The "Missing Crypto Projects Series" is a series that highlights projects that were once at the center of attention and in the spotlight but, for some reason, have now faded into the shadows and no longer enjoy the same level of popularity as before.
Check out the episode below to explore the stories of other crypto projects that have faded into obscurity after their past glory.
Ep 1: Missing Crypto Project Series: Terra
Category: Infrastructure, Layer 1, Interchain, Interoperability
ATH Price and Market Cap: $44.27 (Sep 20, 2021), $11.19B (Jan 21, 2022)
Current Price and Market Cap: $4.92 (Feb 11, 2025) [-89.9%], $1.92B (Feb 11, 2025) [-82.9%]
Key Features: Cosmos is a modular blockchain network designed as an interchain ecosystem, allowing independent blockchains to connect and communicate seamlessly. It is built on the Inter-Blockchain Communication (IBC) protocol and the Tendermint consensus algorithm to maximize interoperability and scalability.
1.1.1 The Warring States Era of Layer 1 Blockchains
As blockchain technology advanced, the industry’s first major expansion came with the emergence of various Layer 1 (L1) blockchains. Following Ethereum, projects such as Solana, Avalanche, and Polkadot entered the market, each establishing its own ecosystem while leveraging unique technologies and features to attract DApps and DeFi projects. While this proliferation of L1 ecosystems contributed to blockchain innovation, it also led to fragmentation and a lack of interoperability between networks.
This fragmentation posed significant challenges for developers and users alike. Transferring assets or sharing data between blockchains became difficult, causing networks to operate in isolation. As a result, interoperability emerged as a critical issue, prompting various attempts to address this challenge.
Source: Cosmos X
Amid this landscape, Cosmos was introduced as a solution. With the vision of becoming the "Internet of Blockchains," Cosmos aimed to build a decentralized hub network that enables independent blockchains to connect seamlessly. By facilitating interoperability among fragmented blockchain networks, Cosmos sought to drive the industry's expansion and enhance overall efficiency.
1.1.2 The Need for Interoperability
It became increasingly clear across the blockchain industry that no single network could fully meet the diverse needs of developers and users. While blockchains like Ethereum boasted strong security and decentralization, they struggled with scalability and transaction speed. On the other hand, blockchains like Solana offered fast transactions but faced limitations in security and censorship resistance. Without interoperability between these various blockchains, it became difficult to leverage their respective strengths.
Interoperability goes beyond simply connecting blockchains—it lays the foundation for different ecosystems to grow together. If users are confined to the limited functionalities of a single blockchain, the overall progress of the blockchain industry will inevitably slow down. As a result, a system that allows seamless interaction and utilization of multiple blockchain advantages became essential, positioning Cosmos as a key solution.
Cosmos was designed to enable seamless data sharing and asset transfers between app chains built with the Cosmos SDK while allowing each blockchain to maintain its own independent ecosystem. This structure not only provided technical advantages but also helped blockchain projects evolve in a more flexible and adaptable manner.
1.1.3 Tendermint and Inter-Blockchain Communication (IBC)
One of Cosmos' core technologies is the Tendermint consensus algorithm. It provides a proof-of-stake (PoS) based consensus algorithm that is much faster and more efficient than the traditional proof-of-work (PoW) mechanism. Tendermint is designed to allow builders to easily create blockchains while maintaining high security and performance.
Another core component of Cosmos is the Inter-Blockchain Communication (IBC) protocol. IBC is a standard protocol that enables different blockchains to securely share data and transfer assets. Through this, users can easily move tokens from one blockchain to another, and builders can create additional applications that connect various networks.
In addition to the basic functionality of IBC, Cosmos introduced Interchain Query (ICQ) and Interchain Account (ICA) to further expand inter-blockchain interactions.
ICQ allows one blockchain to directly query the state of another blockchain, enabling more sophisticated data access and smart contract execution, thus supporting various decentralized applications in utilizing data more efficiently.
On the other hand, ICA provides a function that allows one blockchain to create and control an account on another blockchain. Through this, users can manage assets and execute transactions on different blockchains without having to move between them. ICA simplifies multi-chain operations and contributes to streamlining complex blockchain interactions.
The combination of Tendermint, IBC, ICQ, and ICA played a crucial role in realizing Cosmos' vision. Through this, the blockchain ecosystem can maintain its independence while ensuring smooth connectivity with other networks when needed. Thanks to this new approach to enhancing interoperability, Cosmos has garnered significant attention since its early days.
