Cosmos (ATOM)

Cosmos (ATOM) is the native cryptocurrency of the Cosmos Hub, the first blockchain in the Cosmos network, an ecosystem of independent blockchains that can send tokens and messages to one another. ATOM is staked to secure the Hub, used to vote on its governance proposals, and pays its transaction fees. The coin is usually just called Cosmos, after the wider project founded by Jae Kwon and Ethan Buchman.

The Cosmos Hub is only one of many chains built with the same open-source tools, the Cosmos SDK and the CometBFT consensus engine, formerly called Tendermint. Those chains, which have included dYdX and the collapsed Terra network, issue their own tokens and do not need ATOM. Cosmos is often compared with Polkadot (DOT), which links chains under one shared security system, whereas Cosmos chains usually secure themselves; such single-purpose chains are often called appchains.

Think of Cosmos as a group of independent countries that have agreed on a common postal system. Each country makes its own laws, prints its own money and runs its own police, but because they all use the same envelopes and address format, a parcel can travel from one to another without a middleman. That postal system is called IBC, short for the Inter-Blockchain Communication protocol.

The Cosmos Hub is one of those countries, an early and well-known one, and ATOM is its currency. Holders can lock up ATOM to help keep the Hub honest and earn new ATOM in return, and they vote on its rules. The other countries in the network do not have to use ATOM at all, which is the main reason its role has been debated for years.

Kwon began work on Tendermint, a fast consensus engine, in 2014, and Buchman joined in 2015; their white paper describing a network of connected blockchains followed in 2016. The Interchain Foundation, based in Switzerland, sold ATOM in an April 2017 fundraiser, an initial coin offering that raised about $17 million. The Cosmos Hub launched on 13 March 2019, and the Stargate upgrade of February 2021 brought IBC to the Hub. In March 2023 the Hub introduced Interchain Security, first called replicated security, under which other chains can rent protection from ATOM stakers instead of building their own validator set. In the same year Tendermint Core was forked and renamed CometBFT.

The Hub uses proof of stake with CometBFT, a Byzantine fault tolerant engine. A capped set of validators, chosen by the amount of ATOM staked with them, propose and vote on blocks, and a block is final once more than two-thirds of the stake has signed it, giving fast finality. Holders take part through delegated staking, assigning ATOM to a validator and sharing its rewards; validators and their delegators can lose part of their stake for signing two conflicting blocks or for long downtime. Unstaking takes 21 days. IBC lets chains track each other's state and pass packets through relayers, so tokens can move between chains without a custodian in the middle, unlike many a crypto bridge.

ATOM has no supply cap. The Hub mints new ATOM continuously and adjusts the rate of inflation to keep about two-thirds of supply staked: when less is staked the rate drifts up to reward staking, and when more is staked it drifts down. In September 2022 developers published the ATOM 2.0 white paper, which would have redesigned issuance and created a treasury for the Hub, but in November 2022 holders rejected it, many voting "no with veto", partly over a plan to issue more tokens early on. In November 2023 holders narrowly passed Proposal 848, capping annual inflation at 10 percent, down from about 14 percent; Kwon objected and called for a split, which led to a separate fork called AtomOne. A January 2024 proposal to lower the minimum rate from 7 percent to zero was rejected. A broader redesign of ATOM's economics was under discussion in 2026.

New ATOM goes to stakers, so their approximate yield is:

• $y$ is the gross annual yield for stakers, before validator commission.
• $i$ is the annual inflation rate.
• $c$ is the share of new tokens sent to the Hub's community pool.
• $b$ is the share of all ATOM that is staked.

With illustrative figures of 10 percent inflation, a 10 percent community-pool share and 60 percent of ATOM staked, the yield is 0.10 × 0.90 ÷ 0.60 = 0.15, or about 15 percent. Holders who do not stake are diluted by the full inflation rate.

• Staking. ATOM secures the Cosmos Hub and, through Interchain Security, chains that rent its validators.
• Governance. Holders vote on upgrades, parameters and spending from the community pool.
• Fees. Transactions on the Hub are paid for in ATOM.
• DeFi collateral. Staked ATOM can be turned into tradable tokens through liquid staking and used in other applications.

The main criticism is weak value capture: chains built with Cosmos tools generate activity and fees in their own tokens, so the ecosystem's growth has not translated into steady demand for ATOM. Interchain Security attracted only a small number of consumer chains. High inflation has diluted holders who do not stake, and repeated governance fights over the coin's purpose have divided the community. The collapse of Terra in May 2022, a chain built with Cosmos tools, also damaged the ecosystem's reputation. Like other proof-of-stake coins, ATOM is volatile, and stakers face a 21-day lock-up and the risk of slashing.

• Cosmos
• Cosmos Hub documentation
• IBC Protocol