Cosmos is a network that aims to solve some of the most alarming problems in the cryptocurrency sphere, like the lack of scalability, and interoperability between separate cryptocurrencies. Cosmos wants to become, in a sense, the “internet of blockchains”. Using the Cosmos Network, users will be able to transfer tokens from one blockchain to another via inter-blockchain communication (IBC) packets. How does this work?
The Cosmos Network is comprised of various blockchains also called zones. Each one of these zones is powered by a Byzantine fault-tolerant (BFT) consensus algorithms like Tendermint. Tendermint is a proof-of-stake protocol that addresses the problems found in first-generation PoS coins like NXT.
The first blockchain in Cosmos will be the Cosmos hub, a multi-asset blockchain that acts as a central hub. Hubs are different from zones, as they can keep up with all the zones, while zones can only keep up with the hub, so the Cosmos hub is, generally speaking where all these blockchain come together. The Cosmos hub keeps up with the zones through a constant stream of block commits made from those blockchains. When a token is transferred from one zone to another, the hub is in charge of posting a proof on the receiving chain, which states that the sending chain published that specific IBC packet.
This system allows multiple blockchains to scale according to their transaction volume, by attaching more zones to the hub and directing a portion of the users to them once the original one bloats up. The same can be said for upgrades, which can be deployed as different hubs in Cosmos allowing users to move funds at their own leisure without worring about forks.
Zones can act as pegs for existing cryptocurrencies or employ the same features as them (with the same codebase, but with different specifications), allowing users to exchange tokens between chains and to benefit from their distinct features without the need for a centralized exchange or atomic cross-chain transactions.
“For example, zones derived from Bitcoind, Go-Ethereum, CryptoNote, ZCash, or any blockchain system can be plugged into the Cosmos Hub. These zones allow Cosmos to scale infinitely to meet global transaction demand.”
The native token of the Cosmos Hub blockchain is Atom (COS), which allows users to receive staking rewards and transaction fees via PoS Staking. The initial supply will be 20 million tokens, out of which 75% will be sold during the initial coin offering period. The ICO will be held this year and it will last for a month. The remaining 25% will be kept by the Cosmos Corp and distributed to early investors. In order to steer short-term speculators away from the crowdsale, not all of the Atom tokens will be transferable during the first 2 years. During this period, these tokens will be vested. Vested tokens cannot be transferred but the block rewards that validators recieve can be moved immediately, as they are not yet vested.
A date is yet to be set for the official launch of the Cosmos network, but investors can take a look at the Roadmap for detailed information about alpha and beta releases.