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Cosmos: ATOM token price surges after whitepaper 2.0 cuts supply, boosts security

By Raphael Sanis

Edited by Charlie Mellor

10:53, 30 September 2022

The ATOM logo in front of a price graph
Outlined in its whitepaper, Cosmos’ next mission is to create an ‘interchain economy’ – Photo: Shutterstock

A new whitepaper has outlined the next step for the Cosmos network beyond its founding principle of being the “internet of blockchains”.

The whitepaper, published on Monday, set out Cosmos’ plan to reposition itself as platform for blockchains to grow a “resilient interchain economy”. It also revealed a new issuance model for its native ATOM cryptocurrency.

ATOM to USD

These upgrades are set to be integrated on 3 October. ATOM surged slightly after the whitepaper was revealed, but more recently its price has started to weaken.

Recent price action

After dropping with the crypto crash in May and June, ATOM has seen a steady rise. From its $5.59 low on 18 June, it climbed above $10 in July and peaked at $16.63 on 16 September and $16.92 on 17 September.

As the whitepaper was released during the Cosmoverse conference in Colombia, ATOM could only muster a high of $14.85 on 26 September, and closed at $13.90 the same day.

At the time of writing on 30 September, ATOM was trading at $12.99, down 9% in the past seven days, but up 9% over the past month.

Potential price drivers

There are a range of updates detailed in the whitepaper that Cosmos is hoping will positively impact ATOM’s price.

XRP/USD

0.59 Price
-1.750% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

BTC/USD

67,026.60 Price
-0.590% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

SOL/USD

174.43 Price
-0.360% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.2652

DOGE/USD

0.13 Price
-1.630% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

Previously, ATOM has been criticised for having inflationary tokenomics. Cosmos has proposed a new issuance model for ATOM to address this, which will gradually decrease the amount of tokens minted over time.

There are two phases for this new tokenomics set up. The transition period releases 10,000,000 ATOM in the the first month, which gradually decreases over the next 36 months.

Then there will be a steady state of 300,000 ATOM released every month afterwards. The whitepaper said:

“The new monetary policy should balance interchain adoption, growth, and capitalization with fiscal responsibility while preserving the security afforded by the original regime.”

There are also changes to the staking mechanism of ATOM. It allows investors to easily stake and unstake ATOM through the “liquid staking module”.

The whitepaper added: “A competitive marketplace for liquid staking provision will further improve the consumer experience, driving protocols to compete on several dimensions, including trust minimization and safety”

The interchain vision

Cosmos’ mission revolves on interoperability, by offering an ecosystem of networks and letting blockchains communicate with each other. But Cosmos has said “the needs of the interchain have evolved” and it must now “grow a resilient interchain economy”. It added: 

“In this new role, the Cosmos Hub becomes a secure platform for others to build the next generation of interchain-native infrastructure and applications, opening new opportunities for interchain coordination.”

The Cosmos Hub has designed the “interchain allocator” to achieve this. It’s a platform that lets users grow ATOM markets and facilitates interoperability. It is hoping the allocator will allow more economic power and greater capital efficiency on the network.

Markets in this article

ATOM/USD
ATOM/USD
6.6630 USD
-0.0938 -1.440%

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The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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