Summary

Cosmos is an ecosystem of networks and tools for building interoperable blockchains. The main chain Cosmos hub is a central ledger compatible with blockchain "partitions". Each partition is extremely customizable, allowing developers to design their own cryptocurrencies, customized block verification settings, and other features.

These partitions are created through the Cosmos SDK and lay the necessary foundation for the development of the Cosmos blockchain. Tendermint Core, the default consensus layer of the Cosmos SDK, provides a validator-based consensus mechanism that can be used across multiple Cosmos blockchains. However, each partition can choose exactly how the validators are selected.

For the Cosmos Hub mainnet, the blockchain selects 100 validators from the top nodes, and these validators stake the blockchain’s utility token ATOM. Each validator will be assigned corresponding voting rights based on the amount of ATOM pledged. A lead validator then proposes new blocks for others to vote on. If the block is successfully generated, the validator will receive the block reward, and users who pledge ATOM to select the validator will also share the reward.

In addition to the Cosmos hub consensus mechanism, ATOM can also be used to pay transaction fees and participate in governance voting. Validators must participate in proposals or face sanctions.

Introduction

Like scalability, interoperability is always a key issue to be solved in the blockchain field. In the more than ten years since the first Bitcoin blockchain was launched, we now have many options for interoperable blockchain networks. Cosmos, with its Tendermint consensus mechanism and open source developer tools, is probably one of the most popular options out there. Let’s explore in detail why Cosmos continues to be a hit and how it allows blockchains to easily work together.

How does Cosmos (ATOM) work?

Cosmos is a project focused on creating interoperability between different blockchain networks. Founded in 2014 by Ethan Buchman and Jae Kwon, the Cosmos network consists of a proof-of-stake blockchain mainnet and customized blockchains called “zones.”

The Cosmos Hub main chain can transfer assets and transmit data between interconnected partitions, providing a shared security barrier. These are all operated in conjunction with Cosmos' customized consensus mechanism Tendermint and a universal application programming interface. Fees in Cosmos can be paid using the network's own cryptocurrency ATOM.

The Cosmos network is divided into different three-layer architectures:

1. Network - allows transaction confirmations and other consensus information to communicate with the hub blockchain.

2. Application - updates the status of transactions and balances in the network.

3. Consensus - Organize nodes to reach consensus on adding new transactions.

The above three layers are integrated through a series of open source tools and applications. For example, Tendermint packages the network layer and consensus layer into a ready-to-use engine. Blockchain developers using Tendermint only need to focus on the application layer, saving both time and resources.

What is Cosmos Hub?

The Cosmos Hub is the main blockchain of Cosmos, connecting other customized blockchains called "partitions". This connection is achieved through the Inter-Chain Communication Protocol (IBCP), which tracks the status of each partition. Through this protocol, information can be easily transferred between any zone connected to the Cosmos Hub.

The Cosmos hub serves as the central ledger of the ecosystem, where each partition can exchange information through cross-chain communication (IBC). Cross-chain messages (IBC) use two transaction types: IBCBlockCommitTx and IBCPacketTx. The first passes the latest block hash for any given partition. The second allows partitions to prove whether a packet is legitimate and issued by the sender's application.

Let's imagine two DApps on two different zones communicating with each other. To do this, cross-chain communication information is sent to the Cosmos Hub, which records the interaction. The information is forwarded through the Cosmos Hub, and each zone records the results of these interactions on its own blockchain. This leaves evidence of the activity in all three independent blockchains. Cosmos has been hailed as the "Internet of Blockchains" because of its ability to allow blockchains to interact with each other.

What are Cosmos partitions?

Cosmos' customized blockchains, called "partitions," are used in a wide variety of different applications. The term is equivalent to the well-known sidechain concept from blockchain projects such as Polygon. Each partition can verify its own transactions, mint tokens, and enable custom development. Even with these differentiated features, all partitions can still interact with any other partition in the Cosmos system as long as they are licensed.

Partitions adopt a hub and spoke architecture, with the hub acting as a router between different partitions. The Cosmos hub is a popular representative of these, but there are other hubs out there. The network is completely permissionless and anyone can create a hub blockchain or partition. However, each zone or hub has the right to deny connections to other blockchains.

A blockchain connected to a hub can also connect any partition connected to the same hub. Hubs can also be connected to each other. Additionally, just as Binance Chain did in 2019, anyone can fork Cosmos Hub and release their own version.

