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What is Cosmos? The network and ATOM explained

Cosmos links independent chains so they can swap data and tokens, and ATOM is the Cosmos Hub token for staking and voting. The hub launched in March 2019.

Vahe HakobyanEditor-in-chief Updated Oct 6, 20263 min readFact-checked

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How does Cosmos work?What is Cosmos used for?Who created Cosmos?What are the risks and legal issues?FAQ

Short answer

Cosmos is a network of independent blockchains that can exchange data and tokens. The Cosmos Hub is one chain in that network, and its token, ATOM, is used for staking and governance.

The Cosmos Hub is one hub, but other chains can act as hubs and chains can connect directly. Each chain keeps its own rules and can have its own token. Cosmos is a group of connected chains, not one blockchain.

How does Cosmos work?

Cosmos at a glance

Structure: Many independent parallel blockchains
Hub: Multi-asset distributed ledger
Consensus: Classical Byzantine fault-tolerant
Hubs: Hubs, allowing many zones
Staking: Staking token in order to earn

Cosmos uses the Cosmos SDK to build chains and IBC to connect them. IBC lets chains that support it pass tokens and data to each other. Many Cosmos chains use proof of stake consensus instead of proof of work. Ethereum instead runs one main chain for many applications.

Cosmos and Ethereum compared
Feature	Cosmos	Ethereum
Basic design	Many chains, each with its own rules	One main chain for apps
Connecting chains	IBC where both chains support it	Bridges between networks
Chain purpose	Each chain serves one app or goal	One chain serves many apps

What is Cosmos used for?

Developers use Cosmos to build blockchains for one main purpose, such as DeFi or gaming. Teams use the Cosmos SDK to give each chain its own rules and fees. ATOM on the Cosmos Hub pays fees and can be staked or used to vote.

Build DeFi chains with custom fees and rules.
Run gaming chains that need their own transaction space.
Connect a chain to other chains through IBC when both sides support it.

Who created Cosmos?

Jae Kwon and Ethan Buchman created Cosmos. They also worked on Tendermint, the consensus software many Cosmos chains use. The Cosmos Hub launched in March 2019.

What are the risks and legal issues?

Staking ATOM carries the risk that part of the stake can be destroyed if a validator breaks the rules. In June 2023, the SEC alleged in a lawsuit against Binance that ATOM is a security. That claim is an allegation, not a final court ruling.

Frequently asked questions

The Interchain is the wider group of blockchains built with Cosmos technology that can connect through IBC. It includes the Cosmos Hub and other chains.

There is no official count. Many independent chains use Cosmos software, and developers can build new ones with the Cosmos SDK.

Use a wallet that supports Cosmos SDK chains and IBC, such as some browser or hardware wallets. Check that it lists ATOM before you use it.

No. IBC works only when both chains support it. A chain built with the Cosmos SDK can leave IBC turned off.

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Written byVahe HakobyanVahe Hakobyan is the editor-in-chief of World-Crypt. He covers bitcoin, markets and regulation, and leads the newsroom that fact-checks every story before it goes live.

How does Cosmos work?

What is Cosmos used for?

Who created Cosmos?

What are the risks and legal issues?

Frequently asked questions

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