1.1.4 Cosmos Zones and Hubs
The Cosmos network introduced the concept of Cosmos Zones to move away from a centralized structure and allow various independent blockchains to operate their own ecosystems. A Cosmos Zone is an individual blockchain designed for a specific purpose, and it is interconnected with others through IBC. This enables each blockchain to maintain its independence while seamlessly interacting with other networks when needed.
Among these Zones, some have evolved into Hubs, which serve as central points that connect multiple Zones, forming a more expansive blockchain network. In the Cosmos network, anyone can operate a Hub, and this multi-Hub network structure allows for a more flexible and resilient system.
The most notable Hub is the Cosmos Hub, which serves as the implementation of the IBC concept and protocol. It acts as a mediator between different blockchains, facilitating communication and connectivity between various networks. This foundational role of the Cosmos Hub has contributed significantly to the expansion of the Cosmos ecosystem.
The Cosmos Hub maintains network security and incentivizes validators through its native token, ATOM ($ATOM). Validators play a crucial role in the Cosmos ecosystem, ensuring network stability by staking $ATOM.
Thanks to this design, the Cosmos ecosystem is not dependent on a single network. Instead, individual blockchains can maintain their own governance while remaining interoperable with other networks when needed. This decentralized approach maximizes scalability and flexibility, expanding the potential of blockchain networks for various long-term applications.
1.2.1 Cosmos SDK for Builders
Cosmos provided the Cosmos Software Development Kit (SDK) to enable builders to easily create blockchains. The SDK features a modular structure, allowing developers to selectively add desired functionalities while building their blockchain. As a result, the number of projects based on Cosmos grew rapidly.
Notably, the Cosmos SDK was designed with security and scalability in mind, maximizing performance by utilizing the Tendermint consensus algorithm. Builders could effortlessly develop basic app chains and customize them by adding specific functionalities as needed.
This approach led to the emergence of various blockchain projects built on Cosmos, accelerating the expansion of the Cosmos ecosystem. As more builders adopted Cosmos technology, the ecosystem became increasingly dynamic and vibrant.
1.2.2 Activation of IBC and Expansion into DeFi
As cross-chain transactions using IBC became possible, DeFi projects within the Cosmos ecosystem expanded rapidly. Notably, decentralized exchanges (DEXs) like Osmosis leveraged IBC to secure liquidity and utilize various blockchain assets.
The expansion of DeFi through IBC went beyond simple token transfers, fostering an ecosystem that included cross-chain lending protocols and yield optimization strategies. This enabled Cosmos-based projects to maintain their independent chains while maximizing interoperability to successfully scale their networks.
The activation of IBC extended beyond DeFi to NFTs and GameFi, with more projects exploring its potential applications. This played a crucial role in realizing Cosmos' original vision of becoming the "Internet of Blockchains."
1.2.3 Expansion Through Connection with Ethereum
Cosmos strengthened its interoperability with Ethereum, recognizing it as a key element for broader ecosystem expansion. Various bridge solutions were developed, allowing users to freely transfer assets between the Ethereum network and Cosmos-based blockchains.
Source: CoinEx
A representative example is the Evmos project. Evmos is an Ethereum Virtual Machine (EVM)-compatible blockchain that connects Ethereum and Cosmos, enabling Ethereum smart contracts to run directly within the Cosmos ecosystem. This allowed existing Ethereum-based DApps and protocols to operate in Cosmos without additional development, providing users with lower gas fees and faster transaction speeds.
Notably, Evmos leveraged the IBC protocol to interact with various chains within the Cosmos ecosystem. This created new opportunities for Ethereum-based DeFi and NFT projects to expand into Cosmos. Major DeFi protocols like Aave and Uniswap were even tested in the Cosmos environment, demonstrating the potential of this cross-chain integration.
Cosmos was recognized as one of the most innovative projects in the blockchain industry due to its unique features. With the activation of the IBC protocol and the developer-friendly Cosmos SDK, numerous projects adopted Cosmos, leading to rapid ecosystem growth. Notable projects like Osmosis, Cronos, and Certik spearheaded the adoption of Cosmos-based chains across various industries.
However, just as its golden era shined brightly, its decline was equally steep. Due to several reasons, which will be discussed later, Cosmos' popularity waned, and the ecosystem faced significant challenges in further expansion.
2.1.1 $ATOM as the Meme Coin of the Cosmos Ecosystem
The primary reason Cosmos has been overlooked by the market despite its technology and impact lies in the tokenomics of $ATOM, the platform token of the Cosmos Hub. Due to Cosmos’ architectural design, the growth of the Application-Specific Chain (app chain) ecosystem does not directly impact the value of $ATOM.