What is Cosmos SDK?

Cosmos SDK is an open source software development toolkit that allows users to create customized blockchains. The default consensus protocol of the Cosmos SDK is Tendermint Core, but there are also various pre-built modules available. Using the Cosmos SDK will significantly simplify the process of building a blockchain, providing all the standards users expect.

Through highly customizable plugins, users can design new functions and features. Both public proof-of-stake and private permissioned proof-of-authority blockchains can be built using the Cosmos SDK. Binance Chain is an example of a blockchain built using the Cosmos SDK.

What is ATOM?

ATOM is the native token of Cosmos and has three main use cases:

1. Users must use ATOM to pay transaction fees, which are proportional to the required computing power.

2.ATOM also participates in the governance system of the Cosmos Hub. The more ATOM you hold, the greater your voting rights on platform decisions.

3. Verifiers can stake tokens and receive rewards for participating in the consensus algorithm.

ATOM is issued through an Initial Coin Offering (ICO) and has no supply cap, making it an inflationary token. Tendermint Core rewards stakers with newly minted ATOM. Therefore, the inflation rate adjusts in real time based on the number of tokens pledged and the number of pledgers.

How to buy ATOM?

ATOM can be easily purchased through the Binance exchange. Before purchasing ATOM, please register a Binance account or complete identity verification (KYC) and anti-money laundering (AML) investigations. The simple steps are as follows:

1. Log in to your personal Binance account and hover your mouse over the [Trading] tab. Choose [Standard Edition] or [Professional Edition] trading view.

2. Hover the mouse to the trading pair displayed on the left, search for "ATOM", and select the appropriate trading pair. Here we take [ATOM/BUSD] as an example.

3. Select the order type you are interested in and enter the quantity you wish to purchase. Here we choose market order. Carefully verify the order details and click [Buy ATOM] to submit the purchase application.

What is Tendermint?

Tendermint is a protocol that provides a blockchain consensus mechanism (Tendermint Core) and tools that allow applications to connect to the Tendermint Core consensus engine, namely Tendermint ABCI. Tendermint Core is the default consensus protocol of Cosmos and is also a Byzantine Fault Tolerant (BFT) system. In short, Byzantine Fault Tolerance (BFT) means that non-cooperative, even malicious actors can confirm new transactions.

Validators can run nodes through Tendermint Core and maintain copies of blockchain data. The Cosmos hub has a limit of 100 validators, so some full nodes cannot become validators. Validators who confirm transactions need to vote for new blocks added to the chain.

By staking ATOM as a node, the verifier can obtain verification rights. The top 100 nodes with the highest stake value become validators, and their voting rights are proportional to the staked ATOM. Users can also entrust their ATOM to validators in exchange for part of the block rewards.

Users can freely choose to stake ATOM to more reliable people. This mechanism will effectively motivate validators to maintain good conduct. To add new blocks, a group of 100 validators vote to reach consensus on each block. Voting will take place in multiple rounds based on the leader’s block proposals.

Why is Tendermint important?

Here’s why Tendermint (BFT) is so popular:

1. Applicable to public and private chains. Tendermint (BFT) only handles the network and consensus layers of the Cosmos blockchain, including how validators agree on transactions and share information, but developers can customize the application layer. Whether it is a public or private permissioned blockchain, each partition can determine how validators are selected.

2. High performance. Tendermint (BFT) has a block time of about 1 second and can process thousands of transactions per second.

3. Instant transaction confirmation. As long as the majority of network validators are honest and reliable, transactions are confirmed immediately once a block is created. Compared with blockchains such as Ethereum (ETH) or Bitcoin (BTC), Cosmos users need to confirm fewer blocks and are more confident that transactions will be accepted.

4. Security. If the blockchain does fork, resulting in two different historical transaction records, it can easily be held accountable and the cause of the problem can be identified.

Summarize

Cosmos was one of the first solutions for creating blockchain interoperability, and the option remains hot. Tendermint (BFT) and Cosmos SDK are still powerful tools for creating blockchains today. However, since 2017, we have observed that sidechains that collaborate with high-traffic blockchains such as Ethereum began to gain more attention. Whether this trend will continue remains to be seen. Despite this, Cosmos plans to take advantage of the current trends in NFT, DeFi mortgages, and cross-chain pledges, and strive to seize opportunities in the trend and win the future.