Intro
This will be a guide for entering the Cosmos ecosystem and all the great projects that come with it. In this post, I want to speak about how I made my way into Defi, especially Cosmos.
This is not financial advice. I just want to tell people why I am bullish on Cosmos in the long run. Always do your own research and keep safe and beware of bad investments or scammers.
My way into Cosmos
So when I first entered Defi in September 2021 I started with BTC and ETH like probably most people do at the start. But I was looking to diversify my portfolio. My first wallet was Exodus don't get me wrong, Exodus is a great wallet, especially for beginners. You can hold different Tokens in one place. But for Cosmos, that's Keplr I will get into this later though. So I was looking to expand my portfolio and I saw in Exodus you can stake some tokens like Solana(SOL) and some others but what stood out was Exodus with an APR% of 14.6% at that time. This staking reward is what got me Interested. But I didn't do any research except for looking up what proof of stake is until later that year I realized what a gem I picked for my third investment in Defi. But enough of that I'll start with what I really want to tell and show people
Cosmos is a Blockchain with the Native token (ATOM) that uses ProofOfStake or short PoS. The Cosmos blockchain acts as a hub for different other Blockchains that are built on the Cosmos SDK or use SDKs provided by Blockchains that are connected to the Hub.
The Cosmos SDK is a tool developed by Ignite formerly known as Tendermint. It's designed to help build your own blockchain. On top or rather connected via Inter BlockChain Communication or for short IBC.
IBC or Inter BlockChain Communication is what Cosmos and all connected chains use to communicate with each other. Those connected chains can freely transfer native tokens of other IBC connected chains to each other via IBC transfers. So there is no bridging needed for Cosmos ecosystem Tokens.
Validators
Validators are the running power of a Blockchain that uses the Proof of stake consensus mechanism.
When picking a validator in the Ecosystem there are things to consider.
When picking a validator in the Ecosystem there are things to consider.
1.Decentralization
You should stake with a validator outside of the Top 10 one of the reasons is you want to decentralize the voting power in the Ecosystem the other reason will make this more attractive for you you will qualify for more airdrops as most of them Exclude top 10 Validators ( some airdrops even more).
2. Commission
The second thing is the Commission's the validator charges commisions is between 0-100% of your staking rewards this means the validator will take the said percentage of your staking rewards for his service. If you select a validator with 100% you won't receive any rewards as all of them would go to the validator. If you choose to go with a 0% fee validator you will receive all your rewards but you might get excluded from airdrops. And the validators offer a service that shouldn't be compensated so I would like to ask you from refraining of picking them. Unless you want to of course all the validators are offering a service I'm just saying it shouldn't be unrewarded.
3. Slash protection
The next one would be Slash protection. Slashing will happen when your chosen validator goes offline for a while the staking rewards of a validator get cut by a certain percentage. Plus your stake gets slashed as well. Some validators offer 100% protection so when they get slashed you won't lose any ATOM. This should be your highest priority when choosing a validator.
4. Relayers
Some Validators are acting as relayers across the chains which costs more resources to maintain.
5. Extra reward
Some validators offer a raffle for when you stake with them. Those are Bro n Bro and GoldenRatioStaking.
Citadel.one offers XTC for when you stake with them and set your wallet up with them.
6. Helpful validators
The second last and for some people maybe less interesting to keep in mind some Validators help out the Community when they have questions or provide useful information in general. Some of those Validators are Smartnodes
, Blocks United, and Citadel.one just to name those that I have seen.7. Was the Validator Jailed
The last thing to consider is if a Validator got Jailed before. A Validator gets jailed when he falls below the Minimum amount delegated to that validator or if he submits too many invalid shares.
8. Restake.app
Restake.app uses authz to give your validator if they support restake.app the permission to redeem and stake your staking rewards for you at a certain set time by the validator. The validator in this case will pay your fees for claiming and restaking. If you are wondering if this is safe, yes it is your Validator only gets the permission to retake your rewards and not for moving funds.
