NEAR vs Cosmos in 2024: Detailed Comparison & Long-Term Potential

As Bitcoin continues to gain mainstream acceptance, higher-risk investors are turning their attention to cryptocurrencies with untapped potential. With Bitcoin's low transaction speed still a concern for scalability, developers have long sought to improve performance without compromising decentralization. Enter NEAR and Cosmos—two blockchain solutions outside the Ethereum ecosystem that have quietly earned the loyalty of developers and users alike. Now, as institutional investors begin to take notice, the investing opportunities within these ecosystems are growing ever more compelling. Note: Cosmos, due to its unique characteristics, can sometimes cause confusion for readers, so let's clarify. Cosmos is an open-source network designed to enable interoperability, scalability, and usability among multiple independent blockchains. The Cosmos Hub is the central blockchain in this ecosystem, acting as a hub that connects various independent blockchains such as Injective, dYdX, and Thorchain. ATOM is the native cryptocurrency token of the Cosmos Hub and will be the asset compared to NEAR tokens as an investment target in this paper. Further details will be explained in the sections below.

Key Takeaways

NEAR operates a unified network where scalability is achieved through sharding, and all dApps share the same security and governance mechanisms. Cosmos enables a network of sovereign blockchains, each with autonomy over its governance and economic models, interconnected through the Cosmos Hub.

NEAR offers a streamlined environment for building on its platform with a focus on scalability and user experience and AI. Cosmos provides developers with the flexibility to create independent blockchains tailored to specific use cases, benefiting from shared tools and interoperability.

While investors in both NEAR and Cosmos might look for price surges in Altcoins, ATOM investors receive more than just yield by staking. They benefit from additional incentives like airdrops from new Zones launching within the Cosmos ecosystem.

Key differences between NEAR and Cosmos

While both NEAR and Cosmos aim to enhance blockchain scalability, they adopt fundamentally different strategies in how they structure their networks and governance models. NEAR operates as a unified platform where decentralized applications (dApps) are built directly on top of its sharded blockchain, relying on a traditional governance model where the NEAR protocol's validators secure the network and make consensus decisions. This means that dApps on NEAR share the same security and governance mechanisms provided by the core protocol. In contrast, Cosmos takes a modular approach by enabling the creation of independent, sovereign blockchains known as "Zones". Each Zone in the Cosmos ecosystem has the autonomy to govern itself, utilize its native token to secure its network, and manage transactions, all while being able to interoperate with other zones through the Inter-Blockchain Communication (IBC) protocol and HUB. This grants developers and communities the freedom to tailor their blockchain's governance and economic models to their specific needs, highlighting Cosmos's emphasis on sovereignty and flexibility compared to NEAR's more centralized governance structure within a single network.

NEAR vs Cosmos: Transaction Speed & Fees

NEAR: The NEAR Protocol is a layer-1 blockchain platform designed to deliver fast, secure, and scalable solutions for decentralized applications (dApps). It achieves high transaction speeds through its innovative sharding technology called Nightshade, which allows the network to scale horizontally by dividing the blockchain into multiple parallel shards, dealing with more transactions simultaneously. Additionally, NEAR Protocol is designed to avoid sudden spikes in transaction fees, providing a predictable cost environment.

Cosmos: The Cosmos ecosystem solves the scalable problem with a network of independent blockchains known as Zones, while the Hub plays the center of this ecosystem. Both the Cosmos Hub and the individual Zones have their own transaction speeds and fee structures, influenced by their specific configurations and purposes.

NEAR vs Cosmos: Long-Term Potential

What is NEAR's Long-term Potential?

The NEAR Protocol is witnessing significant adoption, particularly highlighted by applications like KAI-CHING, a popular shopping app in Asia. As one of the top five decentralized applications (dApps) based on unique active wallets, KAI-CHING exemplifies how NEAR's scalable and user-friendly platform is attracting mass-market consumer apps. The success of KAI-CHING underscores NEAR's capability to handle high transaction volumes with low fees and fast confirmation times, essential features that appeal to both developers and a growing user base in the competitive consumer market.

