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With all the attention Polkadot (19.5B) has been getting, there is another lesser-known project that could soon give it a run for its money. Billion-dollar blockchains like Binance Chain and Terra are all built on top of it.
$ATOM (Cosmos) - $3.4B
A thread
$ATOM (Cosmos) - $3.4B
A thread
1/ Cosmos, like Polkadot, is also vying to be the panacea of blockchain interoperability. Both are attempts to allow different blockchains to communicate with each other in a trust-minimized way without giving up its sovereignty.
2/ I believe the upcoming Stargate update, poised to launch on Feb 18, will be a huge catalyst for $ATOM’s price appreciation. The ATOM/DOT ratio has been on a strong uptrend lately, and it looks likely to continue.
Why?
Why?
3/ Stargate brings with it a host of new improvements such as improved scalability and faster state syncs. However, the star of the show will be the activation of inter-blockchain communication (IBC). How will it affect the value of ATOM?
4/ Currently, the primary yield for ATOM holders is through staking, where stakers receive block rewards for securing the network. With IBC coming online, the full potential of the Cosmos ecosystem can finally be realized.
5/ This is symbolically the "ETH 2.0" of Cosmos, 3 years in the making. IBC essentially enables a previously siloed ecosystem comprising different blockchains to now be able to directly communicate with each other through hubs.
6/ The influx of new IBC transactions through the Cosmos hub will significantly increase the economic value of the Cosmos ecosystem, and by extension, $ATOM. Stakers, on top of receiving block rewards, will now be able to claim fees from all IBC transactions through the hub.
7/ For example, with IBC you can now mint thorBTC on Thorchain, send it to KAVA for use as collateral to mint USDX, then use it to yield farm, borrow in Terra, etc. All these interactions generate strong network effects.
8/ This has the potential to supercharge Cosmos’s DeFi ecosystem. Some notable DeFi projects in the ecosystem include KAVA, RUNE, BAND and the upcoming Anchor Protocol. Will these tokens also perform well on the back of ATOM’s ascension?
9/ Additionally, with IBC, an AMM becomes possible with the Cosmos Hub. Different chains can trustlessly swap tokens through the hub, allowing ATOM stakers to collect LP fees.
10/ All this leads to price appreciation from securing a fast-expanding network. How? A malicious attacker would have to own at least 1/3 of staked ATOMs. With IBC, the incentive to do so increases as there will be large economic value transacting through the hub.
11/ Currently, the top 10 projects in the Cosmos ecosystem have a combined market cap of $16.5B vs ATOM’s $3.2B. Logically ATOM must become inherently valuable enough to secure significant cross-blockchain economic activity between these billion-dollar blockchains.
12/ Should the Cosmos hub be the primary hub in the ecosystem, ATOM stakers can expect to collect substantial fees. I can envision a future where each niche will have their own primary hub (Binance financial hub, etc), with the Cosmos hub at the center of it.
13/ The network effect doesn’t have to be limited within Tendermint-based chains. IBC also allows the Cosmos ecosystem to interact with external blockchains with different consensus mechanisms via "peg-zones".
14/ Sifchain announced the deployment of an Ethereum bridge called "Peggy" on its testnet last month. https://blog.cosmos.network/sifchain-announces-peggy-cosmos-ethereum-cross-chain-bridge-eeb46a8f91db
15/ There is also a new initiative to further increase ATOM’s economic value, dubbed the ATOM2021 initiative.
Amongst them are to allow staked ATOMs to be posted as collateral, allowing holders to participate in various DeFi ecosystems. https://github.com/cosmosdevs/atom2021
Amongst them are to allow staked ATOMs to be posted as collateral, allowing holders to participate in various DeFi ecosystems. https://github.com/cosmosdevs/atom2021
16/ The Cosmos Grayscale trust was also recently registered on 27th Jan signalling potential institutional interest in investing in the asset.
17/ This is highly speculative, but there are rumors that ATOM holders will be eligible for Ethermint’s upcoming fee token, $PHOTON around the time of the upgrade.
https://docs.ethermint.zone/basics/photon.html https://twitter.com/fekunze/status/1351988932364349441
https://docs.ethermint.zone/basics/photon.html https://twitter.com/fekunze/status/1351988932364349441
18/ Tldr; I’m highly bullish on $ATOM in the upcoming weeks. We saw the market potential of interoperability projects with Polkadot’s recent surge. With IBC, the interoperability vision of Cosmos will finally be realized.
