Are Cosmos’ ecosystem growth and roadmap enough to sustain ATOM’s current 50% monthly rally?

In September 2022, Interchain Basis, the group behind Cosmos’ growth , launched the Cosmos ATOM 2.0 whitepaper. The doc proposed important modifications 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 needed to take a measured strategy to every growth function 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 group continues to work on the upgrades talked about in it. The opposite enhancements in tokenomics will likely 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 patrons proceed to build up, there’s a stable likelihood of a short-to-medium commerce rally.

Interchain Safety to convey extra worth to ATOM stakers

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

The Cosmos group concluded its builders marketing campaign known as “Recreation of Chains” to check shopper chains earlier than rolling out the mainnet model of Interchain Safety. They are going to implement this function in Cosmos’s Lambda improve (v9) a while in February.

Growth of Cosmos ecosystem and IBC growth

One of the outstanding 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 in style blockchain and cryptocurrency tasks, equivalent to Binance DEX, Kava, Terra and extra just lately, dYdX. Till now, ATOM didn’t accrue any worth from this implementation. Nonetheless, slowly it will change with Interchain Safety and different developments with cross-chain implementation.

The Inter Blockchain Communication (IBC), which allows interoperability between Cosmos-based blockchains, showcased spectacular development in 2022. Shifting ahead, the challenge’s group 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 gasoline token for IBC transfers, although the charges will be paid in a number of tokens.

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

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

For the reason that starting of 2023, ATOM’s value has elevated by 61%, which will be partly attributed to the broader rally within the crypto market. However, the good points had been nonetheless bigger in comparison with Bitcoin (BTC) and Ethereum (ETH), which gained 48.10% and 43.20%, respectively.

Coinglass knowledge shows 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 price and lengthy vs. quick ratio counsel that the curiosity was primarily in lengthy orders. An over-leveraged futures market can present headwinds for patrons as sellers will look to run the stops of lengthy gamers.

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 worth closes above the 50-week EMA on the finish of February’s first week, technical patrons 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.

The Cosmos group has lengthy anticipated the Interchain Safety function. Thus, the token has a better likelihood of sustaining its breakout, no less than main as much as the launch. 

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

The views, ideas and opinions expressed listed below are the authors’ alone and don’t essentially mirror or characterize the views and opinions of Cointelegraph.

This text doesn’t comprise funding recommendation or suggestions. Each funding and buying and selling transfer includes danger, and readers ought to conduct their very own analysis when making a call.