Cosmos

Bitcoin's 8-week win streak is in danger, but ATOM, FIL, EGLD, and ALGO don't care

Bitcoin is set to break its eight-week winning streak, but that has not affected the prospects of ATOM, FIL, EGLD, and ALGO, which look strong on the charts.

Bitcoin’s (BTC) eight-week winning streak is likely to end as the price is down nearly 4% this week. The recent weakness indicates profit-booking by traders but it does not change the short-term uptrend. The pullback will also help reduce the froth that may have been building.

After the initial shakeout, strong hands are likely to re-enter the crypto market as the macro environment remains bullish for risk-assets. The decision by the Federal Reserve to pause rate hikes and possibly reduce rates in 2024 could further boost demand for crypto products.

However, nothing goes up in a straight line. After sharp rallies, traders generally book profits and shift their focus to other coins. As Bitcoin takes a breather, traders’ are likely to turn their attention to select altcoins.

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Cosmos Interchain Foundation budgets $26M for ecosystem development in 2024

The amount allocated is down from a budget of $40 million in 2023.

Switzerland-based Interchain Foundation (ICF), the core developer behind the cross-chain communications protocol Cosmos, will allocate $26.4 million for maintaining the said ecosystem next year.

According to a Dec. 13 announcement seen by Cointelegraph, the ICF 2024 roadmap “prioritizes funding for the Interchain Stack’s optimal functionality.” Out of the amount, $3 million will be allocated to CometBFT, Cosmos’ Byzantine fault-tolerant engine for state machine replication. Meanwhile, $4.5 million will go toward the Cosmos software development kit, and $7.5 million will be allocated to Cosmos’ native inter-blockchain communications protocol (IBC).

The remaining $4.155 million will go toward smart contract framework CosmWasm, digital library CosmJS, and ecosystem security audits. “This year’s funding program is designed to fortify the free-to-use, open-source Interchain Stack, serving as a catalyst for enhanced blockchain interconnectedness,” said ICF board director Maria Gomez, adding, “The role we play in the ecosystem is that of a steward that aids the interchain to achieve its goal of interoperable sovereignty.”

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Cosmos-based networks Umee and Osmosis to merge, creating ‘DeFi Hub’

Through a software upgrade, Umee UX Chain code will be implemented on Osmosis, combining the two networks.

Cosmos-based networks Umee and Osmosis will merge via a software upgrade, according to a Dec.

Umee user interface. Source: Umee

Umee is a decentralized lending protocol that runs on its own dedicated Cosmos chain called “UX Chain.” Osmosis, on the other hand, is one of the largest decentralized exchanges (DEXs) in the Cosmos ecosystem, also running on its own dedicated network. It has over $23 billion in cumulative volume and is the fourth-largest Cosmos chain in terms of total value locked (TVL), according to DefiLlama. 

According to the announcement, the development teams behind the protocols agreed to combine the two networks, allowing the lending app and DEX to exist on the same chain.

“The combined architecture of both chain functionality will open up the door for flash loans and new forms of MEV on the same DeFi Hub,” said Osmosis co-founder Sunny Agarwal, adding, “We originally thought of flashmint via protorev for multiple types of cross chain arb, and realize[d] a lending protocol on the same chain would further optimize this vision.”

Related: Cosmos Hub greenlights ATOM inflation cut for security boost

The announcement did not state a specific date for the merger.

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Injective launches layer-2 testnet for Solana-based apps in Cosmos

The new testnet is one of the few networks that uses Solana’s Sea Level Virtual Machine (SVM).

Developers may soon be able to port Solana Web3 apps to the Cosmos ecosystem, bringing new users to these apps and providing a greater variety of uses for Cosmos blockchains. 

According to a March 30 announcement from the developer of Cosmos-based network Injective (INJ), the team has released a layer-2 testnet that utilizes Solana’s Sea Level Virtual Machine (SVM). This means that some Solana developers can now test their apps for use in the Cosmos ecosystem without needing to change the programming language or tooling used.

In a conversation with Cointelegraph, a representative from Injective said the name of the new network is “Cascade” and that it uses optimistic rollup technology.

According to the announcement, the new layer was created with the help of Eclipse, a company that provides customized zero-knowledge and optimistic rollups for developers.

Eric Chen, co-founder and CEO of Injective Labs, stated that the integration should help both the Solana developer community and Cosmos users:

“This new SVM rollup for the Cosmos IBC world will not only empower developers from Solana to deploy their DApps on Injective, but it will also create more opportunities for users to experience the best Web3 DApps in one integrated network.”

