The Internet of Blockchains: A Deep Dive Into Cosmos (ATOM)
The Cosmos Hub is the blockchain protocol underlying an increasingly large number of blockchains built on the Cosmos Network, allowing them to communicate with each other. It functions much like how you use a computer to share files that can be opened on any operating system.
Updated October 5, 2023 • 4 min read
The Cosmos Hub is designed to generate thousands of interconnecting blockchain systems built on the Cosmos Network. Powered by the ATOM coin, the Cosmos Hub utilizes a proof-of-stake consensus method that allows network participants to “stake” their ATOM coins and earn incentivized rewards. The Cosmos Hub uses various innovations to simplify software development, improve performance, heighten security, and create an interoperable blockchain infrastructure.
The Cosmos Hub is the blockchain protocol underlying an increasingly large number of blockchains built on the Cosmos Network, allowing them to communicate with each other. It functions much like how you use a computer to share files that can be opened on any operating system. While Cosmos is designed to support a multitude of tokens, Cosmos’ native crypto is ATOM, which is the driving force behind the Cosmos Hub. ATOM serves a variety of functions:
Maintaining network consensus
Staking through incentivization-based validator nodes
Mitigating spam as the medium for paying gas fees
Providing a voting mechanism to propose network amendments through Cosmos governance proposals
The Cosmos Hub is being built by the Tendermint Core team — the primary organization responsible for designing and contributing to the Cosmos Network. They play a key role in building critical network infrastructure such as the Cosmos Hub, Cosmos SDK, and Tendermint Core — providing state-of-the-art tools to help realize the full potential of the Cosmos Network. The Tendermint team has constructed Cosmos Hub as an interoperable blockchain platform that allows the protocol to connect with independent blockchains — known as zones — within the Cosmos Network.
This article will primarily discuss three main aspects of the Cosmos Network:
Tendermint Core Byzantine Fault Tolerance (BFT) consensus methodology: a language-agnostic consensus algorithm designed by the Tendermint team that is used for state machine replication to copy other blockchain networks built within the Cosmos Network.
Inter-Blockchain Communication Protocol (IBC): designed by the Tendermint team to be an interoperable communication layer between different blockchain networks.
The Cosmos Software Development Kit (SDK): an open-source, scalable, infrastructure designed for building multi-asset proof-of-authority (PoA) and PoS blockchain platforms within the Cosmos Network.
Tendermint Core BFT Consensus
Generally, proof-of-work (PoW) blockchain protocols are slow and expensive to run, with significant scalability challenges and high energy consumption. The Tendermint BFT consensus mechanism solves these problems by utilizing a proof-of-stake (PoS) consensus algorithm specifically designed to give the network faster transaction times.
Tendermint, the consensus algorithm underlying the Cosmos Network, is built to be a high-performance BFT SMR (State Machine Replication) platform that replicates services that can then be simulated as deterministic, non-random state machines. Basically, this means that Tendermint Core was created to copy specialized servers (or states). This is realized through a special machine that copies servers and spreads them throughout the global Cosmos Network. This process allows software engineers from Tendermint Core to reproduce the blockchain on state machines across the world.
Tendermint’s significant technical capabilities allow developers to create their own blockchain platform without having to build everything from scratch. This is helpful because it allows users to create essentially any type of blockchain system they desire — with practically everything already completed for them, except for their application logic and token. Tokens that are hosted on the Cosmos Network include: Kava (KAVA), Terra (LUNA), Band Protocol (BAND), Aragon (ANT), and Akash Network (AKASH).
The Cosmos ATOM coin also plays a pivotal role in the functionality of the Tendermint Core BFT consensus mechanism because the Cosmos Hub is a proof-of-stake blockchain platform. Cosmos relies on a 100-validator node network to maintain consensus, security, and operational efficiency. For this system to properly function, it is imperative that users stake their ATOM coins.
The role of a validator is to run a full node — which verifies the rules of the network — and broadcasts votes to the network to subsequently commit new blocks to the blockchain. In turn, the validator receives revenue in the form of ATOM, based on the quantity of ATOM coins that are staked as collateral.
Finally, the Cosmos ATOM coin is used as a spam-prevention mechanism (to pay fees in a similar way ether is used to pay gas fees on Ethereum). Charging for transactions discourages a high quantity of spam transactions. The Cosmos coin is also used as a governance voting mechanism for proposals that impact the direction of the Cosmos Network. Cosmos network participants have the opportunity to vote in proportion to their ATOM holdings.
Inter-Blockchain Communication (IBC) Protocol
The Cosmos IBC protocol was built to solve one of the most important challenges blockchain systems face today: the lack of communication and data sharing between networks.
Interoperability and the capacity to communicate with both external and internal blockchain protocols is pivotal to the widespread real-world application and technological adoption of blockchain and cryptocurrency. Imagine a telephone network that could only communicate with participants in its immediate geographic area. It simply wouldn’t work. The Cosmos IBC is a TCP/IP-like messaging protocol built to share information and data, ultimately enabling the communication of several blockchains with each other.
Capabilities of the Cosmos SDK
The Cosmos SDK is a scalable, open-source infrastructure designed to build multi-asset public PoS blockchain platforms such as the Cosmos Hub, in addition to permissioned proof-of-authority (PoA) blockchains. Simplicity and ease of use are critical attributes sought by software engineers in order to build interoperable, application-specific blockchains in a timely manner. The Cosmos SDK is a modular framework designed to construct application-specific blockchains instead of virtual machine-based applications.
Virtual machine (VM) blockchains like Ethereum were created to host application development on top of an existing blockchain as a set of smart contracts. Smart contracts can be beneficial for specific use cases, such as single-use applications. Nevertheless, they are often ineffective for the development of complex, decentralized platforms.
Typically, smart contract technology is limited in its versatility, sovereignty, and technical performance. Application-specific blockchains supported by Cosmos are designed to operate an individual application and give engineers the freedom to make the type of structural design modifications needed to run the application in an optimal manner.
The Cosmos SDK allows developers to use not only pre-built modules but also their own custom-built modules, enabling them to test their minimum viable product before launching their own public mainnet (blockchain protocols that have completed testing and are ready for public use). Furthermore, the Cosmos SDK allows users to connect their own blockchain to the Cosmos Network via IBC, increasing liquidity and user adoption. The Cosmos SDK has also been used to construct a number of key blockchain and cryptocurrency projects, such as Binance DEX, Kava, Terra and IRISNet.
A Universe of Interoperable Blockchains
The Tendermint BFT consensus mechanism, the IBCProtocol, and the Cosmos SDK are each designed to simplify how software engineers build their own blockchain protocols as part of the Cosmos Network. Many leading blockchain enterprises have already created the core of the Cosmos Network by using its flexible and interoperable framework.
The Cosmos Hub itself is an extremely powerful decentralized blockchain network, whose structure and governance allow network participants to maintain equanimity — with the ATOM coin serving as a staking mechanism to promote security, consensus, and operational efficiency. The Cosmos Network helps solve many of the underlying interoperability challenges that currently impose fundamental limits on today’s blockchain technology.
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