ATOM, the original cryptocurrency of the Cosmos blockchain protocol, has risen more than 100% in the past week.
Analysts attribute the contraction of ATOM to two important fundamental factors. First, layer 1 blockchain protocols, such as Avalanche (AVAX) and Polkadot (DOT), have undergone a major overhaul.
Second, the utility of ATOM enabling holders of cryptocurrency to earn through exchange, gas and transaction fees can make it more compelling for investors.
Restoring layer-one blockchains
The term recurrence is used in the cryptocurrency market to describe when the value of a cryptocurrency rises rapidly after stagnating for a long period of time.
Reprocessing usually occurs when the market finds that a cryptocurrency is undervalued due to fundamental reasons or a certain catalyst exploits the potential of the blockchain protocol.
Cosmos is preparing for a rework because other layer-one blockchain protocols, such as Polkadot, had massive gatherings during January and February.
Currently, as of February 13, Cosmos’ valuation is hovering around $ 5 billion. By comparison, Polkadot’s valuation is about $ 27 billion, more than five times higher.
More importantly, compared to other layer-one blockchain protocols, Cosmos has large decentralized platforms and blockchain projects launched on top of that.
Projects on top of Cosmos have a higher value than ATOM
Most importantly, Terra and Binance Smart Chain are both based on the Cosmos blockchain. The valuation of the two blockchain projects is just over $ 22 billion.
Technically, BNB is the original sign of both Binance Smart Chain and the Binance ecosystem, but nonetheless, the valuation of the two projects is only that of Cosmos.
A pseudonymous DeFi investor, known as ‘SpiderCrypto’, said ATOM was undervalued compared to other blocks. The investor said:
“@Cosmos $ ATOM is also undervalued compared to other blocks. So many amazing projects that use tender mint / cosmos, and you do not even know anon. Market capitalization of $ 10 billion and will explode like $ avax. ”
A pseudonymous Cosmos validator Immasssi also emphasized that ATOM’s tokenomics, which allow users to take advantage of the fees generated from the Cosmos ecosystem, make ATOM more attractive.
Similar to DeFi projects with cash flow and a sign that users earn by depositing, the validator said that ATOM containers will earn transaction fees from parcels sent by the Cosmos Center. He said:
‘$ ATOM containers earn tx fees for packets sent by the hub. This includes all #data. Furthermore, atomic holders are earning exchange fees, gas fees and tx fees from the upcoming AMM. Further earnings from shared security. Once you realize what that means for ATOM. ”
In addition, long-term sentiment for ATOM has risen significantly this year, along with Terra LUNAs, suggesting that the revaluation of Cosmos may continue, especially as the DeFi sector continues to grow.