Injective stated that the testnet is currently private, but it is “offering a limited number of spots exclusively to select Solana developers” beginning on March 30.

The number of active Solana developer teams increased over 1,000% year-over-year in the third quarter of 2022, according to a report by Alchemy. The network features several apps with over 2,000 unique users, including the nonfungible token marketplace Magic Eden and DeFi protocol MeanFi, according to Web3 analytics company DappRadar.

However, Solana Web3 apps are written for use with the Solana SVM, which is used by few networks other than Solana itself. This makes it difficult for Solana developers to port their apps to other networks without extensive rewriting.

Related: Formfunction to shutter marketplace amid Solana NFT slump

Eclipse also created an SVM rollup for Polygon on February 23.

Cosmos is a group of interconnected blockchain networks developed using the same consensus engine and software development kit. They are connected through the Cosmos Inter-Blockchain Communication Protocol (IBC), and assets on one network can be transferred to others within the Cosmos ecosystem. Injective is one of the networks that make up this ecosystem, and the new SVM rollup is a layer-2 of Injective.

Injective Labs isn’t the only company trying to make Solana apps compatible with Cosmos. Nitro Labs also announced the development of an SVM rollup for the Sei network in September and released a decentralized exchange for its testnet in February.

The Cosmos ecosystem has been growing over the past two years. On March 11, Cosmos Hub governance approved the V9-Lambda upgrade that begins to implement Interchain Security (ICS), allowing members of the ecosystem to share validations resources. On March 29, Circle announced that it will launch USDC for Cosmos via the Noble Network.

Circle announces USDC launch for Cosmos via Noble network

The stablecoin will be launched on the Noble network, making it available to all 50-plus Cosmos IBC blockchains.

USD Coin (USDC) will soon be available in the Cosmos ecosystem via the Noble network, according to a blog post from the Noble development team. The post was shared on Twitter by USDC issuer Circle.

Neither Circle nor Noble gave out a specific date for USDC’s launch on the network, but both said that readers should “stay tuned.”

In its announcement, the Noble team said that USDC will be the first “native, fiat-backed stablecoin that is highly liquid and fully collateralized” on a Cosmos Inter-Blockchain Communication Protocol-connected network. In its view, the introduction of the fiat-backed stablecoin will solve many of the challenges that Cosmos users currently have when trying to bridge assets from one network to another, explaining:

“This integration will catalyze hundreds of millions of dollars in liquidity over the coming months in Cosmos, and will seek to rectify the challenges that users and appchains face when interacting with bridged assets sourced from other ecosystems. […] Every blockchain needs a canonical and fungible version of USDC, and Noble exists to fulfill this critical need.”

Related: Mastercard to settle transactions for USDC in APAC

According to an explanation on the official Cosmos website, Cosmos is an interconnected web of blockchain networks that use the Tendermint Byzantine fault-tolerant consensus protocol, Application Blockchain Interface and Cosmos Software Development Kit. The networks are connected through the Inter-Blockchain Communication Protocol (IBC), allowing them to move assets between networks within the overall Cosmos ecosystem.

Noble is one of more than 50 networks in the Cosmos IBC ecosystem, according to Mintscan.

In January, Injective Protocol launched a $150 million fund to promote user adoption of the Cosmos ecosystem. It was backed by Kraken Ventures, Pantera Capital, Jump Crypto and other firms known for investing in blockchain projects. In February, the Cosmos Interchain Foundation allocated another $40 million to develop core infrastructure and applications for the ecosystem.

ATOM bulls watch closely as Cosmos interchain security prepares for March 15 launch

Cosmos governance has approved the v9-Lambda upgrade, including interchain security and possibly kicking off a “virtuous real yield cycle.”

The Cosmos community has approved a vote to add “replicated security (RS)” to its chain, with 99.99% of votes in favor of the motion. The much-awaited upgrade is set to go live on March 15, 2023, with the v9-Lamba upgrade. 

RS is the first version of Cosmos’s Interchain Security (ICS) feature, allowing blockchains in the Cosmos ecosystem to share validation resources for improved security.

Only protocols approved by Cosmos governance will be added as consumer chains in the upcoming update. Eight consumer chains are potential candidates for selection, including Neutron, PolymerDAO, Duality, Stride, Simply Staking, FairBlock and Comdex.

Cosmos’s interchain security could start a virtuous real yield cycle

The Replicated Security feature will distribute up to 25% of the consumer chain fees to Cosmos Hub stakers. The protocols can also allocate a portion of token inflation and revenue streams to Cosmos (ATOM) stakers.

