After more than a decade, a new generation of blockchain systems has emerged with the primary goal of propagating the decentralized finance (DeFi) ecosystem, which breeds thousands of utility tokens and a host of decentralized applications (dApps).
However, while some dApps support interoperability, the vast majority operate in isolation. Cosmos, dubbed the "Internet of Blockchains," aims to bridge this gap by creating a network of interconnected crypto networks using open-source tools to streamline cross-network transactions.
Brief History of Cosmos
Founded in 2014 by developers Jae Kwon and Ethan Buchman with support from the Interchain Foundation (ICF), Cosmos began with the creation of Tendermint, its consensus algorithm. The project raised over $17 million in a 2017 ICO for its native token, ATOM, followed by a $9 million Series A funding round to accelerate development. The mainnet and whitepaper launched in 2019.
How Cosmos Works
Cosmos operates via the Tendermint BFT protocol, ensuring Byzantine fault tolerance to maintain network integrity despite malicious nodes. Key components include:
- Cosmos Hub: The central blockchain interfacing with independent "Zones."
- IBC Protocol: Enables seamless asset and data exchange across connected blockchains.
- Cosmos SDK: A developer toolkit for building custom blockchains with features like staking and governance.
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Cosmos Consensus Mechanism
Tendermint uses a Proof-of-Stake (PoS) algorithm, offering faster transaction finality than Proof-of-Work (PoW). Validators must stake ATOM tokens, with voting power proportional to stakes. Delegators can support validators without running nodes.
Governance Model
Cosmos employs on-chain governance:
- Proposal Submission
- Voting (1 ATOM = 1 vote)
- Inheritance/Penalties (Delegators inherit validator votes if inactive)
- Deposit Claims (Refunds post-voting)
FAQs
1. What is Cosmos’ primary goal?
Cosmos aims to create an ecosystem of interoperable blockchains, solving scalability and isolation issues in DeFi.
2. How does Cosmos achieve interoperability?
Via the IBC protocol, which connects blockchains ("Zones") through the Cosmos Hub.
3. What role does ATOM play?
ATOM is the native token used for staking, governance, and securing the network.
4. How is Cosmos different from Ethereum?
Cosmos focuses on cross-chain communication via Tendermint PoS, while Ethereum relies on smart contracts and is transitioning to PoS.
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Conclusion
Cosmos pioneers a modular, interconnected blockchain future. By prioritizing scalability, usability, and interoperability, it empowers developers to build customizable networks while fostering seamless cross-chain collaboration.