The Rise of the Cosmos Ecosystem: Reevaluating Underestimated Potential

As a well-established blockchain ecosystem, Cosmos stands out in the competition with its decentralized and open characteristics. Although the Cosmos ecosystem was relatively quiet in the past, it is currently one of the sectors in the crypto industry with the most potential for high growth. Recent development trends indicate that projects with strong fundamentals and sustainable narratives will greatly benefit in the future market, and Cosmos is well-prepared to take advantage of this trend.

Cosmos is an open-source ecosystem based on blockchain technology, aimed at achieving interoperability between different blockchains. Although there are still gaps compared to some leading systems in terms of technology and ecological projects, Cosmos has strong advantages in decentralization and interoperability. The Cosmos SDK and IBC launched by the Cosmos development team help developers solve the problem of reinventing the wheel, playing an important role in promoting technological advancement across the industry.

However, the market valuation of Cosmos does not match its strength. Compared to other blockchain ecosystems, the scale of the Cosmos ecosystem is relatively small and has not yet attracted enough developers and users. Additionally, the technology and application scenarios of Cosmos are relatively complex, requiring more time and resources for promotion and popularization. Therefore, in a cryptocurrency market that places greater emphasis on data and liquidity, the market capitalization of Cosmos has been severely underestimated in the long term, currently standing at only $3.15 billion, ranking 23rd. Its token ATOM also differs greatly in market value compared to other ecosystem tokens due to a lack of practicality.

To change this situation, the Cosmos 2.0 white paper was launched at last year's Cosmoverse conference, aiming to improve the low utilization of the Cosmos Hub network and ATOM token. Around these goals, Cosmos has announced several developments, such as upgrading the original Interchain Security to "Replication Security" and passing the Liquid Staking Module (LSM) proposal. In May of this year, the Cosmos ecosystem chain Neutron's mainnet went live, marking the first use of the upgraded "Replication Security" mechanism, and announced an airdrop to stakers of Cosmos Hub, sparking heated discussions about the value capture of Cosmos, ATOM, and its ecosystem.

Based on these technological improvements, the Cosmos ecosystem projects have experienced a liquidity explosion this year. First, the daily trading volume of the public blockchain Canto once exceeded that of Solana, marking a successful start for Cosmos. Subsequently, the total locked value (TVL) of liquidity staking protocols Stride, Layer 1 public blockchain Injective, and Kujira has continued to rise, increasing between 2 to 6 times compared to January. In April of this year, data monitoring showed that the number of active developers on the Cosmos SDK briefly surpassed that of Ethereum, currently ranking second. In addition, the recently launched modular blockchain network Celestia, built on the Cosmos SDK, has also attracted market attention, with the Celestia + Cosmos model being hailed as the ultimate form of application chains.

The outstanding performance of Cosmos ecosystem projects has rekindled market interest in Cosmos. Many users have shown high expectations for the future plans of Cosmos 2.0, and there are even voices in the market saying "Cosmos Summer is coming." In the recent rebound, tokens related to the Cosmos ecosystem, such as Celestia (TIA), Injective (INJ), and Osmosis (OSMO), have all surged over 20% in the past week. INJ has seen an increase of over 110% in a month. These positive trends indicate that Cosmos is gradually gaining market recognition and attention, laying a solid foundation for its future development.

Future Development Plan of Cosmos Technology: Providing Technical Support for Liquidity Explosion

When exploring the latest developments in the Cosmos ecosystem, it is essential to understand the future development plans for Cosmos technology. Continuous technological innovation is crucial for maintaining ecosystem growth and providing unprecedented liquidity for blockchain applications. In September 2023, the Interchain Foundation, which promotes the development of the Cosmos ecosystem, publicly released the Interchain 2024 development plan, outlining the future development plans for Cosmos technology.

CometBFT: The Cornerstone of Cross-Chain Scalability

CometBFT is an innovative consensus algorithm and is the core of Interchain scalability. By ensuring that validators reach consensus on block generation, CometBFT enables the Interchain ecosystem to maintain security, decentralization, and integrity. The Interchain Foundation plans to further expand the reach and applicability of CometBFT, empowering the development of sovereign, interoperable applications. Currently, CometBFT has been upgraded to v0.38, and the foundation plans to release v0.39 by the end of 2023, featuring efficiency improvements, a comprehensive data support API, and an enhanced indexing system.

Cosmos SDK: Modular and New Features

The Cosmos SDK is a multifunctional toolkit for developing blockchain or Rollup applications. It has been adopted by many new blockchain projects, including Cosmos-based applications, Fairblock, Berachain, and the upcoming dYdX V4. In future development plans, the Cosmos SDK will focus on modularity and the introduction of new features. This will enable developers to create more complex, modular applications, thereby fostering a broader and more robust ecosystem.

CosmJS: Improving Efficiency and User Experience

CosmJS is a library that helps developers integrate JavaScript clients with the CosmosSDK blockchain. The Interchain Foundation plans to enhance CosmJS with a new encoder to improve its efficiency, reduce code bloat, and provide a more streamlined and professional development experience. This will enable developers to create more elegant and user-friendly applications, ultimately enhancing the appeal of the Cosmos ecosystem.

CosmWasm: Unlocking Decentralized, Permissionless Deployment

CosmWasm is a smart contract framework built on the Cosmos SDK. It enables developers to deploy decentralized applications without permission requirements, while also allowing blockchain developers to separate their product development cycles from blockchain development, thereby reducing the costs of validator upgrades. The Interchain Fund will further optimize CosmWasm in the future, making it easier for developers to create and deploy various applications, ultimately increasing blockchain utilization. Key focus areas include IBC adoption and account-based smart contracts.

