Source: Logan Craig
2021 is largely determined by the rise of Layer-1. Following the rise of Ethereum in the summer of 2020, blockchains such as Solana, Terra, Avalanche and Fantom have seen exponential growth in both network activity and the price of their native tokens.
The meteoric rise of these blockchains indicates two things:
- There are enormous opportunities for adventurous users exploring and adopting emerging networks.
- There are significant technical limitations inherent in a single, monolithic blockchain.
Enter the Cosmos
Cosmos enables the creation of highly customizable blockchains, whether they are general-purpose or application-specific. Cosmos is designed to connect these networks through so-called Inter-Blockchain Communication (IBC), allowing for trust-minimized, near-instant transfer of value and data between blockchains. This modular design has the potential to unlock a new design space for interoperable cross-chain applications, while providing a potential path for continued expansion.
While many of Cosmos’ potentially transformative technologies are still in their infancy, the ecosystem is already starting to see meaningful traction, bringing many innovations at the protocol and application layers.
And with the opportunity presented by innovation – since many may be familiar with Cosmos chains such as Terra and ThorChain, let’s take a deep dive into five other tokens in the ecosystem that investors should pay close attention to.
Cosmos Hub (ATOM)
- Token Type: L0/L1
- Market cap: $8.2 billion
- FDV: n/a (perpetual inflation)
- Apeability: 5/5
Although it is the flagship coin of Cosmos, ATOM also deserves a closer look as it continues to grow in the ecosystem. As the first-ever Cosmos chain, the Cosmos Hub plays an important role as infrastructure, as a terminal for IBC transfers, and will see further utility in the coming months by providing Interchain Security.
A core challenge faced by specific Lisks is the need to launch their own set of validators. Unlike rollups, Cosmos chains do not inherit security from the parent chain. Instead, each chain is responsible for protecting itself, requiring independent source validators and ensuring that their native tokens maintain value. While allowing a greater degree of sovereignty and customizability, it can result in a drastic drop in security for a particular chain relative to Layer-1 of shared security such as Ethereum. While many use cases have different security needs, some, such as DeFi, require a highly robust and decentralized validator to defend against potential attacks.
The Cosmos Hub aims to play the role of the beacon chain by launching Interchain Security. This will allow the Cosmos chain to outsource its security needs to the Cosmos Hub, benefiting from its over $5.2 billion in ATOM staking. Interchain Security can bring more high-value use cases to the ecosystem and is expected to start rolling out in Q3 2022 .
While it could be argued that the Cosmos Hub is a “layer 0” rather than a layer 1, the ATOM token functions in practice similarly to a traditional L1 token. ATOM is used to secure the Hub, and holders are eligible for inflation rewards as well as transaction fees for IBC transfers.
One advantage of ATOM over other L1 tokens is its role as an “airdrop magnet”. Many networks and projects in the Cosmos ecosystem, such as Osmosis, Juno, and Shade Protocol, have airdropped or plan to airdrop a portion of their token supply to ATOM holders.
What is less clear is whether ATOM will receive the monetary premium held by other L1 tokens to varying degrees. For example, ATOM is the second most liquid token on the aforementioned Osmosis DEX, after OSMO, suggesting that it may act as the second most native token on various chains.
While it has a market cap of over $8 billion and its popularity as an asset among Cosmos DeFi users is unclear, ATOM may be the safest and most widespread way for investors to gain exposure to the Cosmos ecosystem. The token is poised to benefit from the increased utility and demand brought about by the launch of Interchain Security and, at least in the near future, has the potential to generate additional cash flow for its holders through airdrops, further increasing its appeal .
- Token Type: L1/DeFi – DEX
- Market cap: $2.8 billion
- FDV: $850 million
- Flushability: 5/5
Osmosis is a decentralized exchange and application-specific chain with over $1.66 billion in TVL and has facilitated $7-1.7 billion in trading volume in recent weeks. Similar to Terra’s UST stablecoin, users and applications can take advantage of the network’s capabilities built on top of AMM.
Osmosis is most similar to Balancer in that it allows the creation of highly customizable multi-asset pools, but also incorporates elements from other AMMs while also having its own unique features. For example, each liquidity pool is “self-managed”, with liquidity providers having governance over its parameters. Like Curve, LPs must lock up their tokens to participate in governance, plus liquidity mining rewards are proportional to the length of the lock-up period.
The OSMO token plays several key roles in the Osmosis ecosystem, with characteristics of Layer-1 and DeFi tokens.
Like ETH, AVAX, SOL, and other L1 tokens, users receive inflation rewards and transaction fees from Gas payments by staking OSMO in exchange for network security. Additionally, like the latter two tokens, OSMO is also used to vote on network-wide governance proposals.
Additionally, OSMO shares similarities with DeFi tokens, which are also used for AMM-level governance. For example, the token is used to determine the base exchange fee for all Osmosis pools and, like Curve, to vote on rewards for different OSMO meters.
OSMO is also used for so-called “Superfluid Staking”, which will allow OSMO to be utilized as liquidity within the AMM while being staked.
For more information on Super Liquid Staking, click here .
Osmosis is both a very unique blockchain and an AMM. OSMO benefits from one of the most unique token designs of all cryptocurrencies, with its utility and demand driven by its use as an L1 token, AMM governance token, and superfluid staking.
