The Potential and Prospects of Liquidity Explosion in the Cosmos Ecosystem

Cosmos, as a mature blockchain ecosystem, stands out in many ecosystems with its decentralization and openness. Although market promotion is relatively low-key, Cosmos has always maintained the ability to incubate and attract quality projects. As the birthplace of the application chain revolution, Cosmos, despite experiencing a relatively quiet period, is still regarded as one of the most promising areas for rapid growth in the crypto industry. Current market trends indicate that projects with solid foundations and sustainable development prospects will achieve significant gains in the upcoming bull market, and Cosmos is well prepared to seize this trend.

Reassessment of the Potential of the Cosmos Ecosystem

Cosmos is an open-source blockchain ecosystem aimed at achieving interoperability between different blockchains. Although there are gaps in certain technologies and projects compared to leading systems, Cosmos has significant advantages in decentralization and interoperability. The Cosmos SDK and IBC launched by the Cosmos development team provide strong support for developers and play an important role in advancing technological progress across the industry.

However, the market valuation of Cosmos does not match its strength. Compared to other blockchain ecosystems, the ecological scale of Cosmos is relatively small and has not attracted enough developers and users. Additionally, the technology and application scenarios of Cosmos are quite complex, requiring more time and resources for promotion and popularization. In the crypto market, which emphasizes data and Liquidity, the market value of Cosmos has been undervalued for a long time, currently only at $3.15 billion, ranking 23rd. Its token ATOM also has a significant gap in market value compared to other ecosystem tokens due to its lack of utility.

To improve this situation, the Cosmos 2.0 white paper was released at last year's Cosmoverse conference, aiming to enhance the utilization of the Cosmos Hub network and the ATOM token. Around these goals, Cosmos has successively launched a series of advancements, such as upgrading Interchain Security to "Replication Security" and passing the Liquidity Staking Module (LSM) proposal.

Based on these technological improvements, the Cosmos ecosystem projects have experienced a liquidity explosion this year. The ecological public chain Canto's daily trading volume once surpassed Solana, marking a successful start for Cosmos. The total locked value of liquidity staking protocols Stride, Layer1 public chain Injective, and Kujira has significantly increased. In April of this year, the number of active developers on Cosmos SDK once exceeded that of Ethereum, ranking second. In addition, the modular blockchain network Celestia, built on Cosmos SDK, has also attracted market attention.

The outstanding performance of Cosmos ecosystem projects has rekindled the market's interest in Cosmos. Many users have expressed high expectations for the implementation of Cosmos 2.0 future plans, and there are even voices in the market saying "Cosmos Summer is coming." In the recent rebound, tokens related to the Cosmos ecosystem, such as Celestia (TIA), Injective (INJ), and Osmosis (OSMO), have all seen increases of over 20% in the past week, with INJ increasing by more than 110% in a month. These positive trends indicate that Cosmos is gradually gaining market recognition and attention, laying a solid foundation for its future development.

Future Development Plan for Cosmos Technology

In September 2023, the Interchain Foundation, which promotes the development of the Cosmos ecosystem, publicly released the Interchain 2024 development plan, outlining the future development roadmap for Cosmos technology.

CometBFT: The Cornerstone of Cross-Chain Scalability

CometBFT is the core of Interchain scalability, ensuring that validators reach consensus on block generation. The Interchain Foundation plans to further expand the coverage and applicability of CometBFT, empowering the development of sovereign, interoperable applications. CometBFT has been upgraded to v0.38, with plans to release v0.39 by the end of 2023, featuring efficiency improvements, comprehensive data support APIs, and an enhanced indexing system.

Cosmos SDK: Modular and New Features

The Cosmos SDK is a versatile toolkit for developing blockchain or Rollup applications. Future development plans will focus on modularity and the introduction of new features, enabling developers to create more complex, modular applications, thereby nurturing a broader and more robust ecosystem.

CosmJS: Improving Efficiency and User Experience

CosmJS is a library that helps developers integrate JavaScript clients with the CosmosSDK blockchain. The Interchain Foundation plans to enhance CosmJS with a new encoder to improve its efficiency, reduce code bloat, and provide a more streamlined and professional development experience.

CosmWasm: Unlocking decentralized, permissionless deployment

CosmWasm is a smart contract framework built on the Cosmos SDK. The Interchain Fund will further optimize CosmWasm in the future, making it easier for developers to create and deploy various applications, ultimately enhancing blockchain utilization. Key focus areas include IBC adoption and account-based smart contracts.

