Key Takeaways
Cosmos is an ecosystem of interoperable blockchains connected via the Inter-Blockchain Communication (IBC) protocol, with Cosmos Hub serving as the central connector between independent blockchains called Zones.
Each Zone is built using Cosmos SDK and runs on CometBFT (formerly Tendermint Core), a Byzantine Fault Tolerant consensus engine that handles networking and consensus so developers can focus on building applications.
ATOM is Cosmos Hub's native token, used to pay transaction fees, vote on governance proposals, and stake behind validators who secure the network in return for staking rewards.
Since 2023, major upgrades have expanded Cosmos's scope: Interchain Security lets Cosmos Hub validators secure consumer chains, and IBC Eureka (March 2025) enables trust-minimized connections to Ethereum and Solana.
Introduction
Interoperability has always been one of blockchain's hardest problems. Cosmos addresses it by providing a modular framework for building independent blockchains that can communicate with each other. Backed by open-source tools like Cosmos SDK and the IBC protocol, Cosmos has become one of the most widely adopted platforms for launching new blockchain networks. This article explains how Cosmos works, what ATOM is used for, and how the ecosystem has evolved through 2025.
How Does Cosmos (ATOM) Work?
Cosmos is a project focused on creating a network of different blockchains that are interoperable. Founded in 2014 by Ethan Buchman and Jae Kwon, the Cosmos network consists of a Proof of Stake blockchain mainnet and customized blockchains known as Zones.
The main chain, Cosmos Hub, transfers assets and data between the connected Zones and provides a shared layer of security. These all work together using CometBFT (formerly Tendermint Core), Cosmos's consensus mechanism, and a general application interface. Fees in Cosmos are payable using ATOM, the network's native token.
The Cosmos network is split into three different layers:
Networking: Allows transaction confirmations and other consensus messages to communicate with hub blockchains.
Application: Updates the network on the new state of transactions and balances.
Consensus: Organizes nodes in how they agree on adding new transactions.
These three layers are combined through a collection of open-source tools and applications. CometBFT packages the networking and consensus layers into a ready-to-use engine. Blockchain developers using CometBFT only need to focus on the application layer, saving them time and resources.
What Is Cosmos Hub?
Cosmos Hub is Cosmos's primary blockchain that connects other customized blockchains known as Zones. It does this by keeping track of the state of each Zone through the Inter-Blockchain Communication (IBC) protocol. Through IBC, information can travel between any Zone connected to Cosmos Hub, as well as to external blockchains like Ethereum and Solana (via IBC Eureka, described below). Smart contract-enabled consumer chains like Neutron can also connect to the Hub for security through Interchain Security.
Cosmos Hub acts as a central ledger for the ecosystem where Zones exchange IBC messages. IBC uses two kinds of transactions: IBCBlockCommitTx and IBCPacketTx. The first communicates the most recent block hash in any given Zone. The second allows a Zone to prove that a packet of information is legitimate and was published by the sender's application.
When two applications on two different Zones need to communicate, IBC messages are relayed to Cosmos Hub, which records the interaction. Each Zone also records the outcome on its own blockchain, creating evidence of the activity across three separate blockchains. This ability for blockchains to interact has given Cosmos the nickname "The Internet of Blockchains."
What Is IBC Eureka?
In March 2025, Cosmos launched IBC Eureka (IBC v2), a major upgrade to the Inter-Blockchain Communication protocol. IBC Eureka simplifies the original protocol by removing complex connection handshakes and channel identifier redundancy, and introduces a Payload concept that allows applications to transfer tokens and data using different encoding formats, including Ethereum's ABI encoding for lower gas costs.
One of IBC Eureka's most significant features is its use of zero-knowledge proofs to verify Cosmos's CometBFT light client on Ethereum, using Succinct's SP1 zkVM. This enables trust-minimized token transfers between Ethereum and Cosmos at relatively low cost. A Solana integration was in final audit stages as of May 2026.
As of May 2026, the IBC ecosystem spans 115+ connected chains with over $3 billion in monthly transfer volumes. The ibc-go v10 library supports both IBC Classic and IBC v2, allowing chains to upgrade gradually.
What Is Interchain Security?
Interchain Security (ICS), launched on Cosmos Hub in March 2023, allows the Hub's validator set to extend its security to smaller consumer chains that would otherwise need to recruit and bootstrap their own validators. Under this model, Cosmos Hub acts as a provider chain: its ATOM-staked validators also validate approved consumer chains, with slashing applied for misbehavior on both chains.
The first two consumer chains were Neutron (a smart-contract chain; Hub stakers receive NTRN token rewards) and Stride (a liquid staking protocol). By late 2023, ICS evolved from full Replicated Security (entire Hub validator set mandated) to Partial Set Security (PSS) and Opt-In Security, reducing hardware burden on smaller validators while still offering robust security to consumer chains that need it.
What Are Cosmos Zones?
Cosmos's custom blockchains, known as Zones, are used for a wide variety of applications. Each Zone can authenticate its own transactions, mint tokens, and implement custom developments. Even with these differences, all Zones are interoperable with any other Zone in the Cosmos system, as long as they have permission to do so.
Zones use a Hub and Spoke architecture where Hubs act like routers for different Zones. Cosmos Hub is one of the most popular, but other Hubs exist. Anyone can create a Hub blockchain or Zone, as the network is entirely permissionless. However, each Zone or Hub has the power to refuse connections from other blockchains.
By connecting to a Hub, a blockchain can communicate with any Zone on the same Hub. Hubs can also connect to each other. BNB Chain is one example of a blockchain built using Cosmos SDK.
