Cosmos, built on Tendermint Core, the design’s purpose is to be the “Internet of Blockchains”. The network provides the means for trustless exchange of assets across independent blockchains. Exchange occurs via a master hub chain known as the Cosmos Hub.
Cosmos also comes with a toolkit called the Cosmos-SDK. So this provides plug-and-play modules for developers to easily create custom blockchains.
Consensus on the network forms through the Tendermint BFT engine. Various advantages include:
– High Performance: Blocktime on the order of 1 second. Capable of handling thousands of transactions per second.
– No Forks: A property of the Tendermint consensus is instant finality. Forks are never created as long as less than one third of validators are malicious.
– Security: Tendermint consensus is also accountable. When there is a fork, an external process can determine the cause by requiring each validator to justify votes.
Blockchains on the Cosmos Network communicate through IBC (Inter-blockchain Communication), a common standard that allows two chains to have light clients of the other chain. A light client can monitor and validate the state of another blockchain without running a full node.
Example: Cross chain token transfer
– Token A on Chain #1 locks in a smart contract
– Proof is provided to Chain #2
– Chain #2 validates the proof and creates a Token B to represent Token A
– We can redeem Token A when Chain #2 burns Token B
Developers have the freedom to customize rules that define the validator set of their blockchain to build both public and private networks. So with Tendermint and the Cosmos-SDK, developers do not have to fork the codebase of an existing blockchain like Bitcoin; they can just build a blockchain by easily coding a few modules.
Cosmos SDK provides all the basic functions of a blockchain and allow developers to have a less restricted environment (unlike having an EVM) to build modular blockchain applications. More application-specific blockchains leads to a more mature ecosystem.
Atoms (ATOM) is the native token of Cosmos Hub with the main purpose of governance. The Cosmos Hub is a public Proof-Of-Stake (PoS) blockchain, meaning the weight of validators is determined by the amount staked (collateral). Currently, the top 100 validator candidates with the highest stake will become Cosmos validators. Therefore this figure will increase gradually to 300 validators.
The revenue of validators comes from block provisions and transaction fees paids in Atoms, similar to block rewards (Bitcoin).
The risk involved in staking is 1) 3 week initial lockup, 2) slashing (penalty) for misbehavior. So delegators should carefully select and actively monitor the relevant validators to preserve their assets.
The design of Atoms are not as a currency or investment tool. They are hyperinflationary to purposefully prevent such activity. Furthermore Atoms are designed to be bonded in the network for participation in the governance (submitting proposals, casting votes on upgrades). Above all the value will come from adoption and rising maturity of the Cosmos ecosystem.
First slashing event on Cosmos Hub on 29 Jun 2019:
Written by Ernest Lau
Trader @Genesis Block
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