The ICS implementation allows consumer chains to focus entirely on the growth of the network’s economy, as Cosmos Hub’s validators provide reliable security against 51% attacks and double-spending. This will bring additional yield to ATOM stakers and allow consumer chains to optimize for growth.

The staking reward for ATOM after adjusting for inflation is 6.82%, with 24.37% annual returns. The additional consumer chain yields will improve ATOM holders’ annual yield, encouraging more buying and staking activity.

Cosmos staking rewards inflation adjustment. Source: Staking Rewards

Neutron is a smart contract platform that will likely be the first consumer chain to use the new ICS feature. Avril Dutheil, general manager of Neutron, told Cointelegraph:

“As a result [of RS], Neutron does not have to inflate the Neutron (NTRN) supply continuously to keep validators honest or pay staking yield to governance participants since they do not contribute to securing the network.”

Dutheil added, “Instead, NTRN can afford to have a fixed supply, a release schedule indexed on on-chain activity and constant buy-and-burn pressure from Neutron’s three streams of revenue.”

This will allow the consumer chains to focus on the blockchain’s real yield and bring additional yield to ATOM stakers as the price increases. Consequently, high yields for staking ATOM will motivate more users to purchase and stake ATOM. Hence, potentially giving rise to a virtuous investment cycle in the Cosmos ecosystem.

Bullish Cosmos ecosystem growth appears

The Cosmos ecosystem has grown significantly in the last two years as more chains use the Cosmos-SDK and Tendermint consensus mechanism to spin up application chains. Implementing improved cross-chain features like RS will allow blockchains to benefit from the liquidity in the Cosmos ecosystem.

Circle’s announcement of a native USD Coin (USDC) blockchain on Cosmos will likely be a potent catalyst to improve the ecosystem’s liquidity. Dutheil mentioned multiple decentralized stablecoin projects like Agoric’s Inter Stable Token (IST) and Kujira’s USK, which look to replicate the success of Ethereum-based decentralized stablecoins on Cosmos. It will also help establish ATOM as a reliable collateral and improve its value proposition. Dutheil added,

“Whether or not these decentralized alternatives will succeed in scaling their offering across the Interchain remains to be seen, but at least the building blocks are there to finally bring a well-integrated DeFi ecosystem to Cosmos.“

Technically, the ATOM/USD pair has formed a bullish ascending triangle pattern since forming the June 2022 lows at $6. A breakout from the triangle around the $14 and $15 resistance levels could see the asset tap 2022 bearish breakdown levels around $33, with a slight chance of tapping the all-time highs around $46. However, the bullish thesis would be invalidated if the price breaks an falls below the triangle’s base, currently hovering around $10.

CryptoQuant data shows that ATOM’s relative strength index and Stochastic indicator are in the oversold category, suggesting a possible trend shift.

ATOM/USD weekly price chart. Source: TradingView

While a bullish ATOM thesis looks plausible, its realization will depend on the usage and whether or not consumer chains can bring meaningful returns to ATOM stakers.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Cosmos Interchain Foundation allocates $40M for ecosystem development in 2023

The ICF is also funding projects to drive Cosmos’s adoption and use cases, including programs like the Interchain Developer Academy and Interchain Builders Program.

The nonprofit organization behind the creation of the Cosmos (ATOM) interblockchain communications (IBC) ecosystem has committed to spending around $40 million in 2023 to develop its core infrastructure and applications, the Interchain Foundation (ICF) announced in a Feb. 20 Medium post 

 The Interchain Stack is utilized by around 50 blockchains, including the Tendermint Core (and now CometBFT), Cosmos SDK, Cosmos Hub and the IBC protocol.

“Throughout the year, we envisage engaging other teams to deliver smaller, tightly defined tasks within each area of work. Such contracts will be to supplement the work of the teams mentioned below or in service of their needs that arise during the year.”

The ICF is also supporting the development of CosmWasm and Ethermint, the technologies the firm says have become the “foundations of smart contract and Ethereum Virtual Machine (EVM) compatible blockchains.”

In addition to core infrastructure, the ICF will fund projects that drive Cosmos’s adoption and use cases. These include programs such as the Interchain Developer Academy, the Cosmos Developer Portal, and the Interchain Builders Program, as well as integration with other blockchain technologies such as Polkadot and Hyper Ledger.

Key areas of work of the ICF’s funding commitment. Source: ICF

Additionally, the ICF says that it plans to reopen its public Small Grants Program in 2023, which was suspended last year due to a “significant backlog of applications.”