- Token Type: L1
- Market cap: $1.4 billion
- FDV: $5.6 billion
- Flushability: 2/5
Juno is a general smart contract platform. Unlike many other chains in the Cosmos ecosystem, Juno allows permissionless deployment of smart contracts built using CosmWasm, a virtual machine that uses Rust as the programming language. JunoSwap is the network’s most popular application, holding over $42 million in TVL, and in the future, the chain will leverage IBC for true cross-chain applications.
Source: Juno Documentation
Juno has recently been at the center of a highly controversial governance proposal. As part of its token distribution, JUNO distributes 47% of its supply to ATOM stakers. While there is a “whale cap” to prevent entities like exchanges from receiving JUNO, one whale managed to trick the airdrop and amass 2.5 million JUNO, worth about $75 million at current prices. This represents 7.5% of the initial circulating supply of the token and 1.3% of the expected supply at the end of the team’s 12-year vesting period.
After intense discussions, in a highly controversial proposal dubbed ” Proposition 16 “, the community voted through on-chain governance to reduce the whale’s balance to 50,000 JUNO, the maximum allocation per address during the initial airdrop.
Translator’s Note: In the early morning of March 16, uno Network’s proposal No. 16 on removing the assets of the whale account was passed, and 40.85% of the voters agreed with the proposal.
Like ATOM, OSMO, and other PoS networks, JUNO is used for network security, while stakers are able to earn inflation rewards and transaction fees. Like the first two tokens, JUNO is used as Gas on the network and is showing signs of becoming a reserve asset for the chain as it is the most popular base pair asset on JUNoSwap.
The outcome of Proposition 16 poses a huge risk to Juno’s trusted neutrality, potentially hindering developer interest and capital flowing into the ecosystem. However, if the community is united, and if the network hard forks, then as one of the first permissionless, general-purpose CosmWasm L1s, JUNO could be attractive to contrarians.
Secret Network (SCRT)
- Token Type: L1
- Market cap: $805 million
- FDV: n/a (perpetual inflation)
- Flushability: 3/5
Secret Network is a general-purpose smart contract platform that (lives up to its name) allows the creation of privacy-oriented applications, known as Secret Apps. Secret Apps can be built using “Secret contracts” capable of encrypting user data. With the emphasis on privacy, Secret has the potential to play a valuable role as a “privacy chain” in the Cosmos ecosystem. By encrypting transaction data across the entire first layer, the network combines the best of privacy coins like Zcash and Monero with applications like Tornado Cash.
Image source: Secret Analytics
With the limited number of apps deployed on the network, Secret is only seeing the earliest signs of traction. For example, SecretSwap is the largest AMM on the network, but only has a daily trading volume of $1-3 million and holds only $39.1 million in TVL. Additionally, while Secret also emphasized interoperability with other networks, only $46.2 million was funded from Ethereum, BNB Chain, Monero, and bridged through IBC.
Similar to Juno, SCRT is an L1 token used to secure the network, pay gas, and be used for protocol-level governance. However, as mentioned above, SCRT can have multiple “roles” and can also act as a private currency with broad utility similar to L1 tokens like ETH.
As privacy public chains, Secret Network and SCRT have the potential to provide a very valuable and important niche within the Cosmos ecosystem and the crypto space as a whole. However, given the limited traction the network has seen so far, SCRT appears to be best suited for investors with a long-term perspective.
5. Astroport (ASTRO)
- Token Type: DeFi – DEX
- Market cap: $274 million
- FDV: $2.1 billion
- Flushability: 4/5
Astroport is the largest decentralized exchange on Terra, with over $1.3 billion in TVL and a consistent trading volume of over $100 million. Through a unique three-phase “lockup ” that combines elements of airdrops and vampire attacks, the DEX acts as a combination of Uniswap and Curve, and Astroport facilitates the exchange between volatile trading pairs, as well as other similar assets.
The protocol makes good use of its so-called “generators,” which function similarly to Curve and Frax meters, with governance voting for free-allocated pairs. Generators are also able to automatically deposit LP tokens into third-party protocols that are currently offering incentives to increase capital efficiency by offering double mining rewards to users.
ASTRO employs two token models. The first is the liquid asset xASTRO, holders, i.e. ASTRO stakers, will receive tokens and be entitled to governance rights and a share of transaction fees generated by the platform.
The second, vxASTRO, is a non-transferable token that is most similar to veCRV. ASTRO holders can lock up their tokens for vxASTRO, which entitles them to a larger share of governance rights and transaction fees relative to xASTRO, as well as more rewards for providing liquidity on the platform.
As the largest DEX governance token on the largest blockchain in the Cosmos ecosystem, ASTRO appears poised to be a major beneficiary of Terra’s growth. Furthermore, due to its ability to steer liquidity across trading pairs within the exchange, the token could be in high demand in the Terra native protocol, perhaps starting an “ASTRO war”.
While they vary in their operability today, there are many fascinating chains, protocols, and tokens in the Cosmos ecosystem that deserve attention. For crypto natives, while many of them are in the early stages of the adoption cycle, they bring exciting innovations in network, application and token design.
Can they bring investors into the Cosmos?
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/bankless-5-noteworthy-projects-in-the-cosmos-ecosystem/
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