The universe is infinitely expanding, even if our portfolios might not be. That’s confusing given the law of entropy suggests the universe tends towards disorder. How consistent growth coexists with the magnetism of chaos is one of the baffling characteristics that makes our Cosmos antifragile.
Having created one of the earliest thriving communities of crypto devs, braved the ignominy of losing their founder to myriad issues, bootstrapped the creation of the first interchain communication protocol, and suffered the shock of watching their ecosystem’s most successful application (Terra) lose 99% of it’s value in three days, antifragility also defines the Cosmos network. Perseverance is one of the best leading indicators of long-term success, and the Cosmos team (led by the interchain and Tendermint foundations) might just be the Rafael Nadal of the crypto world. Every time you count them out, they bounce back stronger, often seemingly on the strength of will alone. People thought Luna would be the next Lehman, but Cosmos DeFi held strong, and perceived correlations seem to have been overblown.
Like Rafa however, Cosmos doesn’t do it alone: investors and ecosystem builders have stepped up big time to bridge gaps, most notably in the context of the 2019 management reorganization, but it’s notable that unlike most other multi-billion-dollar projects, Cosmos lacks a central evangelizer. Decentralization is truly core to the ethos of the project.
We’ve been looking at this ecosystem for years and think it’s going to be the venue for some of the most exciting projects over the long term. The way the project is set up gives the builders real freedom to build their project to their required parameters and accrue all the value to their own token. Further, in the short term, as projects like crypto.com and Certik prove, Cosmos remains the #1 destination for web-2 FinTechs who want to build on chain. With a number of new innovations coming to market in the coming months, including bridges, apps, and security standards, we suspect Cosmos will remain a hotbed of activity, even through a potential bear market. We lay out our case below, not for any particular investment, but for why builders and investors in this ecosystem will thrive:
People in bull markets overindex to simple, easy to explain bets. Cosmos is not that: it’s a complex, unique system that creates a unique environment for others to thrive. Unlike Helium, where we’ve vigorously advocated for the central token’s value, Cosmos’s true innovation is that the core value is decentralized. Individual apps should be supreme, supported by a communications protocol and blockchain infrastructure that delivers blinding go-to-market speeds. Sure, you can buy the Atom token, and it will accrue some value through shared security, but Cosmos remains an ecosystem where you must pick your winners, and you have a lot more upside convexity if you do so successfully.
Investing at the end of the day is about conviction, and about backing the passion and drive of visionaries. We’re skeptics that bull market strategies of indexation of the venture/crypto market will deliver the same profile of long run returns as high conviction, deeply diligence investments. For those still trying to find the diamond in the quarry, who can’t afford yet to just buy the whole mine, Cosmos is one of the best places to look.
As always, a special thank you to my co-author Sal (@Danconia_crypto) as well as the broader Cosmos community who was kind enough to give me great feedback.
