Cosmos is home to a booming $100bn+ ecosystem that includes Binance, Terra, and THORChain.
Many overlook Cosmos due to misconceptions that value doesn't accrue to $ATOM.
However, upcoming upgrades change this story and $ATOM will be at the center of the Cosmos ecosystem.
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First a quick overview of Cosmos.
Cosmos consists of various independent blockchains that follow a hub and spoke topology.
Hubs = Router of information for zones.
Zones = Application specific blockchains.
They communicate through an interoperability standard called IBC.
Cosmos provides a development kit (Cosmos SDK) for developers so that they can build application specific blockchains (zones).
Blockchains built with the Cosmos SDK have the ability to customize their chains to optimize for their use cases (ie Thorchain = cross-chain liquidity).
The Cosmos Hub was the first Hub built in the ecosystem.
For a while all the Hub allowed was for $ATOM to be staked and used for governance.
But future upgrades will enable the Hub to perform other crucial functions leading it to become the foundation of the Cosmos ecosystem.
The bear thesis on $ATOM historically stemmed from the token’s perceived lack of value accrual due to its limited use in just staking and governance.
However upgrades like IBC, Gravity Dex and a Shared Security Model will greatly enhance value capture.
1) IBC upgrade went live a couple weeks ago and allows ATOM stakers to have a proportional claim on the fees generated by the network for routing information and tokens across different zones.
The Cosmos Hub will be the first and most secure Hub, making it very likely that it will accrue the most value of any Hub.
Cosmos’s most prominent projects will prefer to integrate with the Cosmos Hub for the foreseeable future.
2) The Gravity Dex Upgrade (awaiting integration) will implement an AMM on Cosmos Hub, thus increasing on-chain activity and providing exchange fees for $ATOM stakers.
It will allow users to swap the long-tail of Cosmos assets.
3) Cosmos is also currently working on implementing a shared security model where zones will be able to source security from the Cosmos Hub.
Essentially Cosmos Hub validators ( $ATOM stakers) will be able to secure multiple chains and earn more fees and rewards.
The shared security model is IMPORTANT.
It’s exactly what gets people so excited by Polkadot, and it’s worth $40+ billion.
The Cosmos ecosystem is comically undervalued relative to its peers given its lively and growing ecosystem, and increasingly strong value capture.
Thought I would share some valuable investing knowledge I have accumulated from experience in Tradfi so we are all equipped to make $$$ this run.
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1. Markets remain irrational for longer than you think, so don't be scared to press your winners (i.e. when people think we have topped, the real move is often yet to come).
The market as a whole can continue to get overvalued often for a long time and vice versa.
2. I'm seeing too many people place too much emphasis on certain ratios for DeFi projects such as P/E or FD/TVL.
What you need to consider is the full context — the film version as opposed to pictures.
It's clear to me that we are headed to a multi-chain world.
At the center of this world is the demand to move value between blockchains.
$RUNE is not only the best way to express this thesis, it is the purest way of expressing it, which provides it a scarcity premium.
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@thorchain_org is an independent blockchain built using the Cosmos SDK.
It is not only optimized for cross-chain liquidity, it also offers extremely strong value capture for $RUNE, which accrues value deterministically based on liquidity.