Ledger is not yet supported.
First steps
If you want to enter the Cosmos your first step should be getting some ATOM at your favorite Exchange.
Then you should get yourself the Browser extension Keplr for your chromium-based browser. Chrome, Brave, or if you want the Cosmos way use Decentr it's one of the projects that use Cosmos as a Hub.
Click create Wallet in Keplr store your seed phrase somewhere save where no one except for you can get to it just like with all other seed phrases you may have. Name the Wallet and set a password for it.
(If you didn't stake on Exodus before reading this skip this step.) If you created an Exodus wallet and staked there don't worry. Exodus stakes with the Everstake validator by default this Validator takes 5% commission of your staking rewards which is quite alright but you most likely want to interact with the Cosmos ecosystem at one Point soon. you want to get the Keplr extension but instead, as in step 3 you don't click create a wallet you just select import and enter your seed phrase from exodus Name that wallet and set a password for it.
After you got your wallet you Transfer the Atom of the Exchange to this wallet. Even though you can stake your tokens on those exchanges it's important that you have custody of your tokens. Centralized Exchanges or CEXes store your wallet keys and as we all know not your keys not your coins so if you don't want to lose your tokens in a hack or the bankruptcy of your CEX. Do this by copying your Wallet address in keplr and past it as the withdrawal address you don't need to set a memo if you don't want to send your tokens to a CEX. If you want to transfer ATOM back to your Exchange you most likely will need to set a memo. Once done pasting your address and you did make sure that you pasted the right address in execute the transaction and wait for your ATOM to arrive at your address.
Once you got your ATOM in your wallet you want to press stake in Keplr.
When you decided which validator you want to stake click on it and press delegate. Don't delegate all of it as you need some ATOM to redeem your staking rewards. If you want to support decentralization you can choose more validators than one to delegate to.
After you staked your ATOM for some time you might be eligible to claim your first airdrop.
Airdrops
So with Cosmos staking, there is always the possibility that your address is eligible for airdrops depending on some criteria. But first what are airdrops? Airdrops are a way for new projects to kick start their liquidity by giving away their native token to participants of the Cosmos ecosystem. When I came into Cosmos to qualify for most airdrops you had to stake.
| ATOM | JUNO | OSMO | SCRT |
|---|---|---|---|
| 10 | 25 | 50 | 50 |
For most of the airdrops at least. Now it's more like
| ATOM | JUNO | OSMO | SCRT |
|---|---|---|---|
| 50 | 50 | 100 | 100 |
Airdrops are sometimes very generous with the number of tokens airdropped and sometimes even exceed your initial investment. I had two of those, those were Stragaze and Evmos and I still hold them even though they are not worth as much as when they got dropped. If you staked for some time you might be able to claim one but first you need to check if you are eligible. There are multiple ways of doing this one is you can have a look in r/cosmosairdrops and see what airdrops are currently claimable
There are Websites that document airdrops though I personally use this one
There is also the option of those
If you are eligible claim your airdrop. I won't get into this as the claiming process can be different for each airdrop. But once you cleared it you'll have to option to stake those tokens to help secure the project's blockchain or you can swap for your favorite asset on one of the dexes in the ecosystem.
Projects
The Cosmos offers a broad choice of projects to invest in to all of them with a promising roadmap.
Osmosis is the first Project I want to talk about. Osmosis is a decentralized exchange with the native token OSMO. It offers a broad variety of different Tokens of the Cosmos ecosystem and has also the dedicated erc 20 bridge AXELAR. On osmosis, you can swap your Cosmos and some erc 20 Tokens. You can also provide liquidity on osmosis. Providing liquidity on Osmosis sometimes qualifies you for airdrops it also offers to Super-Fluid stake your Osmo provided to some pools and earn a bit of staking rewards besides liquidity rewards.
Osmosis will offer Fiat on-ramping. Via Kado Ramp Kado will at first have its own site but will get integrated in the osmosis front end eventually.
