What is Cosmos Hub (ATOM)?
Cosmos Hub is the blockchain at the centre of the Cosmos Network – an ecosystem made up of many interconnected blockchains, including Terra, Osmosis, and crypto.org. It is intended to serve as the economic centre of Cosmos, providing interchain token exchange, security, token custody, and bridges to Ethereum (ETH) and Bitcoin (BTC).
ATOM is the main utility token of the Cosmos Hub, and is used to pay transaction fees. Holders of ATOM can earn more tokens by delegating their tokens to one of the 125 validators on the proof-of-stake Cosmos Hub blockchain. Staked ATOM tokens also give their holders voting rights for on-chain governance proposals.
Cosmos Hub was developed by Tendermint Inc., which was founded in 2014 by Jae Kwon. After years of development, Cosmos Hub was launched on 13 March, 2019. Today, the development of Cosmos is supported by a Switzerland-based non-profit called the Interchain Foundation (ICF).
| Did you know? While initial development of Cosmos was undertaken by Tendermint, they have since been joined by many more core development teams. These include: Agoric, Akash, Althea, Chainapsis, ChainSafe, Confio, Informal Systems, Interchain GmbH, Iqlusion, IRIS Network, PeggyJV, Regen Network, Sikka, SnowFork, VitWit, and Zondax Source: Cosmos.Network |
Cosmos Hub (ATOM) Basics
One of the key principles behind development of Cosmos Hub was the application of Byzantine fault tolerance (BFT). This is the principle that allows a distributed network, like Cosmos Hub, to reach a consensus even if some of the network’s nodes give incorrect responses or fail to respond at all.
Cosmos Blockchain
Cosmos Hub is the central blockchain of the Cosmos Network – which is made up of numerous independent, sovereign blockchains developed using the free Cosmos SDK. Apps can be split into several application-specific blockchains, enabling the entire network to scale both horizontally and vertically, while avoiding network congestion.
ATOM Staking and Minting
All Cosmos blockchains use a proof-of-stake (PoS) consensus mechanism to provide security to the network. ATOM is the primary token of the Cosmos Hub blockchain. New ATOM tokens are minted and awarded to those who stake their ATOM to secure the blockchain. To stake ATOM, holders must delegate their tokens to one of the 125 validators. Tokens can be unstaked, but the process takes 21 days.
ATOM Supply
There is no limit to the number of ATOM tokens that can be minted. This is to encourage holders to stake their tokens to secure Cosmos Hub – the idea being that those who don’t stake will lose value because of inflation, while those who do stake will gain value.
ATOM Adoption & Usability
As previously mentioned, the ATOM token has three main uses: securing the Cosmos Hub chain, earning rewards, and distributing governance rights. Of course, it is also tradable on the secondary market via crypto exchanges in its own right. In the future, it is also possible that it gets adopted for payments.
ATOM Network Fees & Speed
The Cosmos Network has been designed from the ground up to enable extremely fast transactions at very low fees. It does this, in part, by using multiple sovereign blockchains, thus avoiding congestion on any one. Cosmos transactions are confirmed in around 7 seconds. Cosmos Hub transaction fees are paid in ATOM, and at the time of writing, average transaction fees were equivalent to around $0.01.
| Did you know? Cosmos is not positioned as a competitor to Ethereum, but actually embraces it, providing a bridge between the two major ecosystems. Source: Cosmos.Network |
ATOM Security and Safety
The Cosmos Network has been designed to benefit from the network effect of endless scaling. The incentives to stake ATOM also help ensure a committed, secure network, and reliable validators (validators that prove unreliable will cause stakers to lose ATOM, so won’t be tolerated). However, as always, you should be aware of security risks when using third-party platforms, like exchanges and wallets.
Security and safety tips:
- Don’t leave your ATOM on-exchange for longer than absolutely necessary. If you are not currently trading, transfer them to a local wallet for short-term storage or staking.
- For long-term storage or staking, keep your crypto in a hardware wallet.
- Always keep your wallet keys in multiple safe places – they cannot be recovered.
- Never tell anyone about your crypto holdings. No matter how secure your storage is, if you or your loved ones are physically threatened, you’ll probably hand over your personal keys.
ATOM Volatility
As to be expected from any free-floating crypto, ATOM has experienced significant price volatility since launching. Like other cryptos, it has experienced massive upswings during bull markets, and rapid crashes in bear markets. Illustrating this, in December 2020, ATOM was trading at around $5, but in May 2021 almost reached $30, before crashing to under $10 in July. However, by September it had shot back up to more than $40. At the time of writing, in November 2022, ATOM was trading at just under $10 again (based on CoinGecko data).
Final Word on Comos Hub (ATOM)
Clearly, the future of ATOM is intrinsically linked to the success of Cosmos Hub and the wider Cosmos Network. So far, things are looking good, with a rapidly growing ecosystem of apps being built using the Cosmos SDK. Given the critical role of ATOM in the network, it may well have a very bright future, and the ability to stake it and earn rewards is appealing. However, its limitless supply will put off many potential long-term investors.