History of Cosmos

The History of ATOM and the Cosmos Network

Early Development and Vision

The origins of Cosmos (ATOM) date back to 2014 when Jae Kwon conceptualized Tendermint, a Byzantine Fault Tolerant (BFT) consensus engine designed to provide fast finality and scalability. The goal was to address inefficiencies in Proof-of-Work (PoW) systems while enabling a modular blockchain framework. Cosmos aimed to facilitate interoperability between sovereign blockchains, presenting an alternative vision to monolithic blockchain ecosystems.

In 2016, Kwon, alongside Ethan Buchman, formalized the Cosmos project and introduced the Inter-Blockchain Communication (IBC) protocol. The duo co-founded the Interchain Foundation (ICF), a Swiss nonprofit responsible for guiding Cosmos’ development and funding.

ICO and Token Launch

ATOM's initial coin offering (ICO) took place in April 2017, raising approximately $17 million. Despite the relatively modest ICO compared to other projects of the era, the funding was crucial in accelerating Cosmos' roadmap. Unlike many utility tokens, ATOM was not initially designed as a medium of exchange. Instead, it played a role in network security through staking and governance mechanisms.

The Cosmos Hub and Network Expansions

The Cosmos Hub, the first blockchain in the Cosmos ecosystem, launched in March 2019. This network served as the central hub for connecting independent blockchains within the Cosmos ecosystem. While the launch was successful, governance disputes emerged early, with tensions surrounding upgrades and foundation management.

Despite the vision of a decentralized network, Kwon's departure from the project in 2020 raised concerns about leadership fragmentation. Internal disputes over governance, resource allocation, and roadmap execution led to further divisions within the ecosystem.

Governance Challenges and Forks

Cosmos has witnessed several governance struggles. A notable disagreement occurred with the governance proposal regarding the Cosmos Hub’s strategic direction. Some developers and community members felt that funding allocations favored certain projects disproportionately, leading to contentious votes on treasury spending and development focus.

Additionally, the rise of competing interoperability solutions, such as Polkadot and Avalanche, placed Cosmos in a more competitive landscape. Some questioned whether the modular application-specific blockchain model provided enough differentiation to sustain long-term adoption.

The Evolution of IBC and Expanding Utility

While governance debates persisted, the Cosmos ecosystem made significant technical strides. The IBC protocol became operational, enabling seamless asset transfers across IBC-compatible blockchains. The number of connected chains grew steadily, fostering a broader decentralized economy beyond Cosmos Hub itself.

However, Cosmos has faced criticisms regarding ATOM’s tokenomics and economic model. Unlike other smart contract platforms that generate revenue through transaction fees, some argue that ATOM lacks robust value capture mechanisms beyond staking rewards. This has led to discussions on refining the token model to enhance long-term sustainability.

Competing with Other Networks

As Cosmos evolved, it has competed with blockchain frameworks that prioritize cross-chain functionality and scalability, such as Polkadot and Avalanche. If interested in similar interoperability discussions, read more about Polkadot’s approach here: https://bestdapps.com/blogs/news/unlocking-blockchain-how-polkadot-enables-interoperability.

How Cosmos Works

How Cosmos (ATOM) Works: Interoperability and Consensus Explained

Cosmos (ATOM) operates as a modular blockchain network designed to enable interoperability between independent chains. It utilizes the Inter-Blockchain Communication (IBC) Protocol, allowing sovereign blockchains to exchange data and assets without a central intermediary. Cosmos achieves this by using a hub-and-zone model, where multiple blockchains (zones) connect to central hub chains like the Cosmos Hub, reducing reliance on traditional cross-chain bridges.

Tendermint Consensus and Cosmos SDK

At the foundation of Cosmos is Tendermint, a Byzantine Fault Tolerant (BFT) consensus mechanism. Unlike Proof of Work (PoW) systems, Tendermint enables fast finality and low energy consumption. Validators stake ATOM tokens to secure the network, process transactions, and participate in governance. This delegated staking model allows ATOM holders to delegate tokens to validators, earning a share of rewards while taking on the associated risks, including slashing penalties for validator misbehavior.

