What is happening in the cosmos ecosystem? A review from early 2022

Cryptocurrency markets were hit hard in January 2022 and for some it seemed like they were at the beginning of a bear market. Downmarket or not, the Cosmos ecosystem and its $ATOM token is an outlier.

Between December 15 and February 6, $ATOM has appreciated more than 47%. Over the same period, Bitcoin lost nearly 12% in value and Ether lost just under 21%. Why is this happening?

The following guest post is written by Dan Edelback, who joins us in discussing several possible causes for the growing popularity of the Cosmos ecosystem. Then the CEO of Exidio and the co-founder of the Sentinel dVPN. Exidio is an end-to-end encrypted VPN technology that uses open source code and decentralized networks to transparently provide secure access to Web 3.0. The Sentinel network is built using the Cosmos SDK.

Cosmos is king

Cosmos is designed as an ecosystem of interoperable yet autonomous blockchains that can exchange information and tokens with each other in a permissionless manner. The focus is on autonomy, sovereignty and scalability.

Cosmos aims to be the “Internet of Blockchains” and has now attracted 260 decentralized applications on its blockchain. One reason for this growth is that it has become easier for smaller teams to build on Cosmos since last April’s upgrade of the so-called Inter-Blockchain Communication (IBC) protocol combined with the Cosmos Software Development Kit (SDK).

Cosmos, which has a proof-of-stake consensus mechanism, provides the Cosmos SDK to developers to enable cross-chain bridges between Ethereum Virtual Machine (EVM) compatible blockchains. There are dozens of such chains, some of the bigger names are:

  • Ethereum
  • Ethereum Classic
  • Binance smart chain
  • polygon
  • avalanche
  • IoTeX network
  • moon river
  • BitTorrent Chain
  • Kucoin Chain (KCC)
  • EOS
  • Clover

On the one hand, there has been a lot of competition between different crypto camps via social media. On the other hand, innovative projects like Cosmos and Polkadot see the future of global crypto adoption coming from cross-chain networks building bridges between blockchains. This process proves a superior user experience whether they want to use Ether, Binance Coin, Matic or ATOM tokens, thanks to the easy integration of crypto currencies and allowing groups of all sizes to participate.

In the Polkadot system, there is a more advanced governance system where DOT holders have much more power. Polkadot allows to connect to up to 100 other parachains, but to become a parachain the project needs a lot of DOT tokens and to be able to win an auction to become a parachain. With infrastructure demand, Polkadot users must have already invested more than Cosmos.

Cosmos IBC is fundamentally different from Polkadot’s system. With Cosmos there is one consentless cross-chain exchange of data, making it possible for any Cosmos team to send data to any Cosmos chain. Developers can build a new chain at any time and then launch it and send the tokens to the Cosmos Hub, and the Cosmos Hub can transact and send new ATOM tokens to this new chain that was just created. Cosmos holders have no control over who uses the Cosmos SDK.

When done right, cross-chain bridges like Cosmos’ IBC protocol have the added benefit of increasing scalability, allowing for many more users on board.

Ethereum Problems and Ethereum Killers

Unlike Cosmos, Ethereum tokens are among the groups most affected by the current instability and fluctuations in the crypto market. Despite much attention to the subject over the past year, the London Hard Fork, and countless statements by the founder Vitalik Buterinplans and proposes new ideas to solve the existing challenges for the Ethereum and course correction Ethereum gas costs† However, these efforts have not solved the problem.

This intractable problem is becoming an increasingly important issue as decentralized applications built for decentralized finance, decentralized exchanges, NFTs, and blockchain-based video games have become mainstream in the past two years. Decentralized financial instruments have led to a significant increase in popularity. At the time of writing, there have been over $5 million in fees in the past 24 hours on OpenSea alone. OpenSea is the largest NFT marketplace and is built on Ethereum.

Entering the void left by these issues with Ethereum are the so-called “Ethereum killers.” In other words, blockchains designed as a home for decentralized applications, similar to Ethereum, offering greater speed and lower transaction costs. Some important examples of this are the Binance Smart Chain, Solana and Cosmos.

Web 3.0 and its role in cryptostability

Web 3.0 is the latest buzzword in the crypto and tech space. To dive in, let’s first look at the history of the web and define a few terms.

Web 1.0 refers to the early stage of the Internet where most websites were written by web developers and designers. Most users just viewed web pages. The World Wide Web exploded in 1995 and became a global phenomenon.

Web 2.0 refers to the web as we know it today: dynamic websites where most of the data is entered by the users. This started with social media sites like Facebook, MySpace, Twitter and LinkedIn. Even sites like YouTube and Amazon are built on the same model. In a sense, users have become the product.

Companies that own these websites store huge amounts of data about their users and sell it to advertisers. Many companies earn billions of dollars in ad revenue while providing the user with a great user experience, but no share in the profits, and often no choice about who owns their privacy and data.

Web 3.0 is a concept based on taking the principles of decentralized finance and applying them to the decentralization of social media and the Internet. What if there were a fairer system for sharing profits and property? What if users had rights to their own data privacy and sovereignty, with the right to choose whether or not to share their data, and if they did, to own their data and at least share in the revenues that be generated from it. This is the hope for a new, better, safer and fairer online reality.

Building with Cosmos on Web.3

A project building on Cosmos, Sentinel, is on a mission to provide private and censorship-resistant Internet access. By building a Web 3.0 infrastructure, Sentinel seeks to ensure online privacy rights and security.

VPNs are built with their users’ online privacy in mind. However, they are often created by centralized companies that store user information like other Web 2.0 gatekeepers.

Per a report from 2018, 26 VPN companies were found selling their user information to third parties. Another in 2020 found that 7 VPN companies were storing data from 20 million customers who… leaked

The Sentinel Network is designed to solve this with its decentralized platform, which is built using the Cosmos SDK. The Sentinel ecosystem is a global network of autonomous decentralized virtual private network (dVPN) applications. The native token of the Sentinel ecosystem is the $DVPN token.

Exidio built on Cosmos SDK

Exidio built on Cosmos SDK

The Sentinel network allows anyone around the world to mine $DVPN tokens with their unused bandwidth, allowing individuals to monetize residential or commercial bandwidth by supplying it to a network of distributed and decentralized dVPN applications built on the Sentinel framework.

Final Thoughts: The Future of the Cosmos (ATOM)

Through a diverse array of DApps, Cosmos is trying to gain significant market share from Ethereum and other decentralized application blockchains. The cross-chain bridges and network specifications provide high speeds and low costs for projects.

Can Cosmos continue to grow and compete effectively with Ethereum, Binance Smart Chain and Solana? Although there is no crystal ball, things have been looking good since mid-December. So it would be a mistake to ignore what is happening on Cosmos.

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