What Is Cosmos SDK?
Cosmos SDK is an open-source software development kit that lets users create custom blockchains. Its default consensus protocol is CometBFT, but a variety of pre-built modules are available. Using Cosmos SDK simplifies the process considerably and provides all the standards expected when building a blockchain.
It is highly customizable with plug-ins, allowing users to design new features and traits. Both public Proof of Stake blockchains and permissioned Proof of Authority blockchains can be built with Cosmos SDK. The SDK also supports ABCI 2.0 (introduced in SDK v0.50 in 2024), which allows richer interaction between the application and consensus layers.
What Is ATOM?
ATOM is Cosmos's native token with three primary use cases in relation to Cosmos Hub's proof of stake system:
Transaction fees: Users pay transaction fees in ATOM, proportional to the computational power required.
Governance: ATOM holders participate in Cosmos Hub's governance system. As a governance token, ATOM gives holders voting power on proposals that can change protocol parameters, fund ecosystem projects, or approve new consumer chains under Interchain Security.
Staking: ATOM is staked behind validators, who share block rewards with their delegators.
ATOM was distributed via an Initial Coin Offering (ICO) and has no fixed supply cap, making it an inflationary asset. The inflation rate adjusts dynamically based on the percentage of ATOM staked relative to a 66% target bond ratio. In November 2023, Cosmos Hub governance voted to lower the maximum inflation rate from approximately 19% to 13.4%. As of May 2026, approximately 508 million ATOM were in circulation. The community is actively researching further tokenomics changes, including potential fee-based burn mechanisms.
What Is CometBFT?
CometBFT (formerly Tendermint Core) is the consensus engine that powers Cosmos Hub and most Cosmos SDK chains. Tendermint Core was rebranded to CometBFT in January 2023 following a fork from the original Tendermint repository, with ongoing development now maintained by the CometBFT team. All major Cosmos chains, including Cosmos Hub and Osmosis, now run CometBFT.
CometBFT is Byzantine Fault Tolerant (BFT), meaning transaction confirmations can still proceed even with non-cooperating or malicious participants. CometBFT validators run nodes that maintain a copy of the blockchain's data. Cosmos Hub currently operates with up to 180 active validators; the top 180 nodes by staked ATOM value hold voting power proportional to their stake.
Validators gain their positions by staking ATOM. Users can also delegate their ATOM to validators in return for a share of block rewards. This mechanism incentivizes validators to behave well, as delegators can move their stake to more reliable options.
Why Is CometBFT Important?
CometBFT has remained popular due to several properties:
Suitable for public and private blockchains: CometBFT handles only the networking and consensus layers. Developers can still fully customize the application layer, and each Zone can choose how its validators are selected and whether the blockchain is public or permissioned.
High performance: CometBFT has a block time of around one second. The 2026 CometBFT roadmap targets 10,000+ transactions per second, aimed at enterprise-scale use cases.
Immediate transaction finality: Transactions are confirmed as soon as a block is created, provided the majority of validators are honest. This contrasts with probabilistic finality on chains like Bitcoin (BTC), where users typically wait for multiple block confirmations.
Accountability on forks: If the blockchain forks, the BFT mechanism makes it straightforward to identify which validators misbehaved, supporting slashing and on-chain accountability.
FAQ
What is Cosmos?
Cosmos is an ecosystem of independent but interoperable blockchains. It provides a set of open-source tools, including Cosmos SDK and the IBC protocol, that allow developers to build customized blockchain networks ("Zones") that can communicate and exchange assets with each other and with external chains like Ethereum.
What is ATOM used for?
ATOM is the native token of Cosmos Hub. It serves three main purposes: paying transaction fees, voting on governance proposals (giving ATOM the properties of a governance token), and staking behind validators to help secure the network in return for staking rewards.
What is IBC?
IBC (Inter-Blockchain Communication) is the open protocol that allows Cosmos blockchains to send tokens and data to each other in a trust-minimized way. IBC Eureka (IBC v2), launched in March 2025, extended this to Ethereum and Solana using zero-knowledge proofs, making Cosmos a neutral interoperability hub for both Cosmos-native and external blockchain ecosystems.
What is the difference between Cosmos Hub and Cosmos SDK?
Cosmos Hub is a specific blockchain - the central chain in the Cosmos ecosystem that connects other Zones and hosts Interchain Security. Cosmos SDK is the open-source software development kit used to build any Cosmos-compatible blockchain, including Cosmos Hub itself. Developers can use Cosmos SDK to launch their own independent Zone without relying on Cosmos Hub.
How does Interchain Security work?
Interchain Security (ICS) allows Cosmos Hub's established validator set to also validate smaller "consumer chains," giving those chains access to Cosmos Hub's security without having to recruit their own validators. Consumer chains approved by Cosmos Hub governance can receive either full validator set security (Replicated Security) or a subset (Partial Set Security). Cosmos Hub stakers receive a share of consumer chain fees and token rewards in exchange.
Closing Thoughts
Cosmos was one of the first ecosystems to tackle blockchain interoperability at scale, and its foundational tools, Cosmos SDK and the IBC protocol, remain widely used today. Since the original launch, the ecosystem has grown considerably: Interchain Security now allows Cosmos Hub to extend its security to consumer chains, IBC Eureka has brought trust-minimized connections to Ethereum and Solana, and CometBFT continues to evolve toward higher throughput targets. Whether ATOM can capture value commensurate with the ecosystem's technical growth is a question that ongoing tokenomics research is attempting to address.
Further Reading
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