Cosmos positions itself as a project addressing some of the most significant challenges in the blockchain industry. It seeks to provide solutions to problems associated with "slow, expensive, unscalable, and environmentally harmful" proof-of-work protocols, such as those employed by Bitcoin, by creating an ecosystem of interconnected blockchains. The project further aims to simplify blockchain technology for developers through a modular framework that clarifies decentralized applications. Additionally, the Interblockchain Communication (IBC) protocol enhances the ability of different blockchain networks to communicate, mitigating the issue of fragmentation within the industry. The origins of Cosmos trace back to 2014 with the establishment of Tendermint, a core contributor to the network. In 2016, Cosmos released its white paper, followed by a token sale in the subsequent year. The ATOM tokens are acquired via a hybrid proof-of-stake algorithm, playing a critical role in securing the Cosmos Hub, which serves as the project’s main blockchain. This cryptocurrency also contributes to the governance of the network.

The co-founders of Tendermint, the gateway to the Cosmos ecosystem, include Jae Kwon, Zarko Milosevic, and Ethan Buchman. Although Jae Kwon remains listed as the principal architect, he stepped down from his role as CEO in 2020. Kwon has stated that he continues to be involved with the project, but his primary focus has shifted to other initiatives. Peng Zhong has succeeded him as the CEO of Tendermint, and the board of directors has undergone a significant refresh. Their objectives include improving the experience for developers, fostering an enthusiastic community around Cosmos, and creating educational resources to increase awareness of the network's capabilities.

The Cosmos network is composed of three distinct layers: the application layer, the networking layer, and the consensus layer. The application layer is responsible for processing transactions and updating the network's state. The networking layer facilitates communication between transactions and blockchains. Meanwhile, the consensus layer ensures that nodes reach an agreement on the current state of the system. Cosmos leverages a suite of open-source tools to integrate these layers and empower developers to create decentralized applications (dApps).

ATOM has a defined total supply of precisely 260,906,513 tokens. At the time of writing, approximately 203,121,910 of these are in circulation. It is important to highlight that these cryptocurrencies are not mined; they are earned through staking. Two private sales took place in January 2017, followed by a public sale in April of the same year. These events collectively raised $16 million, equivalent to around $0.10 per ATOM. Regarding token distribution, approximately 80% was allocated to investors, while the remaining 20% was divided between two entities: All In Bits and the Interchain Foundation. Cosmos has likened ATOM tokens to the ASICs used in Bitcoin mining. As a technical paper by the Tendermint team elaborated: “It is a piece of virtualized hardware (economic capital) that you need to obtain in order to participate as a keeper in the network.”

As previously discussed, Cosmos employs a proof-of-stake consensus algorithm. Validator nodes that stake a larger number of ATOM tokens have a higher probability of being selected to verify transactions and receive rewards. Nodes that are determined to be acting dishonestly face penalties and risk losing the tokens they have staked.

Cosmos is now available on several major exchanges. Many individuals choose to purchase Cosmos on platforms such as Binance, Coinbase, and OKEx. Trading pairs are available with a variety of fiat currencies, and further information about the process of converting dollars and euros to cryptocurrencies can be found on Eulerpool.

A crucial component of Cosmos's layered architecture is the Tendermint BFT engine. This aspect of the network enables developers to construct blockchains without the necessity of coding them from the ground up. Tendermint consolidates essential blockchain processes, including the peer-to-peer network, consensus algorithm, and transaction processing, into a single package. This integration significantly simplifies the development of blockchain applications by eliminating the requirement to begin from scratch.

The Cosmos Hub represents the inaugural blockchain launched on the Cosmos network. It is specifically designed to serve as an intermediary for the distinct blockchains, referred to as "zones," that are developed within the Cosmos network. Validators on the Cosmos Hub are tasked with sustaining consensus across all zones and are compensated with fees for their services. These fees are transacted using the native token of the Cosmos Hub, ATOM.

At the core of Tendermint lies Tendermint Core, a Proof-of-Stake (PoS) governance mechanism that ensures synchronization among the computers operating the Cosmos Hub. It utilizes the Tendermint Byzantine Fault Tolerance (BFT) consensus algorithm, a variant of PoS. Within this framework, validators alternate in committing new blocks of transactions to the blockchain.

The Cosmos team has developed the Cosmos Software Development Kit (SDK), enabling the use of Tendermint's consensus algorithm for blockchain creation. The SDK is designed on a modular philosophy, allowing developers to integrate diverse modules to construct the specific type of blockchain they require. Additionally, it supports multiple programming languages, thereby making it accessible to a broader range of developers.

The Interchain Foundation, a non-profit organization within the Cosmos ecosystem, announced on February 17, 2022, the release of the Interchain Accounts upgrade. The Inter-Blockchain Communications (IBC) protocol, which launched in April 2021, serves as the Cosmos standard for blockchain interoperability, enabling a blockchain to manage an account on a different chain. Currently, there are 38 projects utilizing IBC, including notable names such as Terra, the Crypto.org chain, and Gravity bridge. The Interchain Accounts upgrade represents the most significant enhancement to the ecosystem since Stargate, which initially enabled Cosmos blockchains to connect using the standardized IBC protocol. With the implementation of Interchain Accounts, users can engage in activities such as staking, voting, and token swapping on different blockchains. The upgrade aims to "enable composability in IBC [which] allows innovation in distinct applications to be deployed without needing to upgrade the entire Interchain." Explore simple definitions for crypto terms in our glossary. Learn about blockchain basics with Eulerpool Alexandria.