Cosmos is an ecosystem of networks and tools for creating interoperable blockchains. Its main chain Cosmos Hub acts as a central ledger for compatible blockchains called Zones. Each Zone is highly customizable, allowing developers to design their own cryptocurrency, with custom block validation settings, and other features.
These Zones are created using the Cosmos SDK, which provides the basics needed for developing a Cosmos blockchain. Cosmos SDK’s default consensus layer, Tendermint Core, provides a validator-based consensus mechanism usable across multiple Cosmos blockchains. Each Zone can, however, choose precisely how its validators are selected.
For the Cosmos Hub mainnet, the blockchain picks 100 validators from the top set of nodes staking ATOM, the blockchain’s utility coin. Voting power is assigned to each validator based on the amount of ATOM staked. A leader validator then proposes new blocks for others to vote on. Successful blocks provide a block reward given to the validator and shared with users who stake ATOM behind their chosen validator.
Apart from the Cosmos Hub’s consensus mechanism, ATOM is also used to pay transaction fees and take part in governance votes. Validators must also take part in proposals or face sanctions.
Along with scalability, interoperability has always been a key problem to solve in the blockchain world. After more than a decade since the first Bitcoin blockchain, we now have a variety of options when it comes to interoperable blockchain networks. Cosmos is perhaps one of the most popular choices out there, along with its Tendermint consensus mechanism and open-source developer tools. Let’s explore precisely why Cosmos has stayed a popular choice and how it allows blockchains to work together easily.
How does Cosmos (ATOM) work?
The Cosmos network is split into three different layers:
What is Cosmos Hub?
Cosmos Hub is Cosmos’s primary blockchain that connects other customized blockchains known as Zones. It does this by keeping track of the state of each Zone through the Inter-Blockchain Communication Protocol (IBCP). Through this protocol, information can easily travel between any Zone connected to Cosmos Hub.
Let’s imagine two DApps on two different Zones want to communicate with each other. To do this, IBC messages are sent to Cosmos Hub, which records the interaction. Messages are relayed through Cosmos Hub, and each Zone also records the outcomes of their interactions on their own blockchains. There is then evidence over three separate blockchains of the activity. This ability for blockchains to interact with each other has given Cosmos the nickname “The Internet of Blockchains.”
What are Cosmos Zones?
What is Cosmos SDK?
What is ATOM?
ATOM is Cosmos’s native coin that has three primary use cases:
How to purchase ATOM?
2. Mouse over the trading pair displayed on the left, search for ATOM, and choose a suitable trading pair. In our example, we’ll use [ATOM/BUSD].
What is Tendermint?
With Tendermint Core, validators run nodes that maintain a copy of the blockchain’s data. Not every full node is a validator, as there is a limit of 100 validators on Cosmos Hub. Validators who confirm transactions vote on new blocks to be added to the chain.
This mechanism incentivizes validators to behave as users can easily stake their ATOM behind more reliable options. To add new blocks, a set of 100 validators reach a consensus on each block via voting. Voting takes place in rounds based on block proposals from a leader.
Why is Tendermint important?
Tendermint (BFT) has proved popular due to its:
Cosmos was one of the first solutions available for creating interoperable blockchains and has remained a popular option. Tendermint (BFT) and Cosmos SDK are still both powerful tools that are used in the creation of blockchains today. However, since 2017 we’ve seen more focus on sidechains that work with high-traffic blockchains like Ethereum. Whether this trend will continue is yet to be seen. Nevertheless, Cosmos has plans to expand on current trends including NFTs, DeFi collateralization, and interchain staking, giving it the chance to ride their popularity into the future.