Furthermore, NEAR's long-term potential is significantly bolstered by its strategic focus on artificial intelligence (AI). This direction is deeply influenced by the background of NEAR's co-founder, Illia Polosukhin, who was one of the contributors to the groundbreaking paper "Attention Is All You Need", which introduced the Transformer model revolutionizing natural language processing. Illia's extensive experience in AI research and development guides NEAR's recent strategies to integrate AI capabilities into their blockchain platform. This positions NEAR at the forefront of combining blockchain technology with AI, enabling the creation of more intelligent and responsive decentralized applications.

What is Cosmos's Long-term Potential?

The Cosmos ecosystem holds significant long-term potential due to its innovative approach to blockchain interoperability and scalability. One of its primary advantages is the ability to facilitate the permissionless and debtless creation of layer-1 blockchains. Using the Cosmos SDK, developers can build custom, sovereign blockchains—referred to as Zones—tailored to specific applications and requirements without the limitations often associated with existing layer-1 platforms. This flexibility empowers developers to launch their own blockchains efficiently, while taking advantage of existing infra and users. Regarding ATOM, the native token of the Cosmos Hub, recent developments have aimed to enhance its utility and value proposition for stakers. Notably, the Cosmos Hub recently passed a key vote in favor of implementing the Liquid Staking Module. This upgrade enables ATOM holders to stake their tokens while simultaneously allowing them to secure other chains and earn additional rewards, thereby increasing the token’s flexibility. These advancements highlight the growing potential for ATOM’s value, as its role in the broader Cosmos ecosystem expands.

Difference between NEAR and Cosmos in Supply

NEAR: The NEAR Token services as the native token used in NEAR Protocol, which had an initial total supply of 1,000,000,000 NEAR token at the mainnet launch in April 2020. NEAR employs an inflationary token model with an annual inflation rate of 5% to incentivize network validators and maintain security. Additionally, NEAR adopts deflationary mechanisms by burning 70% of transaction fees, which helps reduce the circulating supply over time. During periods of high network activity, this burning mechanism can lead to net deflation in the maximum supply, as the amount of tokens burned may exceed the tokens minted through inflation.

Cosmos: The ATOM token is the native cryptocurrency of the Cosmos Hub, began with an initial supply of approximately 236 million tokens at the network's launch in March 2019. Unlike cryptocurrencies with a fixed maximum supply, ATOM employs a dynamic inflationary model to incentivize network security and participation. The inflation rate adjusts between 7% and 20% per year based on the proportion of ATOM staked by validators and delegators—the more ATOM staked, the lower the inflation rate, aiming for a target of 67% of the total supply being staked. And as a result, the total supply of ATOM increases over time, but is open to change by the community's proposal.

NEAR vs Cosmos: Consensus algorithm

NEAR: The NEAR Protocol uses a version of Proof-of-Stake, particularly Thresholded Proof of Stake. Compared to the traditional Proof-of-Stake algorithm, TPoS sets a minimum and maximum stake threshold, to prevent any single validator from having disproportionate influence over the network.

Cosmos: The primary consensus algorithm used in Cosmos is the Tendermint Byzantine Fault Tolerant (BFT) consensus algorithm, now updated to CometBFT, which is a Proof-of-Stake (PoS) consensus protocol. In Cosmos Hub, Validators must stake ATOM tokens to participate in the consensus process. Each blockchain (Zone) in the Cosmos ecosystem can run its own instance of the Tendermint BFT consensus algorithm. Zones are sovereign and can have their own validator set and governance. Inter-Blockchain Communication (IBC) Protocol enables secure and trustless communication between independent blockchains (Zones).

