Who killed the cross-chain king Cosmos?

Written by: Yanz, Deep Tide TechFlow

At the end of 2024 and the beginning of 2025, the performance of the Cosmos ecosystem is particularly noteworthy, but not because of good news.

As of August 5, 2025, the core token ATOM of Cosmos has shrunk to $4.2, a decline of up to 90% from its peak. Meanwhile, compared to the end of 2024, the major project Osmosis (OSMO) has dropped 79%, the price of JUNO has shrunk by 82% and is nearly zero, and even the relatively strong Injective (INJ) has fallen from $34 to around $12, not to mention that Kava, Evmos, Cronos, and Fetch.AI have all generally declined...

Once experiencing逆势增长 in 2022, with a TVL ranking second, Cosmos now faces a collective value destruction. What exactly happened to the Cosmos ecosystem, which was once regarded as the core of blockchain internet? From being a star project during the DeFi boom in 2021 to the current sluggish market performance, what are the reasons behind this transformation?

When we take a close look at its recent performance, we will find that there is a deeper background behind this sharp decline—not just simple market fluctuations.

Airdrop Carnival, Death Loop

In early 2024, when the news of the Celestia (TIA) airdrop spread through the crypto community, no one could have predicted that this free wealth feast would mark the beginning of a nightmare for the entire Cosmos ecosystem.

Celestia, as a modular data availability network built on the Cosmos SDK, is deeply integrated with the Cosmos ecosystem through the IBC (Inter-Blockchain Communication) protocol.

A year ago in spring, the price of TIA skyrocketed to a peak of $20.17, and social media was filled with legends of overnight wealth. However, this frenzy lasted only two months before a selling wave surged in, causing the price of TIA to plummet by 91.9% like a free fall, currently hovering around $1.6.

Coincidentally, the collapse occurred throughout the Cosmos ecosystem.

The Celestia airdrop event perfectly demonstrates the entire process of the "speculation—dump" vicious cycle in the Cosmos ecosystem. When the airdrop news was released, a large amount of speculative capital flocked in, driving the price up rapidly and creating an illusion of prosperity.

However, this growth based on expectations rather than actual value is destined to be unsustainable. When early holders begin to sell to lock in profits, prices start to fall, panic spreads rapidly, triggering a larger-scale sell-off, ultimately leading to a price crash.

Osmosis underwent a similar process during the liquidity mining craze in 2022, with the price falling from a peak of $11 to its current $0.17.

Each cycle like this consumes the trust and financial foundation of the ecosystem. Such short-term speculative behavior drives away genuine long-term builders, plunging the entire ecosystem into a restless atmosphere.

Puppet Emperor and the Divided Kingdom

Ecological projects are trapped in a death spiral, and the price performance of ATOM, the core asset of the Cosmos ecosystem, is also facing a bottleneck issue.

Under the multi-chain parallel architecture, the positioning of ATOM as network fuel has not formed an effective closed loop. Many sub-chains have independent native tokens that do not directly rely on ATOM, leading to difficulties in the flow and value of the ecosystem returning.

The high-inflation model without a total supply cap, while incentivizing staking and governance participation, has also created long-term price dilution pressure. More importantly, the concept of free chain building in Cosmos, while encouraging innovation and competition, has led to fragmented traffic, with projects operating independently, contrasting sharply with Ethereum's model of locking most value in ETH.

ATOM has become the puppet emperor of Cosmos, and the governance issues have further spread, with the federation not benefiting either.

The JUNO project is the most typical case: in April 2022, the JUNO community discovered that a whale user circumvented the airdrop restrictions through multiple wallets, acquiring approximately $35 million worth of JUNO tokens.

After intense community debate, JUNO DAO officially voted to pass Proposal No. 20 on April 29, 2022, deciding to confiscate these tokens, which took effect on May 4.

This controversial decision has severely divided the community and led to a significant decline in investor confidence in the JUNO project’s governance mechanism. The failure of the governance mechanism not only failed to address the technical and market challenges facing the project but also accelerated its decline, with the JUNO price dropping from $43 to $0.09, a drop of 99%.