Cosmos blockchains are built using the Cosmos SDK, a modular framework that makes launching application-specific blockchains more efficient. This differs from generalized smart contract platforms, as developers can create optimized chains rather than competing for resources on a single blockchain like Ethereum.

Issues in the Cosmos Ecosystem

Despite its innovative design, Cosmos faces several hurdles:
1. Interoperability Risks – While IBC enables a trust-minimized approach to cross-chain transactions, bridging assets across different security models remains a challenge, raising concerns about security exploits.
2. Validator Centralization – Cosmos relies on a limited number of validators (around 175 for the Cosmos Hub), potentially leading to governance centralization issues, as seen in other staking-based systems.
3. Interchain Security Delay – Initially, Cosmos lacked a unified security model, meaning each blockchain had to secure itself. While Interchain Security (ICS) aims to solve this, adoption has been slower than anticipated.
4. ATOM Utility and Inflation – ATOM has been criticized for excessive inflation, which could reduce long-term value retention. Governance proposals have attempted to balance staking yields and inflation, but concerns persist.

Cosmos vs. Other Blockchain Interoperability Solutions

Cosmos competes with Polkadot and Avalanche, both offering unique interoperability solutions. While Polkadot uses a shared security model through parachains, Cosmos blockchains retain greater sovereignty but must secure themselves independently. Avalanche’s subnets provide similar independent chain functionality, making the choice between ecosystems dependent on network needs.

For a deep dive into how Polkadot enables interoperability, check out Unlocking-Blockchain-How-Polkadot-Enables-Interoperability.

Use Cases

ATOM and Cosmos Use Cases: Powering Blockchain Interoperability

Inter-Blockchain Communication (IBC) and Cross-Chain Transactions

A core use case for ATOM within the Cosmos ecosystem is facilitating secure cross-chain transactions via the Inter-Blockchain Communication (IBC) protocol. By enabling independent blockchains to communicate and exchange assets without trust assumptions, IBC addresses one of the biggest challenges in the industry: interoperability. Unlike wrapped assets and bridges that frequently suffer from security vulnerabilities, IBC is designed to be more decentralized and resistant to exploits. However, adoption remains uneven, with many blockchains still relying on traditional bridges, slowing Cosmos’ vision of a fully interoperable blockchain ecosystem.

Staking and Network Security

ATOM holders can delegate their tokens to validators to secure the Cosmos Hub, receiving staking rewards in return. This Proof-of-Stake (PoS) model helps maintain network integrity and decentralization. However, like all PoS systems, centralization risks emerge when staking becomes too concentrated among a small set of validators. Additionally, slashing mechanisms pose a risk to stakers, as misbehavior—such as validator downtime or double signing—can result in loss of funds.

Governance Participation

ATOM holders actively influence the protocol’s evolution through governance proposals. This on-chain decision-making process allows the community to vote on updates, improvements, and economic policies. While this empowers token holders, low participation rates remain a challenge, raising concerns about a lack of decentralized governance engagement. Unlike more structured governance mechanisms seen in some blockchain networks, Cosmos’ governance is highly dependent on community involvement, leading to potential stagnation in decision-making.

Cosmos SDK: Building Custom Blockchains

The Cosmos SDK is a modular framework that enables developers to create application-specific blockchains. Many major projects, including Terra and Binance Smart Chain, have utilized Cosmos technology. Despite its flexibility, adoption faces competition from alternatives like Polkadot’s Substrate framework. Some developers also cite integration complexities and documentation challenges, which can slow down onboarding. Those exploring interoperable ecosystems may find Polkadot's governance model worth comparing to Cosmos.

DeFi and Liquid Staking

The Cosmos ecosystem has seen emerging DeFi applications, including liquid staking solutions, enabling stakers to receive derivative assets representing their staked tokens. These derivatives unlock liquidity but introduce additional smart contract risks. Unlike Ethereum’s LST ecosystem, Cosmos' liquid staking landscape is still developing, with relatively lower TVL.

Overall, ATOM plays a fundamental role in Cosmos’ vision of a scalable, interconnected blockchain network, but challenges such as governance participation and competitive pressures from rival ecosystems persist.

