This is article 5/10 in Part II of our series: How To Build Wealth and Grow Crypto Assets and Income by Staking
Key Takeaways
1. Cosmos has unique features, like interoperability, customizability, scalability, governance, and the ATOM economic zone.
2. You can start staking with only 1 ATOM token.
3. The ATOM token has the potential to be a core holding in any crypto portfolio.
For links to resources and to see the FAQs please read this on our blog.
Cosmos is gaining traction among crypto developers and investors, thanks to its unique approach to solving blockchain interoperability. It is a decentralized network of independent parallel blockchains. Cosmos welcomes developers who want to launch their own blockchains that seamlessly connect to other IBC enabled chains. The ATOM token is the native cryptocurrency of the Cosmos Hub, used for staking, governance, and securing the network.
The unique features of the Cosmos ecosystem
1. Interoperability: Cosmos enables communication and data sharing between different blockchains, addressing the issue of blockchain silos. Inter-blockchain Communication (IBC) allows different blockchains to establish secure connections and authenticate data. IBC can be used to develop a wide range of applications, from token transfers, NFTs, oracle data feeds, and interchain accounts. IBC just connected Polkadot and Kusama to the Cosmos. Many more ecosystems will soon connect.
2. Customizability: Cosmos developers can create custom blockchains tailored to their specific needs and use cases. They can have their own blockchains that trustless bridge to other blockchains within the Cosmos. Plus, they can secure each other. Developers should check out the Cosmos SDK.
3. Scalability: Cosmos believes that decentralized applications can function best as their own blockchains. Dapps no longer need to host their databases on Ethereum. With virtually an unlimited number of applications coming, Cosmos can scale exponentially.
4. Governance: Cosmos governance is quite active. ATOM token holders can participate in governance decisions, like proposals for network upgrades, changes to network parameters, and adding consumer chains to the Cosmos Hub.
5. The ATOM economic zone: Deep liquidity, transaction volume, and revenue are coming to the Cosmos Hub. Neutron is a smart contract platform that will bring decentralized finance and hopefully transaction volume to the Cosmos Hub. They are proposing to merge with the Duality team and acquire their DEX.
Stride is a liquid staking platform that will expand the use of the ATOM token as collateral within DeFi.
Noble is a native asset issuance protocol that will bring stable coins, like USDC to the Hub.
And, EntryPoint hopes to bring index tokens to the Cosmos Hub. The synergies between consumer chains could attract massive amounts of liquidity and revenue from transactions.
Staking requirements and rewards for ATOM
ATOM holders can stake their tokens to help secure the Cosmos network and earn rewards in return. You need at least 1 ATOM to stake. Staking can be done directly through a wallet, like Keplr, Cosmostation, and Trust Wallet.
The current annual staking reward rate for ATOM is around 19%. However, there is talk of lowering inflation to attract institutional investors. Plus, the staking rate varies depending on the total amount of ATOM staked, transaction volume, validator uptime, validator commission, etc.
The long-term potential of ATOM
As the Cosmos ecosystem and ATOM economic zone grow, the demand for ATOM tokens is likely to increase because the token will be needed to pay for transactions. Projects, like Kava connect Cosmos to Ethereum, Composable brings Cosmos to Polkadot. Injective and Axelar connect Cosmos to Solana and many other blockchain ecosystems.
Staking ATOM and restaking your rewards allows you to compound your holdings. Plus, staking ATOM tokens with qualified validators will earn you airdrops. Free tokens that you can turn around and stake is a huge bonus.
Additionally, staking ATOM enables you to participate in the governance process, giving you a voice within the ecosystem.
Conclusion
The unique features of the Cosmos ecosystem, coupled with the potential for compounding your position, make ATOM an attractive addition to a long-term crypto portfolio. Please refrain from staking with centralized exchanges. For a detailed explanation please read our article: Why You Should Not Stake With Coinbase.
Be sure to check out our ATOM staking tutorials to see how simple it is.
Nothing we say is financial advice or a recommendation to buy or sell anything. Cryptocurrency is a highly speculative asset class. Staking crypto tokens carries additional risks, including but not limited to smart-contract exploitation, poor validator performance or slashing, token price volatility, loss or theft, lockup periods, and illiquidity. Past performance is not indicative of future results. Never invest more than you can afford to lose. Additionally, the information contained in our articles, social media posts, emails, and on our website is not intended as, and shall not be understood or construed as financial advice. We are not attorneys, accountants, or financial advisors, nor are we holding ourselves out to be. The information contained in our articles, social media posts, emails, and on our website is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation. We have done our best to ensure that the information provided in our articles, social media posts, emails, and the resources on our website are accurate and provide valuable information. Regardless of anything to the contrary, nothing available in our articles, social media posts, website, or emails should be understood as a recommendation to buy or sell anything and make any investment or financial decisions without consulting with a financial professional to address your particular situation. Blocks United expressly recommends that you seek advice from a professional. Neither Blocks United nor any of its employees or owners shall be held liable or responsible for any errors or omissions in our articles, in our social media posts, in our emails, or on our website, or for any damage or financial losses you may suffer. The decisions you make belong to you and you only, so always Do Your Own Research.