NEAR vs Cosmos: Performance over the past 5 years

Both NEAR and ATOM have seen substantial growth since the DeFi Summer of 2020, but both experienced significant declines following the Terra (LUNA) crash. While Terra, a blockchain built using the Cosmos SDK and part of the Cosmos ecosystem, collapsed, it didn’t bring down ATOM, further proving the resilience and independence of each Zone within the Cosmos network. NEAR, on the other hand, is making a strong comeback this year, riding the wave of renewed investor interest fueled by the rising popularity of AI-driven applications and innovations.

Note: In fact, many Zones within the Cosmos ecosystem distribute airdrops to ATOM stakers when launching their own tokens. Therefore, simply evaluating the price performance of the ATOM token may not fully reflect its overall value, as these airdrops contribute additional benefits that aren't immediately visible in the price alone.

Difference between NEAR and Cosmos in Security

Although both NEAR and Cosmos utilize Proof-of-Stake (PoS) mechanisms to secure their networks—where validators risk their own assets for bad behavior—they differ in their approaches to handling massive transactions. NEAR employs sharding to partition the network and process transactions in parallel, effectively scaling to accommodate high transaction volumes. In contrast, Cosmos delegates such tasks to specific purpose Zones, which are independent blockchains within its ecosystem designed to handle particular functions or workloads, thereby distributing the transaction load across specialized chains.

NEAR vs Cosmos: Earning

The primary source of returns for investors in both NEAR and ATOM is undoubtedly the price appreciation of these two altcoins. While token holders of both NEAR and ATOM earn staking rewards in the form of the native token, there are notable differences in how these yields are generated. NEAR stakers enjoy relatively stable returns through staking, whereas ATOM stakers experience fluctuating yields, influenced by various governance proposals passed by the community over the years. Additionally, ATOM holders often benefit from airdrops when new Zones are launched, a considerable bonus that should not be overlooked.

NEAR vs Cosmos: Adoption and Community Support

NEAR: Over the past year, NEAR Protocol has experienced significant growth in adoption and community support, primarily driven by the surge of consumer-facing decentralized applications (dApps) and the integration of artificial intelligence (AI) technologies within its ecosystem. This convergence of consumer dApps and AI has amplified NEAR's appeal, leading to remarkable growth metrics—including increases in transaction volumes and active user accounts—that underscore the platform's scalability and its position as a leading destination for innovative blockchain solutions.

Near Unique Accounts Chart

Cosmos: Cosmos's approach of empowering each Zone with sovereignty and customization has significantly boosted its adoption and community support. By giving builders and developers the freedom to create and optimize their own independent blockchains, Cosmos has become a magnet for innovation within the blockchain space. This flexibility has attracted a growing number of projects and developers to the ecosystem, leading to a substantial increase in the number of Zones. From just around a couple of dozen Zones in 2021, the Cosmos network has expanded to over 100 Zones by now.

Zones in 2021 vs 2024

NEAR vs Cosmos: Which one is better?

Both NEAR Protocol and the Cosmos Network are pioneering platforms in blockchain space, aiming to address some of the most pressing challenges such as scalability, interoperability, and developer accessibility. Determining which one is "better" depends largely on specific use cases, priorities, and the needs of developers and users. NEAR's alignment with AI makes it a compelling choice for projects that integrate artificial intelligence, offering tools and support tailored to AI applications. Conversely, Cosmos attracts a broad developer community due to its flexible and modular ecosystem, enabling developers to build and customize their own blockchains with ease. Furthermore, it's important to note that the ATOM token is the native cryptocurrency of the Cosmos Hub, which is just one component of the broader Cosmos ecosystem. The Cosmos ecosystem consists of numerous independent blockchains, known as Zones, each potentially with its own native tokens and specific purposes. Therefore, ATOM cannot fully represent the entire Cosmos ecosystem but rather serves as the backbone for inter-chain interoperability within it. The Cosmos Hub and the ATOM token will continue their exploration and evolution within the Cosmos network, fostering connectivity and collaboration among diverse blockchains to advance the development of interconnected applications.