The Potential and Development of the Cosmos Ecosystem

Cosmos, as a mature blockchain ecosystem, stands out among many ecosystems with its decentralization and openness. Although market promotion is relatively low-key, Cosmos has always maintained the ability to incubate and attract high-quality projects. As the birthplace of the application chain revolution, Cosmos remains one of the areas in the crypto industry with the greatest potential for hundredfold growth. Recent trends indicate that projects with strong fundamentals and sustainable development narratives will benefit in the upcoming bull market, and Cosmos is well-prepared for this.

Reevaluating the Potential of the Cosmos Ecosystem

Cosmos is an open-source blockchain ecosystem aimed at achieving interoperability between different blockchains. In terms of decentralization and interoperability, Cosmos has significant advantages. The Cosmos SDK and IBC launched by the Cosmos development team provide convenience for developers and promote technological advancement across the industry.

However, the market valuation of Cosmos does not match its strength. Compared to other blockchain ecosystems, the ecosystem scale of Cosmos is relatively small and has not attracted enough developers and users. Additionally, the technology and application scenarios of Cosmos are relatively complex, requiring more time and resources for promotion. Therefore, in the cryptocurrency market that emphasizes data and liquidity, the market capitalization of Cosmos has been long undervalued, currently at only $3.15 billion, ranking 23rd.

To improve this situation, the Cosmos 2.0 white paper was launched at the Cosmoverse conference last year, aiming to enhance the utilization of the Cosmos Hub network and the ATOM token. Around these goals, Cosmos has announced a series of progressions, including upgrading Interchain Security to "Replication Security" and the proposal of a Liquidity Staking Module (LSM).

In May of this year, the Neutron mainnet of the Cosmos ecosystem went live, utilizing the upgraded "Replication Security" mechanism for the first time, and announced an airdrop to stakers of the Cosmos Hub, sparking heated discussions about Cosmos, ATOM value capture, and its ecosystem.

Based on these technological improvements, the Cosmos ecosystem projects have experienced a surge in liquidity this year. The public chain Canto's daily trading volume once exceeded that of Solana, marking a successful start for Cosmos. The total locked value (TVL) of liquidity staking protocol Stride, Layer 1 public chain Injective, and Kujira has continued to rise, increasing 2 to 6 times compared to January. In April, the number of active developers on the Cosmos SDK surpassed that of Ethereum, ranking second. Recently, the modular blockchain network Celestia, built on the Cosmos SDK, has also attracted market attention, with the Celestia + Cosmos model being regarded as the ultimate form of application chains.

The outstanding performance of the Cosmos ecosystem projects has rekindled market attention towards Cosmos. Many users have expressed 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 risen by over 20% in the past week, with INJ even surging over 110% in one month. These positive trends indicate that Cosmos is gradually gaining market recognition and attention, laying a solid foundation for future development.

Future Development Plans for Cosmos Technology

In September 2023, the Interchain Foundation announced the Interchain 2024 development plan, outlining the future development blueprint for Cosmos technology.

CometBFT: The cornerstone of cross-chain scalability

CometBFT is the core of Interchain scalability, ensuring that validators reach a consensus on block generation. The Interchain Foundation plans to further expand the coverage and applicability of CometBFT, supporting the development of sovereign, interoperable applications. CometBFT has been upgraded to v0.38, with 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

Cosmos SDK is a versatile toolkit for developing blockchain or Rollup applications. Future development plans will focus on modularity and introducing new features, enabling developers to create more complex and modular applications, thereby fostering a broader and more powerful 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 through a new encoder, improving its efficiency, reducing code bloat, and providing a more streamlined and professional development experience.

CosmWasm: Unlocking Decentralized, Permissionless Deployment

CosmWasm is a smart contract framework built on the Cosmos SDK. The Interchain Foundation will further optimize CosmWasm in the future, making it easier for developers to create and deploy various applications. 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 scalability and usability, further enhancing the capacity of the Cosmos ecosystem.

Latest Changes in the Cosmos Ecosystem

Liquidity Staking Module

The Liquidity Staking Module (LSM) was implemented on June 14, 2023, on the Cosmos Hub, and users can now directly liquidity stake their staked ATOM without waiting for the unbonding period.

Token Economics Upgrade

The economic model of ATOM has shifted from pursuing high returns to pursuing real yields. On May 10, the Neutron mainnet went live, marking the first consumer chain to use Cosmos' "Replication Security," aiming to address the lack of obvious utility in ATOM 1.0.

Enhanced Interoperability

In August, Evmos 2.0 was launched, further consolidating Cosmos's advantages in interoperability and achieving interoperability between the Ethereum and Cosmos ecosystems.

The Rise of Perpetual Contracts

dYdX v4 announces its migration to the Cosmos ecosystem, which will bring more liquidity and innovation to Cosmos.

Increase in native liquidity

USDT has been integrated into the Kava blockchain, and Noble has partnered with Circle to introduce native USDC, which is expected to generate hundreds of millions of dollars in liquidity within Cosmos.

Popular Projects in the Cosmos Ecosystem

Initia

Initia is a modular Rollup network based on Cosmos, utilizing the MoveVM computing framework and optimistic aggregation. Recently, it secured pre-seed funding from Binance Labs to support infrastructure development and ecosystem expansion.

Celestia

Celestia is a modular blockchain network based on Cosmos, providing pluggable consensus and data availability layers. The mainnet launched on October 31, and its token TIA is listed on major exchanges, currently priced at $2.33.

dYdXV4

dYdX V4 is expected to be released in December this year, migrating to the Cosmos network, aiming to address Ethereum's scalability limitations. As a leading decentralized exchange with a daily trading volume exceeding $3 billion, its migration will bring a large number of new users and liquidity to Cosmos.

Neutron

Neutron is a smart contract infrastructure based on CosmWasm and will become the first consumer chain on Cosmos. In May this year, it completed a $10 million financing round led by Binance Labs. The NTRN token was launched on Binance in October, and the current trading price is $0.290.