It plans to reopen the program in due course and is encouraging teams to reach out to the Builders Program for non-financial mentorship and support. In the meantime, the ICF recommends developers utilize its ATOM delegation program to access contribution rewards.

Are Cosmos’ ecosystem growth and roadmap enough to sustain ATOM’s current 50% monthly rally?

ATOM gained 50% in January, and while the broader crypto market could remain bullish for some time, does the Cosmos ecosystem have strong enough fundamentals to support further upside?

In September 2022, Interchain Foundation, the team behind the development of Cosmos, introduced the Cosmos ATOM 2.0 white paper. The document proposed significant changes to Cosmos’s design, including a tokenomics upgrade to fund ecosystem development and reduce Cosmos (ATOM) inflation.

While the white paper launch acted as a bullish catalyst for ATOM’s price, the community vote to pass the proposal eventually failed, primarily because of its enormity. Some community members wanted to take a measured approach to each development feature listed in the white paper, starting with interchain security in Q1 2023.

Interchain security will enhance the value accrual position of ATOM as a modular chain. New blockchains will be able to borrow the security from it and pay Cosmos hub validators. 

Despite the rejection of the Cosmos 2.0 white paper, the team continues to work on the upgrades mentioned in it. The other improvements in tokenomics will be introduced as a separate proposal to the Cosmos community.

The first week of February witnessed a technical bullish breakout in ATOM’s price. If buyers continue to accumulate, there’s a solid chance of a short-to-medium trade rally.

Interchain Security to bring more value to ATOM stakers

The interchain security implementation remains the most crucial breakthrough in accruing value to ATOM holders. The feature will allow independent blockchains, called consumer chains in the Cosmos ecosystem, to rent security from the validators of the Cosmos hub. Existing Cosmos SDK-based blockchains can choose to be consumer chains too. This will bring additional staking rewards for ATOM holders.

The Cosmos team concluded its developer’s “Game of Chains” campaign to test consumer chains before rolling out the mainnet version of interchain security. They will implement this feature in Cosmos’s lambda upgrade (v9) sometime in February.

Number of blockchains that are part of IBC. Source: Interchain Foundation

Development of Cosmos ecosystem and IBC expansion

One of the most prominent developments will be the introduction of Circle (USDC) on Cosmos. The stablecoin will enhance the liquidity of Cosmos’s decentralized finance ecosystem. 

The Cosmos SDK is used to construct many popular blockchain and cryptocurrency projects, such as Binance DEX, Kava and more recently, dYdX. Until now, ATOM didn’t accrue any value from this implementation. However, this will change with interchain security and other developments with cross-chain implementation.

The Inter Blockchain Communication (IBC), which enables interoperability between Cosmos-based blockchains, showcased impressive growth in 2022. Moving forward, the project’s team will implement the interchain scheduler, providing an open and transparent maximal extractable value (MEV) marketplace for cross-chain transactions. It will look to standardize ATOM as the default gas token for IBC transfers, though the fees can be paid in multiple tokens.

Number of blockchains that are part of IBC. Source: Interchain Foundation

In the future, the IBC will help the Cosmos ecosystem expand to other blockchains, such as Ethereum, Near and Polkadot, improving liquidity and traffic with it. The change in ATOM’s tokenomics with interchain allocator to fund ecosystem growth and eventually reduce inflation will also be implemented in time.

Related: Injective launches $150M ecosystem fund to boost DeFi, Cosmos adoption

Since the beginning of 2023, ATOM’s price has increased by 61%, partly attributed to the broader rally in the crypto market. Nevertheless, the gains were still more significant than Bitcoin (BTC) and Ether (ETH), which gained 48.10% and 43.20%, respectively.

Coinglass data shows a steep spike in the open interest volume for ATOM futures orders from $65 million to $92 million, setting the token up for increased volatility. The funding rate and long vs. short ratio suggest that the interest was primarily in long orders. An over-leveraged futures market can provide headwinds for buyers as sellers will look to run the stops of long players.

Open interest volume for ATOM. Source: Coinglass

The weekly chart of ATOM/USD broke above the 50-day exponential moving average (EMA) at $14.20. The metric has acted as a pivotal level for trend reversals. If the price closes above the 50-week EMA at the end of February’s first week, technical buyers will look to accumulate ATOM for a swing trade.

If the uptrend continues, the bulls will target the resistance levels at $17.20 and $25.20. On the downside, long-term support lies at $6.50 and $3.10.