IBC Protocol: Enhancing Interoperability and Scalability

IBC (Inter-Blockchain Communication) is a protocol that enables secure, decentralized, and permissionless data transfer between blockchains. The Interchain Foundation plans to update IBC in 2024, focusing on two themes: scalability and usability. By improving the scalability and interoperability of IBC, Cosmos will further enhance the capacity of its ecosystem, enabling seamless interaction between blockchains, applications, and smart contracts.

Latest Changes in the Cosmos Ecosystem: Accelerating Development and Innovation

With the continuous development of the digital asset market, the Cosmos ecosystem has once again demonstrated immense potential in recent months. As an open-source multi-branch blockchain network, the Cosmos ecosystem boasts several advantages, including smart contracts, scalability, security, and cross-chain interoperability. At the same time, its application chain theory is also evolving continuously. Below are some noteworthy changes that have occurred in the Cosmos ecosystem recently.

Liquidity Staking Module

Liquidity Staking Module (LSM) is a new module designed to provide a modular solution for liquidity staking in the Cosmos ecosystem. The implementation of LSM on Cosmos Hub began on June 14, 2023, and a software upgrade plan was released. The impact of LSM's implementation on the Cosmos ecosystem is that users can now directly liquidity stake their already staked ATOM without having to wait for the unbonding period.

Token Economics Upgrade

The economic model of the Cosmos token ATOM has undergone a significant change, shifting from an era of pursuing high returns to a narrative focused on real yields. On May 10, the Neutron mainnet went live, which is a CosmWasm platform that combines the Cosmos SDK and IBC, and it is the first consumption chain to utilize Cosmos's "Replication Security." Neutron aims to address the criticisms faced by ATOM1.0 due to its lack of apparent utility and to bring a new narrative and momentum.

Enhanced Interoperability

Interoperability has always been the greatest advantage of Cosmos compared to other ecosystems. The launch of Evmos 2.0 in August this year undoubtedly further solidifies Cosmos's advantage in this regard. Evmos is built on the Inter-Blockchain Communication (IBC) protocol of Cosmos, which has the potential to elevate the powerful multi-chain ecosystem to new heights. Evmos 2.0 will achieve interoperability between the Ethereum and Cosmos ecosystems, allowing developers to build applications that can interact with both ecosystems.

The Rise of Perpetual Contracts

Perpetual contracts play an important role in the digital asset market and have recently experienced rapid growth. As the leading perpetual contract exchange in the Ethereum ecosystem, dYdX v4's announcement to migrate to the Cosmos ecosystem will undoubtedly have a positive impact on the Cosmos perpetual contract module, as it will bring more liquidity and innovation to the Cosmos ecosystem.

Increase in Native Liquidity

Native liquidity is crucial for the DeFi space, as it not only enables seamless on-chain interactions but also reduces bridging risks. Recently, Tether's stablecoin USDT has been integrated into the Kava blockchain, solidifying Tether's leading position in the space and introducing new native liquidity to Cosmos. Furthermore, in March of this year, Noble, the native asset issuance platform of the Cosmos ecosystem, officially announced a partnership with Circle to bring native USDC into Cosmos. Noble stated that this integration is expected to generate hundreds of millions of dollars in liquidity within Cosmos in the coming months.

Overview of Popular Projects in the Cosmos Ecosystem

Initia

Initia is a popular project based on Cosmos, dedicated to building a highly interconnected modular Rollup network. By abstracting the complexities in traditional modular and multi-chain systems, Initia supports developers in creating scalable and autonomous systems. Its architecture includes L1 (Layer 1), L2 (Layer 2), and a communication layer, enabling developers to easily launch application-specific blockchains based on Initia L2 without the need to understand the complex chain-level infrastructure or operate a set of validators.

Initia has adopted the Cosmos Software Development Kit (SDK) but utilizes a computational framework called MoveVM, which is based on the Move smart contract language. At the same time, Initia leverages Optimistic Rollups as an application-specific L2 solution. By integrating L1, L2, and communication layers, Initia achieves seamless messaging and bridging between different virtual machines (such as EVM, WasmVM, and MoveVM), making it the first MoveVM computing framework compatible with the Cosmos IBC protocol and enabling seamless interaction with other blockchain networks in the Cosmos ecosystem.

Recently, it has been reported that Initia has secured pre-seed investment from a certain trading platform's lab, with specific financing amounts and further details yet to be disclosed. This funding will be used to support the development of Initia's infrastructure, the expansion of product tools, and the incubation of key application layer projects to promote the growth of the Initia ecosystem. Currently, Initia is still in the development stage of the testnet, and once launched, it will greatly enhance the liquidity of the Cosmos ecosystem.

Celestia

Celestia is a modular blockchain network based on the Cosmos ecosystem, designed to provide pluggable consensus and data availability layers. The project's goal is to enable anyone to quickly deploy decentralized blockchains without the additional costs of a consensus layer, and to provide developers with greater flexibility in building and deploying blockchain applications.

An important feature of Celestia is data availability sampling. It allows nodes to verify only a small portion of a block's data without needing to validate the entire block. This significantly reduces the hardware requirements for validating nodes and enhances the scalability of the network. In collaboration with Cosmos, Celestia works as a data availability layer alongside Tendermint and Cosmos Zones. This enables chains within the Cosmos ecosystem to leverage the data availability capabilities provided by Celestia and utilize fraud proofs.