Why Is ATOM on the Rise?

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Key Takeaways

  • ATOM is still up 152% since June lows, despite broader market weakness.
  • The whitepaper for ATOM 2.0 is scheduled for release on the first day of Cosmoverse, on September 26.
  • Cosmos community members believe ATOM 2.0 will revamp ATOM’s inflationary tokenomics.

The details for ATOM 2.0 will be revealed in four days during Cosmoverse. Community members expect the token’s inflationary monetary system to be substantially revised.

ATOM 2.0 on the Horizon

Big things are coming for the Cosmos ecosystem.

ATOM is currently trading at $14.7, up 10.3% on the day. While most major cryptocurrencies, including Bitcoin, are revisiting their summer lows, the Cosmos token is still up 152% since June 19.

The coin’s strength in the face of the broader downturn may be due to rumors surrounding ATOM 2.0, the specifics of which will be publicized during an upcoming Cosmos conference. Cosmoverse will be held in Medellín, Colombia, from September 26 to 28 and will feature Cosmos co-founder Ethan Buchman and Osmosis labs co-founder Sunny Aggarwal as speakers, among many others. 

Details around ATOM 2.0 will be made public on the first day of the conference, with Buchman scheduled to unveil the token’s whitepaper at 14:30 UTC and Sommelier co-founder Zaki Manian to expand on the coin’s revamped tokenomics at 15:40 UTC in a talk entitled “$1K ATOM LFG.” A panel dedicated to ATOM 2.0 will also be held on the third day at 21:30 pm UTC.

Tokenomics

Cosmos is a decentralized network of independent blockchains, with ATOM as its leading token. Its Inter-Blockchain Communication protocol (IBC) enables users to seamlessly hop from one blockchain to another. At the time of writing, there are 42 different IBC-connected blockchains, including the Cosmos Hub, decentralized exchange Osmos, smart-contract platform Juno, EVM-compatible chain Evmos, and privacy blockchain Secret Network. According to the Cosmos website, the network’s cumulative market capitalization currently stands at $9.72 billion, placing it only slightly below Solana’s $11.4 billion.

The ATOM token is used to secure the Cosmos Hub. Not to be confused with the broader Cosmos ecosystem, the Cosmos Hub is a blockchain specifically designed to connect all the other blockchains in the network. The Keplr dashboard indicates ATOM staking rewards currently sit between 15.19% and 18.99%, depending on the validator one delegates to; the yield is constituted of ATOM emissions and Cosmos Hub transaction fees.

However, ATOM has received criticism for its inflationary tokenomics. The coin’s inflation rate is conditional on ATOM staking percentages. According to Messari, if more than two-thirds of the supply is staked, the inflation rate gradually decreases until it hits 7%; less than two-thirds, and ATOM can reach up to 20% annual inflation. By comparison, Ethereum’s inflation rate is currently at 0.19%; even before the blockchain’s upgrade to Proof-of-Stake, its token supply increased by about 4.62% yearly.

Prominent Cosmos community members have speculated that ATOM 2.0 will fix the coin’s inflation rate by introducing a burning mechanism or a hard cap to the coin’s total supply. Another positive development for ATOM is the forthcoming launch of Interchain Security, which will put the Cosmos Hub in charge of securing the entire IBC network, not just the Hub itself. Stakers will also begin receiving rewards from other IBC blockchains, depending on the validator set they chose. Interchain Security is set to launch in January 2023.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, ATOM, OSMO, JUNO, and several other cryptocurrencies.

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