To explain further, even if someone creates a successful app chain using the Cosmos SDK, it does not increase the demand for $ATOM. While the vision of an ecosystem where independent chains communicate seamlessly was ambitious, paradoxically, the independence of these chains failed to create a compelling need for the Cosmos Hub.
Additionally, a critical flaw was that $ATOM had no direct connection to IBC (Inter-Blockchain Communication), the fundamental channel enabling communication between chains in the Cosmos ecosystem. Between 2021 and 2022, Cosmos experienced explosive growth, and IBC usage surged. However, since IBC was perceived as a public good, its increased usage had no impact on $ATOM's value.
Furthermore, IBC relayers, which establish IBC channels and facilitate communication between app chains, lacked any incentive. This structural issue was another major weakness in the Cosmos ecosystem.
2.1.2 Numerous App Chains Trapped in the Pit of Inflation
The Cosmos ecosystem itself also had fundamental issues. During its peak, many builders were eager to create their own "application-specific Layer 1" blockchains. The advantage of app chains was that blockchain infrastructure could be optimized for specific applications, but the downside was the enormous cost required to operate a L1 network.
To cover these massive initial operational costs, most developers adopted a strategy of "inflation." This explains why staking yields for most app chain tokens exceeded 50% between 2021 and 2022. The high staking rewards provided validators with a strong economic incentive to participate in the network, and token prices remained stable in the early stages.
However, as time passed, staking rewards began to enter the market, leading to a sharp decline in the prices of most Cosmos app chain tokens launched during this period. While the disconnect between the ecosystem’s growth and $ATOM was already an issue, the bigger problem was the lack of sustainability within the ecosystem itself. As this became evident, Cosmos inevitably lost its influence in the market.
When Cosmos launched its ICO in 2017, its vision of becoming the "Internet of Blockchains" was groundbreaking and well-received by the market. At the time, there was no technology that allowed independent blockchains to communicate with each other, and the idea of "transferring tokens between different chains" was shocking. Like many others, when I first encountered Cosmos in 2017, I believed it had the potential to surpass Ethereum. If more chains emerged and Cosmos successfully connected them all, centralized exchanges could lose their dominance, and all blockchains would be restructured around the Cosmos Hub. This expectation was one of the reasons Cosmos raised $17 million in just 28 minutes.
However, reality turned out to be quite different. When Cosmos launched its mainnet, there was no sign of a network "connecting all blockchains," and even linking app chains within the Cosmos ecosystem itself proved to be a challenge. While Cosmos focused on integrating its internal ecosystem, new cross-chain bridges such as Ren Protocol, Wormhole, Multichain, and LayerZero emerged. Today, LayerZero has established itself as the dominant player in this sector.
If someone were to ask today, "Which protocol has connected blockchains the most effectively?" we would have to point to LayerZero rather than Cosmos. In other words, Cosmos is no longer the "Internet of Blockchains."
Of course, it is not that Cosmos has made no efforts. The project introduced a new roadmap called "ATOM 2.0," which aimed to enhance interoperability through features such as Interchain Security, Interchain Allocator, and Interchain Scheduler. These additions were designed to create tighter integration between the Cosmos Hub and other chains while enabling revenue sharing with the hub.
However, this proposal faced significant pushback due to concerns that "the hub's role would change too drastically" or that "the hub would gain too much authority." As a result, it was not approved in its entirety. The functionalities proposed in ATOM 2.0 have only been partially implemented through separate proposals, highlighting the difficulty of bringing about change.
Ultimately, while Cosmos continues to pursue its vision of becoming the "Internet of Blockchains," its current pace of development suggests that it should now be considered a latecomer in the interoperability sector.
While tokenomics and technology were significant issues, what truly exhausted people within the Cosmos ecosystem was the constant political conflicts among its key players. From its early days, Cosmos operated as a loosely coordinated network of independent organizations, including the Interchain Foundation (ICF), Tendermint/Ignite, and core development teams. However, as the ecosystem grew, leadership disagreements and internal clashes became increasingly public.
For example, in 2020, Jae Kwon, one of Cosmos' co-founders, resigned as CEO of Tendermint, leading to a serious conflict with his colleague, Zaki Manian. Zaki publicly criticized Jae, stating that he was "obsessed with personal projects like Virgo while neglecting the core development of IBC".
Conflicts between the ICF Foundation, Tendermint executives, Ethan Buchman, Jae Kwon, and Zaki Manian continued, deepening community divisions. In 2022-2023, key Cosmos contributors publicly clashed over different visions for the Cosmos Hub, further fragmenting the ecosystem.
