiasts to build their own blockchains that can interact and communicate with other independent blockchain systems. The Cosmos-based blockchains are known as application-specific blockchains which are specifically designed to run a particular application.
In 2014, Jae Kwon published his “Tendermint: Consensus without Mining” paper which focused on applying the BFT in a public PoS blockchain to address the high energy consumption, limited scalability, and low speed of Proof-of-Work blockchain systems, like Bitcoin.
In 2015, Ethan Buchman joined Jae Kwon and together, they published the Cosmos whitepaper “Cosmos: A Network of Distributed Ledgers” in 2016. In the same year, The Interchain Foundation (ICF) was also founded to support the development of the Cosmos ecosystem.
In 2017, ICF managed to raise $16.8M in half an hour. The team started the development of Cosmos SDK in the same year.
On March 13th, 2019, Cosmos Hub was launched successfully, opening the doors to a new ecosystem of connected PoS blockchains.
Cosmos Hub is a multi-asset blockchain that can support various cryptocurrencies in its ecosystem. However, like many other blockchain networks, Cosmos has its own native cryptocurrency which is used globally across the system.
Users can stake Atom tokens to be eligible for voting and validating new blocks. They can also delegate their stake Atoms to other validators and receive a share of block rewards and transaction fees.
Atom has set a limited number for its validators which will be reached in the first 10 years after the creation of the genesis block or the first block of the blockchain.
The initial number of validators was set to 100 and will reach 300 gradually. You can see the schedule below:
Atom token is also used by applications and users to pay for fees within the Cosmos ecosystem.