Cosmos Tokenomics

ATOM Tokenomics: Inflation, Staking, and Liquidity Considerations

Cosmos’ ATOM token follows a distinct tokenomics model driven by staking incentives, security mechanisms, and inflationary supply adjustments. Unlike fixed-supply assets, ATOM is subject to a dynamic monetary policy that directly impacts its value proposition and staking rewards.

Inflationary Model and Supply Expansion

ATOM employs a dynamic inflation rate, ranging between a lower bound and an upper cap. This inflationary model ensures network security by incentivizing validators and delegators to participate in securing the Cosmos Hub. However, it also introduces long-term supply expansion, which can create downward pressure on ATOM’s price unless counteracted by staking demand.

A higher percentage of staked ATOM suppresses inflation, whereas lower staking participation triggers increased issuance. This mechanism is designed to balance validator incentives while maintaining network stability. Yet, this design can also lead to volatility in staking rewards depending on network participation trends.

Staking Yields and Economic Security

ATOM stakers provide economic security to the Cosmos Hub by locking up tokens in exchange for staking yields. Rewards come from transaction fees and inflationary issuance, making staking participation essential to blockchain operations. However, this introduces a security-risk tradeoff—if too few ATOM holders stake, network security weakens, potentially making Cosmos more vulnerable to attacks.

Unlike some ecosystems where stakers can instantly withdraw funds, ATOM has an unbonding period, reducing liquidation risks but also restricting capital mobility. This lock-in mechanism often discourages short-term speculation but can also deter participants seeking immediate liquidity.

Liquidity and DeFi Utility

While Cosmos focuses on interoperability, ATOM has historically struggled with DeFi integration relative to other major assets. Unlike Ethereum-based tokens widely utilized across DeFi protocols, ATOM’s availability in lending markets and yield farming is more limited. However, with IBC (Inter-Blockchain Communication), cross-chain ATOM liquidity is gradually expanding.

Stakers must also weigh the opportunity cost of locking ATOM in staking versus deploying it in emerging DeFi applications. The slow increase in ATOM’s use cases outside of staking contrasts with ecosystems like Stacks, where assets have dual utility in both staking and on-chain smart contract execution. This limitation has historically constrained ATOM’s demand beyond its core function in securing the Cosmos Hub.

Cosmos Governance

Cosmos (ATOM) Governance: Decentralization and Challenges

On-Chain Governance and the Role of ATOM Holders

Cosmos employs an on-chain governance model where ATOM holders influence protocol upgrades, network changes, and funding allocation. Governance proposals can be submitted by any user, but only pass if they receive sufficient community support. Voting power is proportional to the amount of staked ATOM, meaning validators and large delegators have a significant say in protocol decisions. While this ensures active participation, it also introduces centralization risks as wealthier stakeholders can dominate outcomes.

Validator Influence and Concerns of Centralization

ATOM staking plays a dual role in both securing the network and granting governance rights. However, Cosmos' staking model tends to concentrate power among top validators. The governance process is designed to be transparent, but large validator entities can potentially act in self-interest rather than in the community's favor. This issue mirrors governance challenges seen in other blockchain ecosystems, including the weighted influence of token holders in networks like Polkadot's Governance A New Era of Decentralization.

Proposal Process and Community Engagement

For a proposal to be considered, ATOM holders must deposit tokens as collateral, and if it passes, the deposits are refunded. If rejected or deemed spam, deposits are forfeited. This system helps filter out low-quality proposals but may deter smaller participants from engaging actively. Voter turnout in Cosmos governance has also been historically inconsistent, raising concerns about how representative decisions truly are.

The Risk of Low Voter Participation

One of the major criticisms of Cosmos' governance system is its varying voter engagement. Many ATOM holders delegate their tokens to validators, who then vote on their behalf. While this streamlines decision-making, it also disconnects many token holders from governance participation, potentially leading to decisions that favor validators over regular users. Other networks, such as Tezos Revolutionizing Blockchain Governance for All, have addressed similar engagement issues by experimenting with different voting incentive models.