ATOM/USD weekly chart. Source: TradingView

The Cosmos community has long anticipated the interchain security feature. Thus, the token has a higher chance of sustaining its breakout, at least until the launch. 

The growth and the proportion of yield it brings will either keep the bullish momentum alive before the Interchain Foundation moves to the next update or see a fading momentum until the proposal to improve ATOM emissions is finally passed by the community.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Injective launches $150M ecosystem fund to boost DeFi, Cosmos adoption

“DeFi has proven to be a resilient and reliable option for users in the face of the overarching CeFi collapse in 2022,” said Eric Chen, CEO of Injective Labs.

Injective, a layer-1 blockchain protocol founded in 2018, has launched a $150 million ecosystem fund to support developers building on the Cosmos network.

The so-called ecosystem group is backed by a large consortium of venture capital and Web3 firms, including Pantera Capital, Kraken Ventures, Jump Crypto, Kucoin Ventures, Delphi Labs, IDG Capital, Gate Labs and Flow Traders. According to Injective, the consortium is the largest assembled within the broader Cosmos ecosystem.

Developers selected for the fund will receive support through “bespoke token and equity investments,” in addition to mentorship, technical assistance, business development and marketing, Injective said. Projects building decentralized finance (DeFI) and interoperability infrastructure will be given the highest priority. Funds have also been earmarked for projects building trading platforms, scalability solutions and proof-of-stake infrastructure.

When asked how funds would be allocated, Injective Labs’ co-founder and CEO Eric Chen told Cointelegraph, “The ecosystem initiative’s approach to allocating funds is to focus on finding the right fit for each project, rather than being too stringent on a set number for funding.” He added:

“[I]n terms of stage, the group is primarily targeting early-stage projects (seed to Series B), but follow-on funding can also be considered on a case-by-case basis. The size of the funding awarded will vary depending on the stage and needs of the project, with the goal of providing the right level of support for each project to succeed.”

Injective, also known as Injective Protocol, is a decentralized smart contracts platform built using Cosmos SDK, a development kit that promotes faster and more cost-effective infrastructure than Ethereum. Chen said Cosmos provides more versatility, customization options and horizontal scalability than other blockchains.

Cosmos has a market capitalization of roughly $3.7 billion, making it the 20th largest blockchain network, according to CoinMarketCap.

Related: DeFi problems and opportunities in 2023: Market Talks

DeFi entered public discourse in the summer of 2020, with several prominent projects kicking off the crypto bull market shortly after Bitcoin’s quadrennial halvening. Although DeFi activity has slowed over the past year, the sector has been largely immune from the issues plaguing centralized finance, or CeFi, platforms.

“The decentralized nature of DeFi protocols allows for more transparency and true ownership over funds, which will always be a key advantage over centralized finance,” Chen further explained.

Cosmos EUR stablecoin project to unwind after 2 years

“The lack of real-world applications for blockchain has led to low demand for non-USD stablecoins,” e-Money wrote.

According to a Jan. 9 Medium post, e-Money — a stablecoin project in the Cosmos ecosystem — will discontinue the issuance of its EURR euro stablecoin effective March 6. In explaining the decision, e-Money wrote: 

“The lack of real-world applications for blockchain has led to low demand for non-USD stablecoins, and the upcoming European MiCA legislation is expected to hinder the scalability of Euro-backed stablecoins and limit business opportunities in the sector. European MiCA legislation in its current form favours commercial banks as future issuers of Euro stablecoins, hurting innovation in the European Union.”

Until the deadline, users can redeem their EEUR by swapping their stablecoins for digital assets such as OSMO, ATOM (ATOM) or USD Coin (USDC) on the Cosmos decentralized exchange Osmosis. For amounts over 100,000 EEUR, e-Money recommends direct redemption for euros with e-Money A/S. “This requires KYC/AML and you should expect around 5 business days for processing. Please contact sales@e-money.com to redeem using this option,” the firm wrote.

E-Money was founded in 2017 on the Cosmos blockchain and launched its mainnet in early 2020. The company previously worked with the Financial Services Authority and Ernst & Young to “develop a transparent and compliant model for stablecoins that could accommodate negative interest rates in the Euro-zone.” E-Money initially began issuing EEUR stablecoins in 2020 using Ethereum bridging technology, later incorporating Cosmos and Axelar.

“The crypto industry faced many challenges in 2022, with both centralized and decentralized entities experiencing difficulties. While e-Money was not directly affected, the stablecoin business relies heavily on integration with traditional finance, and financial institutions’ interest in cryptocurrency has waned following the events of 2022.”

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