COSMOS

DIGITAL ASSET REPORT:

ATOM Update

Crypto Briefing Research Department

January 31, 2020
Grade-B-minus

Quick Facts

TickerATOM
Current Price$4.31
Market Capitalization$822,097,664
Buy Up To Price$6.25
Funding Information
ICO DateApril, 2017
ICO Price~$0.1
Public Allocation$16,029,300
Seed Round$300,000
Strategic Round$1,329,500
Circulating Supply190,688,439 ATOM
Total Supply237,928,231 ATOM
Top 10 AddressesN/A
ATH Price$8.31 (Mar 16, 2019)
Sharpe Ratio-0.41
30-Day Average Price$4.42
24H Volume$204,766,416
30-Day Average Volume$163,246,425

Contents

Fundamental Factors

Market Opportunity 71;
Ecosystem Development 71;
Token Economics 55;
Token Performance 75;
Core Team 73;
Underlying Technology 76;
Roadmap Progress 71;

Combined Score: 7.0

Introduction

Since our initiation report on Cosmos, the project has shown strong progress across all areas of its development. 

Cosmos continued to build its platform, issuing upgrades and improving its technology stack. Its robust blockchain architecture has been attracting more projects to its ecosystem, helping it develop a foundation for the launch of the Inter Blockchain Communication (IBC) Protocol. 

Although the launch date of IBC is still unknown, it is expected in H1 2020. Given that Cosmos realizes its vision, IBC can significantly boost the interconnectivity within the Cosmos ecosystem, which could make it more attractive to investors, developers, and other potential stakeholders.  

The liquidity of the ATOM token has been improving through the listings on several reputable exchanges. The project continues to maintain one of the highest “total staked” ratios, with over 73% of the circulating supply staked. This shows that the token holder’s trust in the long-term value of the project and are less interested in short-term speculation.

The factors above should have a positive effect on the value and maturity of the project in 2020.

Technological Developments and Upgrade

Although the network had issues upgrading to Cosmos Hub 3 due to the bug in the upgrade in September of last year, the problem was identified and validators were able to quickly relaunch Cosmos Hub 2 chain with no double-signing incidents or downtime slashing. The team spent some time fixing the bug, and the upgrade finally went through in December 2019. 

Cosmos Hub 3 is the major upgrade since the mainnet launch (March 2019). The upgrade includes many noteworthy features, which will be important for the forthcoming launch of IBC. 

One of them is the Parameter Change Proposal. It allows for the modification of on-chain parameters on the network without going through the hard fork process. 

In other words, the changes to the network will be implemented instantly, assuming the proposal went through and the voting period ended. This will help to further decentralize the network and improve the speed of the updates. 

Previously, governance proposals could only be used as signaling mechanisms and did not automatically trigger changes to the Hub. Developers had to release new software that had to be installed by validators. 

Cosmos Hub 3 upgrade also featured an increase in the number of validators from 100 to 125. This should reduce the amount of ATOM needed for a validator to be included in the voting set and help the network decentralize further. 

Additionally, the upgrade approved to enable governance to spend funds from the community pool (around 260K+ ATOMS). Although a 2% tax on inflation and fees was specified in the Cosmos whitepaper, details on how these funds were to be spent were left unspecified. 

In fact, the first community-spend proposal has already been approved. In Q1 2020, 5,250 ATOM will be spent on the creation of the first Governance Working Group, which will focus on decentralized community governance efforts alongside the Hub’s development. The group plans to submit its first proposal in Q2 2020, and continue the work regardless of whether or not  the Hub passes the proposals.

The team has also been actively working on IBC, and is currently preparing to launch its second ever adversarial testnet competition, Game of Zones. As stated by the project:

“This competition will create an invaluable educational opportunity and environment for the Cosmos community to learn the nuances of the IBC protocol, including exception handling and potential failure modes.”

According to the team, Game of Zones should start sometimes after the new year and will award 100,000 ATOM as the prize. For the participants, there will be multiple prices and multiple challenges. IBC will be launched only after Game of Zones ends.

Overall, after the mainnet launch, Cosmos has shown that it is able to adequately respond to potential challenges and work on upgrading the network. Given that the project will continue its current pace of development, the launch of IBC should not be an issue in the upcoming future.

Cosmos & Tendermint Ecosystem Projects

Cosmos, by far, has one of the largest lists of projects in its ecosystem. These projects have been actively developing and are expected to launch their products in 2020. 

One notable project is Kava, which is aiming to bring DeFi on Cosmos. The DeFi space has been actively growing over the last two years. Currently, the largest dApp in the DeFi space is Maker Dao, with over $500M staked on its smart contracts. 

Maker Dao lets you issue stable currency (Dai) by collateralizing Ethereum and Basic Attention Token. Kava is building something similar, but it aims to bring collateralized loans not only to the Ethereum community but to users of major crypto assets, including BTC, XRP, BNB, ATOM, and others.