Future of Governance and Potential Improvements

Cosmos has made efforts to address governance inefficiencies by introducing community pools and long-term funding mechanisms. However, governance remains under scrutiny as the network expands and new participants join the ecosystem. Delegation-based voting, while convenient, could become a bottleneck if large validators continue consolidating power. To mitigate these risks, the Cosmos community must continuously refine governance parameters to align with decentralized decision-making principles.

Technical future of Cosmos

ATOM and Cosmos: Current and Future Technical Developments

Interchain Security: Expanding Shared Security

Interchain Security is shaping Cosmos’ evolution by enabling smaller chains to leverage the security of the Cosmos Hub while maintaining operational independence. This feature allows projects to inherit CometBFT consensus security, reducing bootstrapping costs for new zones. However, its adoption remains limited, and some critics question whether it creates economic reliance on Cosmos Hub validators, undermining true decentralization.

Rollups on Cosmos: The Next Scalability Leap

Optimistic and zero-knowledge rollups are gradually becoming part of Cosmos’ interoperability landscape. Projects aim to implement rollups within the Cosmos ecosystem, enabling scalable execution layers while leveraging IBC for seamless cross-chain communication. Nevertheless, Cosmos has faced challenges in integrating Ethereum Virtual Machine-compatible rollups efficiently due to ecosystem fragmentation and liquidity silos.

The Role of CosmWasm in Smart Contract Expansion

CosmWasm continues to enable Rust-based smart contract execution in Cosmos. While its WASM-based design provides flexibility and modular upgrades, its ecosystem adoption lags behind Ethereum-based frameworks like Solidity. Developers often prioritize EVM-compatible environments due to established tooling and liquidity, which poses a challenge for CosmWasm-based dApps gaining broader traction.

The Evolution of the Atom 2.0 Vision

While the concept of Atom 2.0 introduced expanded use cases for ATOM’s role within the ecosystem, significant portions of the proposal met community resistance. Delegators raised concerns over staking yield dilution and governance centralization. The ambition behind revamping ATOM’s utility remains, but key governance challenges persist, leading to debates over Cosmos Hub’s long-term trajectory.

Liquid Staking: DeFi Growth in Cosmos

Liquid staking solutions like Stride aim to unlock staked ATOM while maintaining delegation rewards, fostering a growing DeFi ecosystem. However, liquid staking could centralize delegation across a few validators, potentially compromising Cosmos’ decentralized ethos. Governance discussions around risk mitigation strategies for liquid staking protocols remain an ongoing debate.

IBC Expansion and Cross-Chain Liquidity Challenges

Inter-Blockchain Communication (IBC) ensures seamless asset transfers between Cosmos zones, but bridging assets beyond the Cosmos SDK ecosystem remains a technical obstacle. While IBC compatibility expansion is underway, bridging external ecosystems such as Ethereum and Bitcoin remains fragmented. Competing solutions like Stacks https://bestdapps.com/blogs/news/stacks-vs-rivals-unpacking-blockchain-distinctions highlight the importance of cross-chain liquidity, a challenge Cosmos must address to remain competitive.

Future Considerations

Cosmos faces significant hurdles regarding fragmented liquidity, validator centralization risks, and slow adoption of newer interoperability features. While its modular framework continues to attract developer interest, competing ecosystems with established DeFi presence could hinder wider Cosmos adoption. Terraforming Cosmos into a leading cross-chain hub remains contingent on solving these persistent technical and governance roadblocks.

Comparing Cosmos to it’s rivals

ATOM vs. DOT: Comparing Cosmos and Polkadot’s Interoperability Models

Both Cosmos (ATOM) and Polkadot (DOT) aim to solve blockchain interoperability but approach it with fundamentally different architectures. Cosmos utilizes the Inter-Blockchain Communication (IBC) protocol, whereas Polkadot employs a shared security model with parachains. These divergence points impact scalability, security, and decentralization.

Security Model: Sovereign vs. Shared

Cosmos prioritizes sovereignty, allowing zones (independent blockchains) to maintain their own validators and security models. This enhances flexibility but comes at the cost of security fragmentation—each blockchain is responsible for its own security. If a Cosmos zone suffers a 51% attack, it does not compromise the entire ecosystem.

