ATOM, the native cryptocurrency of the Cosmos blockchain protocol, rose more than 100% last week.
Analysts are attributing the rise in ATOM to two key factors. First, in recent weeks, layer one blockchain protocols, such as Avalanche (AVAX) and Polkadot (DOT), have undergone a major overhaul.
Second, the utility of ATOM that allows cryptocurrency holders to earn through swap, gas and transaction fees could make it more attractive to investors.
The reevaluation of layer one blockchains
The term rerating is used in the cryptocurrency market to describe when the value of a cryptocurrency increases rapidly after stagnating for an extended period.
Typically, rerating occurs when the market finds that a cryptocurrency is undervalued due to fundamental reasons or a particular catalyst increases the potential of the blockchain protocol.
Cosmos is ready for a new classification because other layer one blockchain protocols, such as Polkadot, saw large rallies throughout January and February.
Currently, as of February 13, Cosmos’ valuation is around US $ 5 billion. By comparison, Polkadot’s valuation is about $ 27 billion, more than five times that.
More importantly, compared to other layer one blockchain protocols, Cosmos has large decentralized platforms and blockchain projects launched on top of it.
Projects beyond the Cosmos with higher value than ATOM
Most notably, Terra and Binance Smart Chain are both based on the Cosmos blockchain. The valuation of the two blockchain projects alone is above $ 22 billion.
Technically, BNB is the native token of Binance Smart Chain and the Binance ecosystem, but even so, the evaluation of the two projects alone surpasses that of Cosmos.
A pseudonym for DeFi investor known as “SpiderCrypto” said that ATOM is undervalued compared to other blockchains. The investor said:
“In addition, @cosmos $ ATOM is undervalued compared to other blockchains. So many great projects using tendermint / cosmos and you don’t even know it beforehand. $ 10b marketcap and will explode like $ avax. “
A Cosmos pseudonym, Immasssi, also emphasized that the ATOM tokenomy, which allows users to benefit from the fees generated by the Cosmos ecosystem, makes ATOM more attractive.
Similar to DeFi projects that have cash flow and a token that allows users to earn through staking, the validator said that ATOM holders will receive transaction fees for packages routed through the Cosmos hub. He said:
“$ ATOM holders will receive tx fees for packages that are routed through the hub. This includes all #data. In addition, atom holders will receive swap fees, gas fees and tx fees from the next AMM. In addition, gaining from shared security. After realizing what this means for ATOM. “
In addition, the long-term sentiment score for ATOM increased significantly this year, along with Terra LUNA, suggesting that the revaluation of the Cosmos may continue, especially if the DeFi sector continues to grow.