Kava has the potential to become a “gateway to DeFi” for Cosmos, attracting more users and developers that will start building more DeFi dApps on this blockchain. Kava launched its mainnet in November of 2019 and is aiming to add the support of collateralization of ATOM and  BNB sometime around Q1 2020. 

The other notable ecosystem project that has recently been showing growing adoption is Terra. This is a payment network supported by a family of stablecoins, pegged to the world’s major currencies.

Terra was able to achieve over 1 million total accounts in less than a year (mainnet was launched in April 2019). In fact, Terra is already backed by top Asia retail platforms and may be leading the wave of redeemable stablecoins within the regulatory structure. 

Once IBC is launched, and given its large and growing user base, Terra could become a valuable player in the Cosmos ecosystem. 

There are many other projects that have been using Cosmos SDK and have seen great progress over the last six months. IRIS Net completed its second mainnet upgrade (the Akash Network) launched the Founding Member Rewards Program for early contributors to Akash’s testnet and community, and Sentinel launched the ‘Sentinel Telegram (dVPN) Network Bot’.

Although most of these projects are just using Tendermint technology and are not connected to the Cosmos Hub directly, the launch of IBC will be an important piece of the puzzle, that connects everything together.

With the IBC launch, all of these separate ecosystem entities will have a chance to connect in many different ways and create synergistic effects for the whole ecosystem. 

This could strengthen Cosmos’ position in the blockchain space even further since the Cosmos Hub will likely become a central point in this growing ecosystem.

ATOM Performance and Improving Liquidity

ATOM token has been performing quite well since the initiation report. The token has been listed on several cryptocurrency exchanges. 

In January 2020, Coinbase Pro announced that support for ATOM is available in all Coinbase’s supported jurisdiction, which should significantly increase the number of potential users and investors for the Cosmos ecosystem. 

Additionally, Crypto.com and CEX.io announced support of ATOM on their trading platforms, which should also help to grow the ecosystem.

Since the initiation report, there has been a slight increase in the total number of ATOMs stacked, from 72.48% to 73.31%.

In fact, more exchanges are adding support of ATOM staking. 

Binance.US recently announced that it will offer ATOM staking rewards starting next month. It is reasonable to expect the same move from Coinbase in the foreseeable future. 

All things considered, Cosmos remains one of the most secure PoS blockchains, with over $800M staked on its network. The number is likely to grow as more exchanges add support of ATOM staking and when the project launches IBC.

Things to Think About

Still, the concerns we listed in our initiation report remain in place. The project does not specify the launch date of IBC, which shows that there is a lot to be done before a working solution will be ready for the market. The team may potentially face development obstacles, which could delay the release.

It is unlikely that Cosmos will lose its competitive advantage to its interoperability competitor, Polkadot, which has delayed its mainnet launch a few times already. Still, the delays will have a negative effect on the project’s progress. 

Furthermore, with the launch of IBC, Cosmos will have to differentiate itself from the other Hubs that are already launched or will be launching in the future.

Given that  Cosmos Hub currently remains the largest and most secure in the network, this shouldn’t be difficult. However, the concern is still present, since the number of projects that will connect to Cosmos Hub remains unknown due to the absence of IBC. 

The recent news that the President of Interchain Foundation (ICF) and the founder of Cosmos, Jae Kwon, are planning to step down to work on the environmental project Virgo.org has also raised concerns. Although Kwon is still planning to be involved with the ICF serving as a member of the council, this is rather a negative sign for investors.

Conclusion

Since the mainnet, Cosmos has shown good progress in growing the ecosystem and working on network upgrades. 

As the project launches IBC, it’s already large and expanding ecosystem can start developing even faster. With all of the potential features that IBC is going to bring, more developers may find Cosmos an interesting project to build on.

This will likely help the value of the network grow further in 2020. Therefore, the project receives an upgrade to B-.  

The author(s) of this report is/are invested in the following coins: BTC, ETH, BNB.

How to buy ATOM

Step 1. Choose your preferred exchange.

ATOM can be purchased from several cryptocurrency exchanges, the full list of available exchanges can be seen ​here​.

Step 2. Head over to your preferred exchange.

If you want to purchase ATOM, it is a good idea to use Coinbase Pro. It has a good liquidity and is among the most reputable on the market.

Step 3. Create an account on the exchange of your choice if you don’t already have one.

Step 4. Top-up your exchange balance with some of your USD.

On Coinbase Pro, ATOM can be purchased with USD, so make sure to first verify your ID and set up your debit card or bank account.

Step 5. Purchase ATOM with a market or a limit order.

If you want to buy just a small amount instantly, it is easiest to use a Market Order.

Input the amount of ATOM you want to purchase and press Buy.

If you need to purchase a large amount of ATOM, it is best to use a Limit Order to get the best possible price.

Input the amount of ATOM you would like to purchase, and the price at which the order should be filled at and press Buy. (It might take some time for the whole order to be filled if you are purchasing a large amount).

Step 6. Store your ATOM on one of the supported wallets for increased security.

To store ATOM, you can use Ledger or Trust Wallet​ for improved security.