Earning Yield – Does it Cancel Out Negative Price Movements – A Look at Cosmos

Not every cryptocurrency relies on energy-consuming mining protocols to validate transactions. Cosmos (ATOM) solves Ethereum scalability problems by using a hybrid Proof-of-Stake mechanism.

Instead of spending thousands of dollars on mining equipment, network validators deposit a stake (collateral) to guarantee their honesty. In some cases, those entities receive a reward for their Cosmos hub network processing work by approving or rejecting transactions.

Cosmos Yield Can Reach 9% APY

Such an all-in-one solution for interoperability allows one to delegate their stake to other participants and receive the corresponding share of the block reward.

In a nutshell, users can receive a passive income by delegating their stake to Cosmos network validators. The current yield per year on Cosmos is near 9%, liquid from validators’ fees.

Not everyone can be a network validator, as only the top 125 are allowed to participate. To protect the network from malicious actors, changing a delegator requires a 21-day delay.

A top-30 cryptocurrency, Cosmos (ATOM) is usually referred to as “The Internet of Blockchains,” a next-generation public blockchain that delivers both scalability and interoperability. The consensus algorithm is based on the ‘Tendermint’ engine, and it works as a hub for other blockchains to plug into.

Staking Cosmos also gives one the right to vote on proposals and make decisions on the network expansion and protocol changes. But, unfortunately, those newly minted coins to reward network validators create inflation, meaning ATOM holders get diluted over time.

Is Cosmos Staking Risk-free?

No, if a validator has downtime or somehow posts invalid transactions, a percentage of the delegated staked ATOM is forfeited. Therefore, using multiple validators is recommended to mitigate such a risk.

Take notice of how Cosmos (ATOM) and Ethereum (ETH) posted similar returns in 2021. This shows how the market has been pricing Cosmos based on decentralized finance and NFT markets growth, which causes network congestion.

Consequently, getting a 9% APY for ATOM staking could make the difference by year-end for investors.

Are There DEX Exchanges on the Cosmos network?

On July 12th, the Cosmos governance community approved the proposal to integrate the Gravity DEX on the Cosmos Hub, its first cross-chain DeFi protocol. As Ethereum network transaction (gas) fees skyrocket, Gravity DEX aims to solve this problem for DeFi, offering significantly lower fees.

Gravity DEX tackles the Uniswap automated market maker slippage issues by providing the latest swap price through its equivalent price model. Therefore, this model removes front-running and price manipulation by using batched execution for orders.

The protocol innovation, Equivalent Swap Price Model (ESPM), improves price discovery by landing on precisely the latest swap price. In a nutshell, orders in the same block are processed simultaneously.

Cosmos’ Inter-Blockchain Communication (IBC) protocol

Developers now have an easy and secure way to build blockchains quickly. All this is possible with the help of Tendermint BFT and the Cosmos SDK, a modular framework that simplifies the process of building decentralized applications.

With the help of the Inter-Blockchain Communication (IBC) protocol, these blockchains can now be connected. The IBC is a protocol that benefits from Tendermint consensus’ instant finality property to enable communication between different blockchains.

The end goal? Allow the transfer of tokens and other data in a trustless manner. IBC opens up a wide range of possibilities, allowing interoperability and value transfer. Cosmos’ solution avoids the scaling issues seen today in some of the largest blockchains. Bridges to Proof-of-Work (PoW) chains like Bitcoin and Ethereum are already being developed.

ATOM can be used to validate child-chains on an opt-in basis, known as Interchain Staking. In exchange for securing those networks, stakers will receive additional rewards.

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