In contrast, Polkadot employs Relay Chain security, where all parachains inherit security from the main network. While this reduces individual blockchain risk, it also introduces centralization concerns—any failure in the Relay Chain impacts all parachains simultaneously. For DOT holders, staking mechanisms emphasize governance-driven allocation of parachain slots, often making entry into the ecosystem expensive and dependent on auctions.

Learn more about Polkadot’s governance model.

Interoperability and Scale

Cosmos’ IBC allows communication between different chains but requires each zone to establish explicit consensus channels. While powerful, this means that scaling requires the continuous addition of custom-built chains, leading to complex network management.

Polkadot provides a unified governance and messaging framework via XCM (Cross-Consensus Messaging), allowing seamless communication between parachains. However, parachain slots are limited, requiring projects to participate in auctions that often lead to significant capital locking by investors.

Explore challenges facing Polkadot.

Decentralization and Flexibility

Cosmos’ model fosters permissionless blockchain creation with modular plug-and-play components like the Cosmos SDK. Developers can launch independent chains suited to specific use cases without waiting for slot approvals—making it attractive for customized blockchain solutions.

Polkadot’s system requires projects to secure parachain slots, restricting the number of active participants. While this ensures quality control, it limits accessibility and restricts innovation to well-funded projects. The rigid governance structure has also sparked concerns about whether true decentralization is achievable.

See how Polkadot enables blockchain interoperability.

Liquidity and Tokenomics Comparison

The ATOM token primarily secures the Cosmos Hub and provides staking incentives. Its role in interoperability is indirect, as IBC transactions do not necessarily require ATOM for execution.

DOT, on the other hand, plays a direct role in securing the network, governance, and parachain leasing. However, this also means higher economic pressure on DOT holders, as token inflation and staking requirements may lead to fluctuating rewards.

Decode Polkadot’s tokenomics.

ATOM vs. Ethereum: Comparing Interoperability and Scalability

Ethereum (ETH) and Cosmos (ATOM) both aim to shape the future of blockchain but take fundamentally different approaches to interoperability and scalability. While Ethereum is the dominant smart contract platform, Cosmos positions itself as the “Internet of Blockchains,” focusing on sovereign chains that communicate via the Inter-Blockchain Communication (IBC) protocol.

Ethereum’s Monolithic Structure vs. Cosmos’ Modular Approach

Ethereum operates as a monolithic blockchain, meaning that execution, settlement, and data availability all occur within the same layer. This model has led to congestion and high gas fees, though Ethereum scaling solutions like rollups attempt to mitigate this. Cosmos, on the other hand, enables developers to launch independent blockchains tailored for specific use cases while maintaining interoperability through IBC. This modular design allows networks within the Cosmos ecosystem to avoid congestion issues seen in Ethereum’s mainnet.

However, fragmentation within Cosmos can be a drawback. While Ethereum benefits from network effects due to most activity being concentrated on a single chain, Cosmos requires projects to develop their own validator sets, which can lead to security trade-offs. Ethereum’s transition to rollup-centric scaling with Layer 2 solutions may also challenge Cosmos’ claim of improved scalability.

Security Model: Ethereum’s Shared Security vs. Cosmos’ Opt-In Approach

Ethereum’s security derives from its robust proof-of-stake (PoS) mechanism where all validators help secure the entire network. Cosmos, in contrast, allows chains to secure themselves independently or opt into shared security models like the Cosmos Hub’s interchain security. While this gives projects flexibility, it also means smaller chains may struggle with security if they lack a robust validator set.

Furthermore, Ethereum’s transition to proof-of-stake provides strong economic incentives for validators and stakers. Cosmos is more decentralized in terms of governance since each chain has sovereignty, but questions remain about whether smaller chains can maintain security at scale.

Smart Contracts and Developer Ecosystem

Ethereum’s EVM (Ethereum Virtual Machine) has become the industry standard for smart contracts, with a vast number of developers building DeFi applications and NFTs. Cosmos doesn’t natively support smart contracts but allows developers to integrate CosmWasm, its own smart contract framework. However, CosmWasm is not as widely adopted as the EVM, which limits composability compared to Ethereum’s extensive dApp ecosystem.

