The direction of ATOM as Cosmos prepares to launch Interchain Security on March 15th

The Cosmos community voted 99.99% in favor to add “Replication Safe (RS)” to its chain.according to planthe long-awaited upgrade will be available on March 15, 2023, and includes the v9-Lamba upgrade.

RS is the first version of the Interchain Security (ICS) feature on Cosmos, allowing blockchains in the ecosystem to share authentication resources for increased security.

Only protocols approved by Cosmos governance will be added as consumer chains in an upcoming update. There are eight consumer chains to choose from, including Neutron, PolymerDAO, Duality, Stride, Simply Staking, FairBlock, and Comdex.

Cosmos interchain security can provide a true yield cycle

The RS function will distribute up to 25% of consumer chain fees to Cosmos Hub stakers. Protocols can also distribute a portion of token inflation and revenue streams to these stakeholders.

The implementation of ICS allows consumer chains to fully focus on the growth of the network economy, as Cosmos Hub validators provide solid security against 51% attacks and low-cost double spends. This feature will bring additional profits to ATOM stakeholders and allow consumer chains to optimize growth.

After adjusting for inflation, ATOM’s staking return rate is 6.82%, and the annual return rate is 24.37%. The additional profits brought by the consumption chain will increase the annual rate of return of ATOM holders, thereby stimulating more purchases and staking activities.


remuneration pledge from the universe back inflation adjustment | Source: Staking Rewards

Neutron is a smart contract platform and may be the first consumer chain to use the new ICS functionality. Neutron General Manager Avril Dutheil said;

“With RS, Neutrons don’t have to keep increasing the supply of Neutrons (NTRNs) to keep validators honest or pay governance participants staking profits because they don’t contribute to the security of the network. Instead, NTRNs can afford a fixed supply, on-chain based An index release schedule of activity, and continued buying and burning pressure from Neutron’s three revenue streams.

This will allow the consumer chain to focus on the actual profitability of the blockchain and provide additional profits for ATOM stakeholders when the price increases. Therefore, the high return on staking ATOMs will motivate more users to purchase and stake ATOMs. It is therefore more likely to create an ethical investment cycle in the Cosmos ecosystem.

Cosmos Ecosystem Growth

The Cosmos ecosystem has grown significantly over the past two years as many chains use the Cosmos-SDK and the Tendermint consensus mechanism to create Appchains. Improved implementation of cross-chain functionality like RS will enable blockchains to benefit from liquidity in the Cosmos ecosystem.

Circle’s announcement on Cosmos that the native USDC blockchain could be a powerful catalyst for increased liquidity in the ecosystem. Dutheil mentioned a number of decentralized stablecoin projects, such as Agoric’s Inter Stable Token (IST) and Kujira’s USK, aiming to replicate the success of Ethereum-based decentralized stablecoins on Cosmos. It will also help establish ATOMs as trusted collateral and improve the value proposition.

“Whether these decentralized alternatives will succeed in expanding supply on Interchain remains to be seen, but at least some of the building blocks will eventually lead to an ecosystem.” DeFi and Cosmos go well together.

Technically, ATOM is forming an ascending triangle since it made its June 2022 low at $6. If the triangle near the $14 and $15 resistance levels is broken, the asset’s price could fall below around $33 in 2022, with a slim chance of hitting a new all-time high around $33.46. However, the bullish thesis will be invalidated if the price breaks below the bottom of the triangle, currently hovering around $10.

CryptoQuant data shows that ATOM’s Relative Strength Index and Stochastic indicators are in oversold territory, signaling a possible trend change.


Weekly ATOM Price Chart | Source: TradingView

While the bullish ATOM argument seems plausible, its implementation will depend on usage and whether consumer chains can provide attractive returns to ATOM stakers.

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As reported by Cointelegraph

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