Coin Spotlight
4 Feb 2022

Cosmos (ATOM) in Spotlight

Deepan Datta

Blockchains need to be scalable, interoperable, and sovereign for the crypto ecosystem to gain mainstream adoption. The functionality that legacy blockchain platforms like Ethereum, Binance Smart Chain lacks.

COSMOS- touted as the Internet of Blockchain (IoB) platform, is designed to solve some of the teething issues currently affecting the crypto ecosystem. It aims to create a network of blockchains that can communicate in a decentralized fashion. 

Its native token, ATOM, has zoomed over 1000% since its launch in March 2019, reaching an all-time high level of ₹3,636.76. 

Key Coin Metrics

    • Coin Rank: #20
    • Coin Market Cap (as of 4th Feb 2022): $8.4B
    • Coin Market Dominance: 0.48%
    • Coin Economics: Inflationary
    • Coin Inflation Rate: ~7%
    • Coin Circulating Supply: 286 million 

Technical Analysis: ATOM Price Analysis

Cosmos (ATOM)
After correcting almost 80%, ATOM seems to have found strong support at the $25.473 (₹ 2,064.7) level. It has bounced two times after testing for support. Due to a lack of momentum in the crypto market, ATOM is finding it difficult to break above the highly resistive $29.61 (₹2,400) level. 

Overall, it looks like ATOM might be preparing for a trend reversal, and a break above the 50 day EMA line can be a positive signal. If it breaks below the support of 78.2% level on the Fibonacci Retracement indicator, the next major support might be at the $20 level (₹ 1,620). 

Disclaimer: Insights and data mentioned are time sensitive. Kindly DYOR to stay safe. 

A Brief About COSMOS

As mentioned earlier, Cosmos solves scalability, interoperability, and sovereignty for dApps. It allows developers to build their dApps on sovereign blockchain on the Cosmos network, each having its governance structure and native token. Additionally, dApps built on Cosmos can interact with other blockchains on the network while maintaining security, lower transaction cost, and scalability. 

Let’s understand how Cosmos makes it easy for developers to build dApps on a sovereign blockchain. 

The Cosmos blockchain network achieves it through open-source tools- Tendermint, the Cosmos SDK, and IBC that lets developers build custom, secure and scalable dApps. 

Tendermint BFT

Tendermint Byzantine Fault Tolerance (BFT) is an important layer in the Cosmos network that allows developers to build dApps without coding from scratch. This resource saves developer effort, as on legacy blockchain platforms, they are required to build all the modules (networking, consensus, and application) from the ground up. 

Further, the Tendermint BFT engine is connected to an application called Application Blockchain Interface (ABI), which lets developers use the programming language they are familiar with. All these features help save hundreds of hours’ worth of development time. 

Other features of the Tendermint BFT engine that make it a state-of-the-art blockchain engine include blockchain readiness, highly scalable, instant transaction finality, and security. 

Cosmos SDK

Cosmos Software Development Kit (SDK) simplifies building application-specific blockchains on the top of the Tendermint BFT engine. It minimizes the complexities in developing a blockchain and comes with pre-loaded functionalities like staking, governance, and tokens. Developers can plug additional features into the blockchain they want to use or deploy. 

Inter-Blockchain Communication (IBC) Protocol

The IBC protocol enables smooth data transfer and transactions across blockchains via interoperability. It uses the Cosmos Hub and Zone network to allow cross-chain transactions securely. 

Cosmos Hub is the first blockchain network created on Cosmos network that connects the independent blockchains called zones. Through Peg Zones, Cosmos allows third-party blockchain networks to transfer value across the Cosmos networks. Peg Zones are the bridges between two blockchain protocols to transfer value with fast transaction finality. 

ATOM Token Economics

ATOM is the native token of the Cosmos blockchain network, and there are primarily two use-cases. Firstly, it is used as a utility token within the Cosmos network. And secondly, it can be used as a staking coin, mainly for governance and securing the network. The staking rewards rate is 10.6%, approximately.

As far as tokenomics goes, ATOM is an inflationary coin with an unlimited supply, having an annual inflation rate of close to 7%. 

Inflation of the coin is directly linked to the percentage of coins staked in the network. For example, if the staking participation rate goes above 67%, the inflation rate bottoms out at 7%. But, when the staking participation rate goes below 67%, the inflation rate can go up to 20%, depending on the staking participation rate. 

Cosmos’s Future Growth Potential

Cosmos is one of the versatile blockchain platforms that can change the market dynamics and can easily fulfil market needs. It can lead the DeFi race and emerge as a preferred platform for developers to create dApps due to its unique functionalities. 

Osmosis, a DEX platform based on the Cosmos blockchain, has crossed $1 billion in total value locked, with daily trading volume closing near $100 million. 

Although the tokenomics of ATOM coin is not superior to its peers, technologically, Cosmos can contribute to the overall growth of the crypto ecosystem and improve mainstream adoption.

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

writer

Deepan Datta

Content Writer

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