For projects requiring cross-chain functionality, Cosmos provides native interoperability without needing bridges, reducing the attack vectors commonly seen with Ethereum Layer 1 cross-chain interactions. That said, Ethereum’s upcoming upgrades aim to strengthen its cross-chain capabilities, potentially closing the gap with Cosmos.

While Cosmos presents a unique modular architecture, Ethereum maintains formidable network effects, developer activity, and liquidity. For those interested in another project addressing blockchain scalability and interoperability, exploring Polkadot’s approach may offer additional insights: https://bestdapps.com/blogs/news/unlocking-blockchain-how-polkadot-enables-interoperability.

Cosmos (ATOM) vs. NEAR Protocol: Key Differences and Trade-Offs

Cosmos (ATOM) and NEAR Protocol both emphasize interoperability, but their approaches differ significantly. Cosmos relies on its Inter-Blockchain Communication (IBC) protocol to enable cross-chain communication, whereas NEAR uses its sharded Proof-of-Stake (PoS) mechanism to ensure scalability. These differences shape their usability, decentralization, and adoption metrics.

Consensus Mechanism: Tendermint vs. Nightshade Sharding

Cosmos employs the Tendermint consensus protocol, offering fast finality and Byzantine Fault Tolerance (BFT). Validators secure the network via staking, ensuring transaction integrity and network security. However, Tendermint, while efficient, has limitations regarding horizontal scalability and throughput expansion.

NEAR, on the other hand, uses Nightshade, a sharding-based consensus approach enabling higher transaction throughput. This scalability advantage allows NEAR to handle significantly more transactions per second (TPS) than Cosmos. However, sharded architectures introduce synchronization challenges, potentially impacting security and decentralization.

Smart Contract Execution: CosmWasm vs. NEAR’s WebAssembly Runtime

Cosmos supports CosmWasm, a smart contract platform optimized for interoperability. CosmWasm allows developers to deploy smart contracts in multiple Cosmos-based chains while benefiting from the shared security model provided by IBC connections. One drawback is that Cosmos smart contracts lack network-wide enforcement—each chain must individually secure its execution environment.

NEAR leverages WebAssembly (WASM) with its native runtime, focusing on performance efficiency and broad developer accessibility. Its WASM-based runtime provides low-latency contract execution, which is advantageous for DeFi applications. The downside is that NEAR’s WebAssembly implementation is less modular than IBC-enabled chains, limiting direct cross-chain operability compared to Cosmos.

Interoperability and Cross-Chain Support

Cosmos is fundamentally built for interoperability, with IBC fostering seamless asset movement across independent blockchains. This ecosystem encourages appchain specialization, reducing congestion and increasing transaction efficiency. However, IBC adoption depends on chains opting into the Cosmos ecosystem, limiting interaction with external non-IBC chains.

NEAR, in contrast, focuses on bridged interoperability, particularly through Aurora, an Ethereum-compatible layer. While Aurora facilitates EVM-compatible smart contracts, the reliance on external bridges increases security concerns. Bridges are historically vulnerable to exploits, an issue NEAR still faces despite ongoing improvements.

Decentralization and Validator Models

Cosmos features a permissionless validator system, giving independent communities control over their chains. However, Cosmos chains vary in decentralization—some networks remain highly centralized among large ATOM stakers.

NEAR imposes an adaptive validator system, where validator participation is dependent on stake-weighted rotation across shards. This approach enhances efficiency but demands precise synchronization, potentially limiting smaller validators’ participation.

Both projects present distinct trade-offs: Cosmos thrives in sovereignty-focused chains with modularity at its core, whereas NEAR prioritizes on-chain efficiency and developer-friendly execution models.

Primary criticisms of Cosmos

Primary Criticisms of ATOM and the Cosmos Ecosystem

Complex Governance and Centralization Concerns

Despite Cosmos positioning itself as a highly decentralized and interoperable blockchain network, criticisms remain regarding its governance structure. The Cosmos Hub and the Interchain Foundation (ICF) wield substantial influence over the network’s development, leading skeptics to argue that decision-making is not as decentralized as advertised. Validator centralization is another issue—while Cosmos relies on Proof-of-Stake (PoS), a significant share of voting power is concentrated within a few large validators, raising concerns about potential collusion and governance manipulation.

