Inter-blockchain Communication (IBC) is a unique protocol. Thanks to this protocol, Cosmos enables fast, secure, and cheap asset transfer between blockchains. Cosmos SDK and Tendermint consensus algorithm are publicly available—to developers who wish to join the ecosystem and produce a new customized network without financial burden.
Such a setup also has its disadvantages. The value produced in the system is not consolidated on one coin as in Ethereum and Polkadot. Therefore, the newly joined networks do not directly contribute to the Cosmos network. They only ensure the growth of the Cosmos economic region.
Until last year, those who wanted to develop a network on Cosmos had to create their validators. New networks can now benefit from the security Cosmos provides. Thus, the Cosmos network generates extra revenue, similar to Ethereum. On the other hand, only a few networks use this Cosmos feature.
The fast, cheap, and secure transfer opportunity between networks IBC provides is unique in the crypto world. That's why I've always been optimistic about Cosmos. Recently, two critical networks, Injective and Celestia, have joined Cosmos, and these networks have achieved great success. Additionally, relatively new Cosmos networks such as Sei, Dymension, Neutron, and Stride have come into play. That's why Cosmos started to attract investors' attention again. Currently, there are 4 Cosmos networks in the top 50 and 7 in the top 100 by market value.
Injective, a network optimized for financial transactions, was one of last year's top gainers. The migration of Injective from Ethereum to Cosmos was a success for Cosmos. The Injective's upside potential, which did about 20x the previous year, will be limited.
Celestia, one of the most popular networks, recently launched the modular blockchain concept. Ethereum Layer 2 networks save significantly on Ethereum gas fees when they keep their data on Celestia. For example, I made a staking transaction on Manta Network using Celestia's data availability solution by paying 5 cents of Ethereum. Even though I like Celestia, it's overpriced because Celestia has rivals such as Eigenlayer and Near.
Sei took over the title of fastest blockchain from Solana and became the center of attention in the crypto world. Sei's price has increased 20 times since November. Sei still has upside potential, but its return may be lower than that of other networks in Cosmos. Transaction fees on Cosmos networks are generally around 1-2 cents. The fee for my first transaction on the Sei network was 20 cents. That may slow down its widespread use.
Dymension's coin, which enables the creation of layer two blockchains on Cosmos, started trading on stock exchanges two weeks ago. Its fully diluted value has already exceeded $7 billion. Layer 2s created on Cosmos will have the advantage of communicating with each other via IBC. Layer 2 networks will benefit from Dymension's security and can use data availability solutions from different networks. Dymension is among the Cosmos networks I will invest in.
Stride, a liquid staking network, has provided 10x returns to its investors recently. With a market cap of $600 million, Stride has a more modest valuation than the above networks. The increase in the value of Cosmos networks will also positively impact Stride.
Osmosis, the most successful DEX of the Cosmos ecosystem, has also significantly benefited from its growth. According to IBC data, the Cosmos network with the highest volume is Osmosis. Osmosis is an innovative DEX, which is why it is on my investment list.
Axelar is a network specializing in interoperability. It enables coins such as BTC, ETH, USDC, and USDT to be brought to the Cosmos ecosystem. Recently, Axelar started working to transfer assets between Layer 2 networks within the framework of its collaboration with ImmutableX.
Finally, I would like to talk about Neutron, a DEFI network. Neutron leverages Cosmos' security, and it has no validators. According to Mintscan data, it ranks fifth in the number of transactions. It has a DEFI TVL of $51 million. A strong development team has a presence in the Cosmos ecosystem.
TL;DR
Cosmos, like Hive, is a community-based network. Like Hive, Cosmos networks also use the DPoS consensus mechanism. In 2021, I invested in Cosmos and Osmosis and benefited from several airdrops.
I am considering investing in Osmosis, Neutron, Dymension, and Axelar in the coming period because Cosmos networks create value for the user. Newly joined popular networks enabled the Cosmos economy to grow. This growth may gain further momentum in the coming months.
Thank you for reading.