Staking OSMO will qualify you for some Airdrops if you got the dedicated amount. Superfluid staking won't qualify you for airdrops unless superfluid staking is specified in the airdrops conditions.
Juno is a permissionless smart contract platform built on the cosmos SDK. Its native token is Juno It offers its own SDK to build on just like The Cosmos Hub does but it's permissionless.
Juno had its fair share of Fud coming its way for confiscating Juno airdropped to Multiple wallets owned by one entity that failed to disclose that it offers services similar to a Centralised Exchange but as CEXes were excluded in the airdrop criteria the entity was not eligible to receive those funds. The funds were moved to a wallet and it still has to be decided yet what will happen to them. You can read up on this issue here and decide for yourself if that's ok.
You might want to consider this when choosing a validator for Juno as Validator votes on this proposal were highly discussed at the time
But all in all Juno is a pretty solid Project many good projects will be able to build on it. But as of now, I have yet to see a project that really impacts the Juno ecosystem with a real use case. Besides Juno swap a Dex Built on Juno with the native Token RAW there is no project I know of that's worth mentioning.
Juno swap does not differ much from Osmosis it's still in its early state so not all liquidity pools are incentivized. You can use it to swap tokens for relatively cheap.
There is Aqua this project provides water fountains to people living in areas where it's hard to get water but they don't need a blockchain for this.
is like Juno a Hub built on the Cosmos SDK its native token is SCRT. Secret Network provides infrastructure for private Dapps.
It specializes in hiding transaction details to make the network private and untraceable.
Secret is a great opportunity for all Dapp developers to that want to make their apps as private as possible. In my opinion this is a keystone in Web3 now that netneutralityt is gone.
There are many good projects on Secret as Juno and Cosmos the DEX for this network is secretswap
Shade is a highly looked after project that helps make transactions even more private.
Jackal Offers private cloud storage. And it's a project I'm really interested in
Evmos delivers the Ethereum virtual machine to Cosmos hence its name EVM Cosmos.
This one is one of the newest Projects coming to Cosmos so I haven't really gotten to explore it as much. It had some starting problems as the first launch was quickly over because the blockchain was halted due to a critical bug in the software.
At its second launch, it had problems with claiming the airdrop for some people.
But I cant see I am disappointed what the Evmos team does is not as easy as slapping a blockchain on and it just works.
I'm personally very bullish on Evmos even though it's slower than most of the Cosmos chains I can say coming from Ethereum it's rather fast.
Diffusion is one of the Dexes built on it and in my opinion the best. It does not differ much from Cosmos Juno or Secret Dexes except you can't trade Cosmos Native tokens but the erc20 Ones.
Akash is one of the two projects I'm most bullish on in the Cosmos. Akash is a Project that offers cloud computing its native Token is AKT. This project offers a real use case, not like most other Blockchains that just offer funny pictures I can screenshot. Akash really delivers on its promise of offering maybe the cheapest prices for cloud computing. Projects like this will really strive once Web3 goes Mainstream.
Comdex is a hub that can be used to build several different blockchains connected to each other that offer utility needed for Commodity exchange that's also Where its name comes from. This project has yet to fully launch but when it does it will be a very nice addition to the Ecosystem.
It offers the first over Collateralized Stablecoin in the Ecosystem which will be called CMTS. And will be minted by locking in your cosmos hub assets for it.
With it there also will be the Option of buying Commodities like Gold or silver. And its own Lending protocol launching with it.
I can't stress enough how bullish I am on Comdex. As it's one of the projects with dedicated builders and great tech. This might explode when Defi goes mainstream as it brings the Old commodity trading to a new level.
Future
In my opinion Cosmos has a great future. The Ecosystem is currently maturing and getting bigger all the time with new projects being released all the time.
Cosmos has a great road map one of the biggest things on it will be interchain security. Consumer chains will be able to lease security from the cosmos hub to secure their blockchain without the use of their own dedicated Validator infrastructure. With this stakers will be able to receive different tokens in addition to their staking rewards which will increase the value of ATOM itself.
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