One highly anticipated blockchain, the Cosmos, which is designed to improve the interoperability between different numbers of other blockchains, officially released its live software. With the mining of its first block, the project also launched Cosmos Hub, which is the first in the series of proof-of-stake or PoS blockchain which is going to be created in the Cosmos ecosystem.
Right now, the users of the network are not going to have the ability to swap tokens between the blockchains or otherwise connect to Cosmos Hub with the existing blockchain networks until the validators officially vote to activate the so-called Inter-Blockchain Communication or IBC protocol.
The primary phase of the network launch of Cosmos came after almost three years of plans and development. Having debuted the concept for the blockchain compatibility platform in the summer of 2016, Cosmos has later raised more than $16 million in an ICO or initial coin offering in 2017.
Since that time, Tendermint Inc, which is a for-profit entity behind the core technology of the Cosmos network, was releasing preliminary products focused on developers.
The director of Tendermint Inc, named Zaki Manian, has explained that they want to take the blockchain development cycle from the idea of implementation down from years to months. This is how they try to transform the blockchain space.
Manian also said that the Cosmos Software Development Kit or SDK, which actually debuted back last year in February, is already utilized by high-profile crypto companies like Binance exchange. Additionally to this, Tendermint Core, which is the blockchain networking, as well as consensus mechanisms, that underlines the Cosmos Hub, is another key tool which Manian envisions will be a fundamental help in removing barriers to innovation in the blockchain space and ultimately assist in composing an entirely new system of finance.
Manian added that out of all the building blocks, people will have the ability to compose an entirely open system of finance which is operating to scale and may be composed of individual, as well as specialized chains which do different things.
The establishment of a broader ecosystem of validators
The launch from the 13th of March has been an essential step toward the more comprehensive and expanse vision, one which Manian pointed out is going to take several years to entirely manifest. The primary goal of launching the Cosmos Hub is establishing the broader ecosystem of validators, entities which take stake tokens on the network, while the team of Manian will continue working toward cross-blockchain capabilities.
Manian also added that to make the whole vision of connecting blockchain work, there has to be a set of operators that have skin in the game to coordinate the blockchain network.
Of course, in a proof-of-work or PoW system, which will be similar to Ethereum or Bitcoin, the validators are miners that compete for block rewards, as they operate computer services, as well as expand large electricity amounts.
On the other hand, the validators in a PoS system are actually selected by the system which is based on a separate metric of stacked tokens, to participate in the block creation, as well as transaction finalization.
Manian said that in PoS, the rewards and costs are internal. They had to come up with a quite sophisticated system of distributing reward, of distributing the speculator taxation system, of pushing people for malicious behavior and for going offline. He added that all of it needs to be internal to the system and that is why PoS is such a vital engineering feat over PoW.
Users are not allowed to transfer holdings for now
While the participants of Cosmos successfully tested the system of validation with almost 200 computer servers called nodes in a former dummy environment called Game of Stakes, there was never a real value at stake by the participants before the launch.
Manian said that the launch was about unleashing the live economic incentives, as well as having value at risk for the first time and then letting the set of financial incentives which they have designed to select who those validators are. According to him, this is the crucial foundational step which Cosmos developers are really cautious about getting right.
For now, the users of Cosmos are not permitted to transfer the holdings of the native network currency, the ATOM tokens, just still. As the ATOM tokens are intended to act as the collateral which people put at risk to be validators in the system, these tokens are strictly going to be utilized as the mechanism for selecting membership in the system.
However, once the validator and the system set are deemed to be in stable condition, the token holders are going to vote on when they can enable live ATOM transfers.
After that, a secondary vote is going to be held to connect new blockchains which are called “zones” to the Cosmos Hub and start swapping heterogeneous cryptos and non-fundable tokens or NFTs.
Staking as a service
Manian stated that there are actually 70 validators at Cosmos Hub launch that are committed to securing the network. Some of them are focused on staking tokens as the service to more full the ATOM holders.
The founder of the Union Marketplace for such service providers, which was scheduled to launch in April, named Shayne Coplan, said that over the following several months, a cross-network layer or reputation for these validators is going to emerge.
The rewards which these stakers, as well as holders, gain are generally earned in the ATOM token; however, in future, they may also be obtained in wrapped forms of alternative cryptos like Ether and Bitcoin.
While the Union Marketplace quietly collected about 230 validators all over its different staking networks as it gears up for launch, Coplan also expects the Cosmos launch to inspire more players to experiment with such types of services.
The co-founder of the validator startup Certus One, named Hendrik Hofstadt, said that there is a wide range of people that are actually interested in these staking services types, from retail investors to investment funds. Moreover, the Telegram group of Certus One, which for retail ATOM users, has signed on 60 members within the first 24 hours of its opening.
In the meantime, the co-founder of the validator startup Block 3, named Joe Pindar, said that this type of ecosystem will open up a new kind of investment opportunities.
Speaking to how Cosmos rewards stakers on a regular basis, which he also compared to income investing, Pindar added that people may start getting revenue or income from the rewards and start appreciating more and more ATOMs, which according to him is a different investing model, and he is excited to see how that will play out.