Of course, disagreements among stakeholders are natural in any ecosystem, and healthy debate can be beneficial. However, in Cosmos' case, these conflicts persisted for years, ultimately hindering ecosystem growth. Instead of uniting to realize the vision of an interconnected blockchain world, key figures spent their time splitting into factions and arguing over differing perspectives.
In the end, conflict for the sake of conflict exhausted the community. These ongoing disputes drained enthusiasm and led many to lose hope in the future of Cosmos.
Beyond internal politics, Cosmos had an even more serious issue: a closed inner circle culture. The worst type of organization is one that constantly struggles with internal conflicts while also failing to welcome new participants, and Cosmos fit this description perfectly. The ecosystem had a closed structure where only projects close to the OG (Original Group) members received benefits, which ultimately limited the recruitment of external talent.
Source: Mintscan Proposals #787
In 2023, Jacob Gadikian from Notional Labs raised this issue by submitting Governance Proposal #787, claiming that the Interchain Foundation (ICF) only provided funding to established teams while remaining closed to newcomers. According to Jacob, projects with strong connections to the foundation or core community members had easy access to funding, while outsiders faced high entry barriers. This reduced the influx of innovative new projects, ultimately slowing down the expansion of the Cosmos ecosystem.
I personally experienced this issue when my previous company was preparing a Cosmos ecosystem project. Since we had no connections with the Cosmos OGs, we struggled to receive support from the ICF in funding, marketing, and other areas. While the lack of ICF support was not the sole reason for our struggles, our Cosmos-based project was eventually abandoned before launching its mainnet.
In other words, the inner circle problem that Jacob pointed out was something I also deeply experienced as a participant in the ecosystem.
As mentioned earlier, the Cosmos ecosystem provided an environment where independent app chains could be freely built. However, each of these blockchains used their own native tokens and did not require $ATOM. As a result, no matter how much the Cosmos ecosystem expanded, the lack of utility for $ATOM prevented its value from increasing.
Additionally, to maintain network security and attract participants, high staking rewards were offered. Over time, however, excessive token issuance led to inflation issues, causing the value of most app chain tokens to decline sharply. Ultimately, the sustainability of the ecosystem collapsed, leading to a loss of trust in Cosmos as a whole.
This case serves as a crucial lesson, emphasizing that tokenomics is just as important for infrastructure-focused blockchain projects as it is for other crypto projects.
For a blockchain ecosystem to be successful and sustainable, its native token must play an essential role and be organically linked to the ecosystem's growth. Tokens like $ATOM, which fail to serve a critical function, will ultimately be ignored by both the ecosystem and its users. Without a clear connection between a token's economic role and the ecosystem's expansion, long-term sustainability becomes difficult to achieve.
Cosmos initially set out with the vision of becoming the "Internet of Blockchains," but it failed to fully realize this goal. However, this does not mean that interoperability is unnecessary in the blockchain industry. The demand for a decentralized framework that connects various blockchains with unique strengths remains strong.
Cosmos' IBC became entangled with various internal issues within the ecosystem, making it difficult to achieve its ambitious objectives. This case highlights a crucial lesson: simply establishing technical connections between chains is not enough to create a competitive interoperability solution. Instead, a well-designed economic incentive and reward structure is essential for long-term sustainability.
Additionally, builders and users need a simple and intuitive UI/UX to effectively develop and adopt interoperability solutions. Without this, even the most well-intentioned interoperability projects risk fading into obscurity due to lack of adoption.
Cosmos' case, where internal political conflicts and a closed culture led to an isolated ecosystem, serves as a warning of how a blockchain project can gradually lose direction, momentum, and ultimately fail.
To avoid repeating these mistakes, an open community culture and a transparent decision-making process are essential. In a decentralized system, power should not be concentrated in the hands of a small core group. Instead, the structure must allow various stakeholders to contribute to the network's growth. Governance should function fairly, and newcomers should have equal opportunities to participate.
Ultimately, a blockchain ecosystem that operates as an exclusive club will be rejected by the market and will struggle to achieve sustainable growth.
The failures of Cosmos did not merely remain as lessons but became part of the blockchain industry's legacy, providing valuable insights for various projects. Many new blockchain initiatives have taken inspiration from Cosmos' shortcomings, using them as a foundation for improvement.
In this section, we will explore projects that have successfully evolved by learning from Cosmos' mistakes.
In many ways, the Optimism ecosystem closely resembles Cosmos. Like Cosmos, Optimism provides an SDK (OP-Stack) that allows anyone to easily create a rollup chain. Additionally, just as the Cosmos Hub represents the Cosmos ecosystem, Optimism itself serves as the flagship chain of its ecosystem. Even early on, the growth of Optimism's rollup ecosystem had little direct correlation with the value of the Optimism token, much like what happened with Cosmos and $ATOM.