However, these are not the only issues faced by Cosmos, nor are they crises unique to Cosmos.

The "mid-life crisis" of the multi-chain ecosystem

When we talk about the predicament of Cosmos, we are actually dissecting the collective anxiety faced by the entire multi-chain ecosystem - a profound disconnect between technological innovation and market adoption.

In April 2025, the Cosmos development event ranked first among blockchain projects. It seems to be leading, but it cannot hide the fatigue of gradually decreasing active crypto developers.

Source: developer report

Other multi-chain ecosystems are also sluggish: the number of Ethereum developers has decreased by 2.54%, BNB Chain development metrics have dropped by 9.45%, and Polygon, Arbitrum, Optimism, and Avalanche have decreased by 10.35%, 7.62%, 6.82%, and 12.08%, respectively.

Polkadot ranks tenth with 3.4K developer activities, with contributors decreasing by 0.91% to 325. Facing a slow response to the JAM upgrade and market competition, the community has even issued an urgent call of "React or die."

Multi-chain ecosystems face similar structural challenges:

Lack of network effects: Compared to Ethereum, there is a lack of sufficient user base and application scenarios to form a self-reinforcing ecological cycle.

Insufficient developer incentive mechanisms: Although the technology is advanced, there is a lack of sufficient economic incentives to attract and retain talented developers.

Vague market positioning: In the competition with Ethereum, these projects often fall into the dilemma of having technical superiority but lacking applications.

This internal dilemma has been further magnified by the current changes in the market environment.

In the second quarter of 2025, the total market capitalization of the cryptocurrency market surpassed $3.5 trillion, but the main drivers of this growth are institutional funds, which have a completely different investment logic: controllable risks, ample liquidity, and regulatory compliance.

For institutional investors seeking stable returns, Bitcoin and Ethereum are clearly more attractive than multi-chain projects focused on technological innovation. This shift in fund flow has directly led to the further marginalization of multi-chain projects in terms of financing and liquidity.

What is even more fatal is that the process of institutionalization has brought about another unexpected consequence—the "Matthew Effect" in infrastructure construction is accelerating.

Stablecoins are becoming the core infrastructure connecting traditional finance with the crypto world. However, this infrastructure development mainly revolves around mature networks, while multi-chain ecosystems find themselves on the fringes as stablecoins become the electricity, water, and gas of the new financial system.

This predicament compels these ecosystems to reassess their value propositions, shifting from pure technological competition to a more pragmatic approach that emphasizes user experience and real-world application scenarios.

This transformation is not only a necessity for survival but may also become the starting point for the next cycle of innovation.

Crossroads: Rebirth or Decline

Standing at the time node of 2025, the Cosmos ecosystem is at a critical historical moment.

From the grand vision of the blockchain internet at the launch of the mainnet in 2019, to the fervent pursuit of interoperability when ATOM reached its historical high of $44.70 in 2021, and then to the deep reflection as prices fell to around $3.50 during the bear market from 2022 to 2024, Cosmos has traversed a typical yet unique growth trajectory of a blockchain project.

In this darkest moment, although the data is bleak, Cosmos is indeed undergoing a profound self-revolution.

Different institutions have diverse expectations regarding the Cosmos (ATOM) ecosystem and price trends. Short-term forecasts show significant divergence, with CCN and Changelly being more pessimistic, emphasizing the bearish pressure indicated by technical indicators (such as RSI and moving averages), while more optimistic sources like CoinLore and CryptoNewsZ expect a bull market to push prices past $20–$40.

For the uncertain future of Cosmos, ecological expansion, technological upgrades, market sentiment, regulatory environment, and competitive pressure are frequently mentioned considerations.

It cannot be denied that the actual effects of technological upgrades and governance reforms require time to verify.

The competitive pressure from Layer-2 and other interoperability solutions persists, and the impact of Federal Reserve policies and geopolitical risks on the entire cryptocurrency market cannot be ignored. More importantly, this shift from idealism to realism is itself a painful process that requires finding a delicate balance between technological innovation and the market.

History tells us that truly great technologies and ecosystems often emerge in the darkest of times. Cosmos also needs time to verify whether what comes is the future or a deeper night.