What is the ATOM Token?

ATOM is the primary/native cryptocurrency of Cosmos Network, a decentralized network of independent blockchains connected through Inter-Blockchain Communication (IBC protocol). It’s referred to as the “future of the decentralized world”.

What is ATOM used for? ATOM serves three key functions in the Cosmos HUB, the first blockchain launched on the Cosmos Network. They include:

·         ATOM is used to pay gas fees and process transactions
·         ATOM can be staked, allowing holders to hedge inflation and earn block rewards for securing the network through operating validator nodes.
·         Token holders use ATOM to participate in the governance of the Cosmos ecosystem, whereby they vote on software upgrades, parameter adjustment and onboarding new blockchains. Usually, holders with larger quantities of ATOM have greater influence when voting.

Vital Statistics as of June 1, 2023

ATOM’s all-time high (ATH) price is $44.70, the all-time low stands at $1.13, and the current price is $10.48. Its inflation rate is approximately 7% per year. The inflation rate and supply automatically fluctuate based on how much money is being staked at once

What is the maximum supply? Currently, there is no maximum supply for ATOM tokens. However, there is 346,608,690 ATOM in the circulating supply.

ATOM ranks as the 19th most popular cryptocurrency, with a global market cap of approximately $3.61billion and 24 hours trade volume of $73 million. This token is listed on approximately 60 exchanges.

Use Cases and Value of ATOM

1.      Staking and governance

Staking is ATOM’s core use and helps secure Cosmos Hub. How? It uses a proof of stake consensus mechanism, Tendermint, whereby you can stake ATOM tokens to validate transactions and earn rewards. The more ATOM you stake, the more you can earn block rewards. Also, Holders of ATOM can vote on any changes proposed by Cosmos Hub.

Both use cases give ATOM intrinsic utility, providing demand and stabilizing price drops.

2.      Launching and connecting more blockchains to Cosmos Hub

Cosmos aims to solve a wide problem in the industry, i.e. interoperability (connecting blockchain networks to interact, integrate and communicate seamlessly to allow data sharing). The best part is that it has the ability to do so. As a result, you could say this is one significant area it draws value from. Suppose there is an increasing number of blockchains that launch and connect to Cosmos Hub. ATOM’s value and functionality would increase, making it a major facilitator of interchain transactions and data/asset exchange.

3.      Mass adoption of the IBC protocol

Technical analysis and price forecast show that Cosmos’s price will rise in the coming years. However, such speculative interest couldn’t boost its value substantially. So, what other factor could significantly impact ATOM’s token prices? Mass adoption of the Cosmos Interblockchain Communication (IBC) protocol. Back in 2021, the launch of the IBC protocol contributed to ATOM gaining much value as tens of popular blockchain technologies like Binance Smart Chain, OKChain and Crypto.Com took it up. Therefore, more adoption of IBC by other blockchains would continue boosting ATOM’s value.

4.      Strong developer base

Cosmos’ Tendermint BFT engine makes it easier for developers to build and launch blockchains faster in a decentralized manner. ATOM is tapped for governance and connectivity in the process, which is good for its value. Additionally, this could boost the growth of Cosmos’ community which is vital in hyping ATOM’s value.

5.      Inflationary steady decline

A steady decline in inflation rates would help balance ATOM’s circulating supply and demand to achieve price equilibrium and steady long-term growth. Generally, low inflation will be beneficial for altcoins like ATOM. 

ATOM Investment Opportunities

1.      Medium to long-term investment holding

ATOM is a viable cryptocurrency in the markets that you could consider buying and holding long-term investments, especially if you’re interested in governance rights and staking rewards. Moreover, Cosmos blockchain technology is promising; thus, more crypto market participants generally feel its value will appreciate, which ultimately impacts ATOM’s price positively in future. Price prediction in the market suggests that ATOM’s price could hit the $35.31 mark by the end of 2023 and potentially reach the $160.49 mark in five years.

Holding long-term involves less risk but demands you to have a lot of patience/ perseverance. Additionally, it requires a substantial amount of capital to make great returns over time.

2.      Short-term trading of CFD

Sometimes ATOM tends to have huge volatile price action, making it an ideal option if you want to take advantage of price fluctuations in the short term. There is no better way to do it than trading ATOM CFDs.

VSTAR is one of the best platforms to trade crypto CFDs such as ATM/USD, BTC/USD, TRX/USD etc. You get a leverage of up to 1:100 to trade crypto CFDs with super tight spreads (than average market spreads) at zero commissions. In addition, it accommodates traders with less capital. For instance, you can open ATM/USD trade with a typical minimum contract size of 0.01 Lots. Suppose you have larger capital; you can trade with up to 20 Lots.

Why trade CFDs anyway? Unlike buying and holding, where you only make a profit when the price rises, trading CFDs allows you to go long or short. Therefore, you can money trading either direction of the market, even when trading small capital. Furthermore, having access to leverage helps you magnify your profits if used well.

However, you should also understand that the risk is higher in CFD trading due to volatility and leveraging. Therefore, you need to understand risk management.

3.   Lending and yielding

Lending and yielding is another way to make money if you hold ATOM. You could hold ATOM as collateral to borrow assets or provide liquidity for automated yield-generating protocols in exchange for interest payments. However, you must have a minimum amount of ATOM required by your chosen platform.

Lending and yielding is an excellent approach to earning a passive income. On the other hand, it limits you from taking advantage of the rapid price fluctuations of ATOM. Also, sometimes, you could end up losing more than you earn, especially in a volatile market.

4.      Operating a validator node (Cosmos validator)

Running an ATOM validator node can be lucrative for technical individuals willing to invest time setting up and maintaining the node. However, you require 10,000 ATOM and security expertise. Additionally, the high competition means that yields are unpredictable.

Bottom line

Since its launch in 2016, Cosmos has grown significantly and made a mark in the blockchain industry. Even now, it’s pretty promising that it can be a major player in the industry, eventually benefiting its native cryptocurrency, ATOM. ATOM will gain more value if more blockchains launch on the Cosmos network and more users adopt Cosmos IBC protocol.

With growth come price fluctuations which create investment opportunities. You could invest in ATOM long term, hoping the price will rise in future or take a short-term approach of trading ATOM’s CFDs. Other alternatives include staking.

*Disclaimer: The content of this article is for learning purposes only and does not represent the official position of VSTAR, nor can it be used as investment advice.