However, Optimism took a different approach by implementing an initiative that allows OP-Stack-based rollups to share sequencer revenue with the broader ecosystem. As this initiative gained traction, hundreds of thousands of dollars in USDC were funneled back to the Optimism Foundation and redistributed through programs like RetroPGF2, successfully establishing a profit-sharing model.
Now, as rollups within the Optimism ecosystem generate revenue and contribute to the Optimism Collective, these funds are reinvested into improving the ecosystem. This creates a positive feedback loop, ensuring that ecosystem growth benefits all participants. Optimism's approach appears to be a deliberate effort to avoid repeating the mistakes of Cosmos.
EigenLayer’s restaking concept—where staked tokens can be used to secure additional chains—bears similarities to Cosmos' Interchain Security model. In Cosmos' approach, new app chains inherit security from the Cosmos Hub, while Cosmos Hub validators receive rewards in the form of the app chain's native tokens. Given this resemblance, EigenLayer's model seems to have been influenced by discussions within the Cosmos ecosystem.
However, EigenLayer differentiates itself by adopting a more flexible shared security model compared to Cosmos' Interchain Security. Instead of a rigid structure, EigenLayer allows Ethereum stakers to extend their security guarantees to other protocols in a permissionless and modular way, making it a more adaptable system.
Currently, EigenDA, EigenLayer’s Ethereum restaking-based DA (Data Availability) layer, is emerging as a next-generation DA solution. High-performance rollups, including MegaETH, are set to launch on EigenDA, positioning EigenLayer as a key player in blockchain infrastructure.
By learning from Cosmos' mistakes, EigenLayer has embraced a more flexible and scalable shared security model, increasing its chances of successful adoption.
Inicia has not yet launched its mainnet, but it aims to establish an interwoven rollup network ecosystem by economically and technically connecting its own rollup ecosystem, thereby enabling rollups to share liquidity and security. Additionally, Inicia is designed so that rollups built on its foundation, known as Inicia-based rollups or Inicia L2s, will continuously utilize Inicia’s native token, $INIT. This ensures that the expansion of the Inicia rollup ecosystem directly contributes to the value appreciation of the $INIT token.
As for the VIP program, Inicia L2s must first be selected through Inicia’s governance to participate. Once approved, upon the network’s launch, a portion of the $INIT tokens will be allocated to the VIP reward pool. The balance pool is structured so that the more $INIT is locked up within an Inicia L2, the greater the rewards it receives. This incentivizes mini-Inicias to lock up more $INIT. Meanwhile, the weight pool calculates rewards based on votes from stakers who have staked $INIT tokens. This mechanism encourages Inicia L2s to compete for the favor of $INIT token holders, creating a strong incentive that enhances the attractiveness of $INIT.
Lastly, since all Inicia L2s must use $INIT to pay transaction fees, the demand for $INIT will naturally grow alongside the expansion of the Inicia ecosystem. This directly links the value of $INIT to the ecosystem’s growth. This design appears to be based on the idea of achieving what Cosmos could not—establishing a direct relationship between ecosystem growth and token value. As a result, many believe that Inicia is striving to fulfill Cosmos' unachieved vision.
Cosmos had an ambitious vision to advance blockchain interoperability in a new direction. However, structural issues in its tokenomics, fragmentation due to independent app chains, political conflicts within the ecosystem, and a closed community culture prevented it from fully realizing its potential. A particularly critical limitation was that, despite emphasizing blockchain interconnectivity, the $ATOM token was not directly linked to ecosystem expansion. As a result, while Cosmos once experienced explosive growth, it failed to establish a sustainable economic model and eventually faded from market interest.
However, Cosmos' shortcomings have provided valuable lessons for other projects. Initiatives like Optimism, EigenLayer, and Initia have learned from Cosmos' mistakes, designing structures that closely tie ecosystem growth to the value of their native tokens. These examples highlight that mere technical innovation is insufficient for sustainability. A strong tokenomics model, an open community culture, and clear economic incentives are essential for the long-term growth of a blockchain ecosystem.
Finally, while the Cosmos Hub itself faces significant challenges in the market, the Cosmos SDK continues to be widely adopted by numerous projects. This makes it difficult to label Cosmos a complete failure. Even now, some of the most highly anticipated Layer 1 chains in the market, such as Story Protocol and Berachain, are building their blockchains using the Cosmos SDK. The question remains—can Cosmos go beyond the success of its SDK and achieve success with the Cosmos Hub itself?
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