ATOM's Inflationary Tokenomics

One of the most persistent criticisms of ATOM revolves around its inflationary nature. The Cosmos staking mechanism offers high rewards, but inflation rates that range between 7% and 20% dilute the value of unstaked ATOM, pressuring token holders into staking. While staking incentivizes network security, critics argue that it turns ATOM into a "stake-to-survive" asset rather than an efficient store of value. In contrast, projects like Stacks pursue alternative tokenomic models that emphasize scarcity alongside a functional use case.

Interoperability Hurdles and Adoption Struggles

Cosmos promises seamless blockchain interoperability, but adoption by external chains remains limited. While the Inter-Blockchain Communication (IBC) protocol allows Cosmos-based chains to connect, meaningful adoption from major Layer-1 ecosystems like Ethereum and Bitcoin has been slow. Competing interoperability solutions, such as Polkadot’s parachains, present alternative models with different trade-offs. Critics argue that Cosmos’ "hub-and-zone" model lacks the network effects and security guarantees that other ecosystems have successfully cultivated.

Limited DeFi and dApp Development

Despite Cosmos’ modular approach to blockchain development, its DeFi and dApp ecosystem has lagged behind competitors. Ethereum, Solana, and even newer Layer-2 solutions boast more robust ecosystems with higher liquidity and developer activity. The absence of a dominant DeFi protocol within Cosmos hinders its ability to attract users who seek deep liquidity and diverse financial applications.

Uncertain Economic Model for ATOM

While Cosmos Hub facilitates interoperability, ATOM’s role within the broader Cosmos ecosystem remains a contentious issue. Many app chains connected to Cosmos via IBC do not rely on ATOM for transaction fees or security, reducing its utility beyond staking. This dynamic has led to uncertainty about long-term demand for ATOM and whether it will play a significant economic role in securing the broader Cosmos network.

Founders

Meet the Cosmos (ATOM) Founders: Visionaries and Challenges

Cosmos (ATOM) was envisioned by a team led by Jae Kwon, a prominent figure in the blockchain space known for his innovations in consensus mechanisms. He co-founded Tendermint in 2014, which later became the backbone of Cosmos. Tendermint introduced BFT consensus tailored for Proof-of-Stake (PoS) networks, an innovation that differentiates Cosmos from other blockchain ecosystems.

Jae Kwon’s Departure and Return

Despite his early contributions, Jae Kwon stepped down from his CEO position at Tendermint Inc. (now Ignite) in early 2020 to focus on a separate project, Virgo, which aimed to integrate philosophical principles with blockchain technology. His departure sparked internal tensions, leading to governance concerns within the Cosmos ecosystem. However, he later re-engaged with Cosmos, adding further uncertainty regarding leadership stability.

Ethan Buchman: The Stability Factor

Ethan Buchman, another co-founder, played a crucial role in maintaining Cosmos’ vision and stability. Unlike Kwon, Buchman remained actively engaged in the project’s technical and strategic direction, particularly through the Interchain Foundation (ICF), the entity responsible for continuing Cosmos’ development and funding key initiatives. His long-term commitment has been pivotal in ensuring Cosmos’ ecosystem growth, especially in areas like interoperability through IBC (Inter-Blockchain Communication).

Internal Struggles and Leadership Fractures

Cosmos' development has not been without conflicts. The split between Tendermint Inc. (Ignite), Interchain GmbH, and the ICF has led to friction regarding execution and governance. Questions about funding allocation and decision-making structures have made Cosmos' leadership structure more fragmented compared to rival blockchain projects like Polkadot (https://bestdapps.com/blogs/news/meet-the-visionaries-behind-polkadot-success).

Furthermore, Cosmos' decentralized governance model, while innovative, has faced criticism for inconsistencies in voting participation and network-wide coordination challenges. Some critics argue that validator centralization is still a concern, with governance power disproportionately controlled by a few major stakeholders—raising concerns about influence over core protocol decisions.

Conclusion

The Cosmos founding story combines technical brilliance and internal power struggles. While the project remains an essential part of the interoperability movement, governance tensions and leadership shifts continue to shape its trajectory.

Authors comments

This document was made by www.BestDapps.com

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