Are Cosmos’ ecosystem development and roadmap sufficient to maintain ATOM’s present 50% month-to-month rally?

by Jeremy

In September 2022, Interchain Basis, the workforce behind Cosmos’ growth , launched the Cosmos ATOM 2.0 whitepaper. The doc proposed vital adjustments to Cosmos’s design, together with a tokenomics improve to fund the Cosmos ecosystem growth and cut back ATOM inflation.

Whereas the whitepaper launch acted as a bullish catalyst for ATOM value, the group vote to move the proposal finally failed, primarily due to its enormity. Some group members wished to take a measured strategy to every growth characteristic listed within the whitepaper, beginning with Interchain Safety in Q1 2023.

Interchain Safety will improve the worth accrual place of ATOM as a modular chain. New blockchains will be capable of borrow the safety from it and pay Cosmos Hub validators. 

Regardless of the rejection of the Cosmos 2.0 whitepaper, the workforce continues to work on the upgrades talked about in it. The opposite enhancements in tokenomics might be launched as a separate proposal to the Cosmos group.

The primary week of February witnessed a technical bullish breakout in ATOM’s value. If consumers proceed to build up, there’s a strong likelihood of a short-to-medium commerce rally.

Interchain Safety to carry extra worth to ATOM stakers

The Interchain Safety implementation stays probably the most essential breakthrough in accruing worth to ATOM holders. The characteristic will permit impartial blockchains, referred to as shopper chains within the Cosmos ecosystem, to hire safety from the validators of Cosmos Hub. Present Cosmos SDK-based blockchains can select to be shopper chains too. It will carry further staking rewards for ATOM holders.

The Cosmos workforce concluded its builders marketing campaign referred to as “Sport of Chains” to check shopper chains earlier than rolling out the mainnet model of Interchain Safety. They may implement this characteristic in Cosmos’s Lambda improve (v9) a while in February.

Variety of blockchains which might be a part of IBC. Supply: Interchain Basis

Improvement of Cosmos ecosystem and IBC enlargement

One of the vital distinguished shopper chains would be the introduction of Cosmos-native USDC by Circle. The stablecoin will improve the liquidity of Cosmos’s DeFi ecosystem. 

The Cosmos SDK is used to assemble many standard blockchain and cryptocurrency tasks, akin to Binance DEX, Kava, Terra and extra lately, dYdX. Till now, ATOM didn’t accrue any worth from this implementation. Nevertheless, slowly it will change with Interchain Safety and different developments with cross-chain implementation.

The Inter Blockchain Communication (IBC), which permits interoperability between Cosmos-based blockchains, showcased spectacular development in 2022. Transferring ahead, the venture’s workforce will implement the Interchain Scheduler, offering an open and clear MEV market for cross-chain transactions. It is going to look to standardize ATOM because the default fuel token for IBC transfers, although the charges could be paid in a number of tokens.

Variety of blockchains which might be a part of IBC. Supply: Interchain Basis

Sooner or later, the IBC will assist the Cosmos ecosystem develop to different blockchains, akin to Ethereum, Close to, and Polkadot, enhancing liquidity and site visitors with it. The change in ATOM’s tokenomics with Interchain Allocator to fund ecosystem development and finally cut back inflation may even be carried out in time.

Associated: Injective launches $150M ecosystem fund to spice up DeFi, Cosmos adoption

Because the starting of 2023, ATOM’s value has elevated by 61%, which could be partly attributed to the broader rally within the crypto market. Nonetheless, the features had been nonetheless bigger in comparison with Bitcoin (BTC) and Ethereum (ETH), which gained 48.10% and 43.20%, respectively.

Coinglass knowledge reveals a steep spike within the open curiosity (OI) quantity for ATOM futures orders to $92 million from $65 million, setting the token up for elevated volatility. The funding fee and lengthy vs. quick ratio recommend that the curiosity was primarily in lengthy orders. An over-leveraged futures market can present headwinds for consumers as sellers will look to run the stops of lengthy gamers.

Open curiosity quantity for ATOM. Supply: Coinglass

The weekly chart of ATOM/USD broke above the 50-period exponential shifting common (EMA) at $14.20. The metric has acted as a pivotal stage for development reversals. If the value closes above the 50-week EMA on the finish of February’s first week, technical consumers will look to build up ATOM for a swing commerce.

The bulls will goal the resistance ranges at $17.20 and $25.20 if the uptrend continues. On the draw back, long run help lies at $6.50 and $3.10.

ATOM/USD weekly chart. Supply: TradingView

The Cosmos group has lengthy anticipated the Interchain Safety characteristic. Thus, the token has the next likelihood of sustaining its breakout, a minimum of main as much as the launch. 

The expansion and the proportion of yield it brings will both maintain the bullish momentum alive earlier than the Interchain Basis strikes to the following replace or see a fading momentum till the proposal to enhance ATOM emissions is lastly handed by the group.