IBC Protocol: Enhancing Interoperability and Scalability

IBC is a protocol that enables secure, decentralized, and permissionless data transfer between blockchains. The Interchain Foundation plans to update IBC in 2024, focusing on scalability and usability to further enhance the capacity of the Cosmos ecosystem, achieving seamless interaction between blockchains, applications, and smart contracts.

Latest Changes in the Cosmos Ecosystem

Recently, the Cosmos ecosystem has once again demonstrated its immense potential. As an open-source multi-branch blockchain network, the Cosmos ecosystem has several advantages in areas such as smart contracts, scalability, security, and cross-chain interoperability. Here are some important changes in the Cosmos ecosystem recently:

Liquidity Staking Module

Liquidity Staking Module (LSM) is a new modular solution for liquidity staking in the Cosmos ecosystem. The LSM on Cosmos Hub was implemented on June 14, 2023. The implementation of LSM allows users to directly liquidity stake already staked ATOM without having to wait for the unbonding period.

Token Economics Upgrade

The economic model of the Cosmos token ATOM has undergone a significant change, shifting from a narrative that pursued high returns to one that seeks real yields. On May 10, the Neutron mainnet went live as the first platform to utilize Cosmos' "Replication Security" consumer chain, aiming to address the issue of ATOM 1.0's lack of apparent utility.

Interoperability Enhancement

In August, the launch of Evmos 2.0 further solidified Cosmos's advantage in interoperability. Evmos is built on the Cosmos IBC protocol and has the potential to elevate the multi-chain ecosystem to new heights, achieving interoperability between the Ethereum and Cosmos ecosystems.

The Rise of Perpetual Contracts

Perpetual contracts play an important role in the digital asset market and have experienced rapid growth. dYdX v4 has announced its migration to the Cosmos ecosystem, which will bring more Liquidity and innovation to the Cosmos perpetual contract module.

Native Liquidity Increase

Tether's stablecoin USDT has been integrated into the Kava blockchain, introducing new native Liquidity to Cosmos. Additionally, Noble, the native asset issuance platform of the Cosmos ecosystem, is collaborating with Circle to bring native USDC to Cosmos, which is expected to generate hundreds of millions of dollars in Liquidity in the coming months.

Popular Projects in the Cosmos Ecosystem

Initia

Initia is a popular project based on Cosmos, dedicated to building a highly interconnected modular Rollup network. It utilizes the Cosmos SDK but employs the MoveVM computing framework and leverages optimistic rollups as an L2 solution for specific applications. Initia achieves seamless messaging and bridging between different virtual machines, becoming the first MoveVM computing framework compatible with the Cosmos IBC protocol.

Recently, Initia has received seed round pre-investment from Binance Labs, and the funds will be used to support infrastructure development, product tool expansion, and the incubation of key application layer projects. Currently, Initia is still in the testnet development stage.

Celestia

Celestia is a modular blockchain network based on the Cosmos ecosystem, providing pluggable consensus and data availability layers. Its goal is to enable anyone to quickly deploy decentralized blockchains without the extra cost of a consensus layer. An important feature of Celestia is data availability sampling, which allows nodes to validate only a small portion of the block's data, significantly reducing the hardware requirements for validating nodes.

On October 31, the Celestia mainnet officially launched, and its token TIA has also been listed on major exchanges, with the current TIA coin price at 2.33 USD.

dYdXV4

dYdX is the leading L2 Dapp on Ethereum, with its latest version dYdX V4 expected to be released in December this year. This upgrade marks dYdX's migration to the decentralized network Cosmos, aimed at addressing Ethereum's scalability limitations. By migrating to Cosmos, dYdX V4 will enhance transaction speed and eliminate centralization concerns.

As a leading decentralized exchange with a daily trading volume exceeding $3 billion, dYdX's migration will bring a large number of new users and Liquidity to the Cosmos ecosystem.

Neutron

Neutron is a smart contract infrastructure based on the CosmWasm platform, allowing developers to easily deploy dApps without complex governance voting or whitelist verification. According to the Interchain Stack 2024 roadmap, Neutron will become the first consumer chain on Cosmos, aiming to host a DeFi product ecosystem built around NTRN and ATOM.

In May of this year, Neutron completed a $10 million funding round led by Binance Labs. The Neutron token NTRN was launched on Binance in October, and the current trading price is $0.290.