Cosmos - ATOM
Updated: Jun 21
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What is Cosmos (ATOM) and how does it work?
Cosmos (ATOM) is a project that aims to solve some of the most common and hard problems in the blockchain industry, such as slow, expensive, unscalable and environmentally harmful proof-of-work protocols, like Bitcoin, by offering a solution to the ecosystem of connected blockchains. The project's goal is to make blockchain technology less complex for developers by applying a modular framework that demystifies decentralized apps. Additionally, an Interblockchain Communication protocol makes it easier for blockchain networks to communicate with each other, therefore, preventing fragmentation in the industry.
Cosmos was originally created in 2014 but wasn't until 2016 that a whitepaper was published, and a token sale was held the following year. Users can earn ATOM tokens through a hybrid proof-of-stake algorithm that helps keep the Cosmos Hub, the project's flagship blockchain, secure, and play a role in the network's governance. One of the main goals of the developers was to reduce the fragmentation seen in blockchain networks by enabling blockchains to communicate with each other. Therefore, Cosmos software development kit focuses on modularity. This enables the network to be easily built using already existing code, with the aim to make, in the long term, complex applications straightforward to construct as a result.
Another main focus for Cosmos is scalability, meaning that more transactions can be substantially processed quicker and more efficiently than in older type blockchains like Ethereum and bitcoin, which are also expensive and congested.
In February 2022, a non-profit organization of the Cosmos ecosystem, the Interchain Foundation, announced the release of the Interchain Accounts network upgrade. The original protocol, the Inter-Blockchain Communications (IBC), launched in April 2021, is the Cosmos standard for blockchain interoperability and allows blockchains to control an account on a separate chain. Many DeFi projects already use IBC, such as Terra, Crypto.org chain and Gravity bridge. With Interchain Accounts, users can stake, vote, swap tokens and more on other blockchains adding a variety of additional benefits that the blockchain solution can offer. The upgrade serves the purpose of "enabling composability in IBC [which] allows innovation in distinct applications to be deployed without needing to upgrade the entire Interchain."
Cosmos uses a proof-of-stake consensus algorithm, where validator nodes that stake a higher quantity of ATOM tokens are more likely to be chosen to verify transactions and earn rewards. Nodes that are found to be acting dishonestly are penalized and they can end up losing the tokens that they had at stake. This is an interesting incentive-based stacking method that aims to disincentive foul behaviour on the network and attacks on the blockchain.
Last update 7/4/2022
ATOM originally launched on Binance in early 2020, at $4,30, and followed somewhat of a downtrend for most of the year, going as low as $1.78 before regaining its launch price around July of the same year. This was followed by an upwards move to over $8, before lateraling until early 2021. This was followed by a massive bull market in 2021, where Cosmos spiked to over $30, before having a correction for the rest of the year that would see prices go as low as $9. Similarly, towards the end of 2021, we saw another bull run with Atom reaching prices as high as $43, before once again correcting to $22.
What can be noticed is that on the weekly time frame Atom seems to be quite correlated to its moving averages, following both the 20EMA and the 50EMA in both the bull cycles, by staying above them, and again during the corrections by bouncing on these levels, initially the 20EMA and then the 50EMA, before continuing with the upwards move.
Currently, ATOM has just had a correction and has bounced between the 20EMA and 50EMA as previously seen, signalling that if it stays above this level it might continue its upwards movements and move towards new all-time high ranges.