Polkadot vs. Cosmos: The Complete Guide (2025)

Polkadot and Cosmos are Both Pioneering Blockchain Networks 

Cosmos and Polkadot are popular blockchain platforms designed to address the interoperability and scalability challenges of traditional Layer-1 blockchains like Ethereum. Both these platforms attempt to make it easy for individual dApp developers to create their own individual blockchains within a broader Layer-1 ecosystem, but they do this in very different ways. 

Cosmos, often referred to as the “Internet of Blockchains,” utilizes the Inter-Blockchain Communication (IBC) protocol to enable independent blockchains, known as “zones,” to interact within its ecosystem. Each zone maintains its sovereignty, allowing for customization and independence while benefiting from shared communication standards. This modular framework promotes flexibility and fosters innovation among developers. 

On the other hand, Polkadot introduces a multi-chain framework consisting of a central Relay Chain and multiple parallel chains called “parachains.” The Relay Chain provides shared security and consensus, ensuring that all connected parachains benefit from a unified security model. This design allows for efficient cross-chain transactions and scalability, as multiple parachains can process transactions concurrently. 

This article will examine various aspects of the Polkadot and Cosmos ecosystems, including their founders and history, speed and finality, consensus mechanisms, tokenomics, use cases, and future potential.

Founders and History 

Polkadot 

The initial plans for Polkadot began in 2016 with a white paper written by Ethereum’s former CTO, Gavin Wood, who also developed Ethereum’s core programming language, Solidity. Polakdot officially began as a project developed in partnership between the Web3 Foundation and Parity Technologies and started testing its relay chain in 2018. The Polkadot mainnet was first launched in May 2020. 

Cosmos

Cosmos was initially founded by developers Jae Kwon and Ethan Buchman in 2014, who authored the initial documentation to create Tendermint, the consensus algorithm that would later go on to power the Cosmos Network. 

Kwon and Buchman later created the Interchain Foundation to further the development of the Cosmos ecosystem. In 2017, the Interchain Foundation held an initial coin offering (ICO) for the ATOM token, raising around $17 million. In 2019, the associated company Tendermint Inc. raised Series A funding worth $9 million to continue the development of the Cosmos Network. 

Network Architecture and Interoperability 

Polkadot 

As previously mentioned, the Polkadot network consists of various parachains, which are Layer-1 (L1) blockchains within the Polkadot networks. These easily-customizable blockchains feed into Polkadot’s core blockchain, the Relay Chain. 

The Relay Chain provides shared security consensus and settles transactions for each parachain. As parachains utilize the Relay Chain for consensus, they do not need their validator nodes. 

One benefit of parachains is their high level of customizability. For example, parachains can: 

• Be either public or private
• Have their own tokens and governance 
• Have different transaction fees, staking rewards, and block times

In some scenarios, parachains are used for multiple dApps. However, in other cases, they’re used only for a single dApp (like a single DEX or blockchain game), making them a form of “appchain.”

Currently, parachain users are selected through an auction process. Right now, there is a limit of 100 parachains on Polkadot.

This means that projects or groups that want to utilize a parachain must first win an auction to “lease” the parachain for a specified period. These leases currently last 96 weeks, or nearly two years. 

After the lease period, the chain operators must bid again to re-win the lease; otherwise, the chain will be awarded to another project. This typically means that the parachains with the most active users and most functional tokenomics will retain their parachain.

As many projects can’t afford the cost of leasing a parachain upfront, they use a crowdfunding method called crowdloans. 

Crowdloans allow community members who want to bid for a parachain to lock DOT tokens temporarily into a separate crowdloan module hosted on the Relay Chain. The DOT tokens are returned to community members if the project’s bid does not win. 

Polkadot uses the Cross-Consensus Message Format, or XCM, to achieve interoperability between parachains. 

According to the official Polkadot wiki: 

XCM is the language through which complex, cross-consensus interactions can occur. Two blockchains can “speak” XCM to seamlessly interact with each other using a standard messaging format.

Cosmos

As previously discussed, Cosmos Zones are designed with a hub-and-spoke model. 

This model means that Zones are the spokes, and key blockchains are the hubs. The Cosmos Hub, the most prominent hub, plays a key role in ecosystem governance and provides a token (ATOM), generally used for paying transaction fees across the Cosmos ecosystem. 

Osmosis, a decentralized exchange (DEX), also functions as a hub, providing valuable liquidity to the ecosystem. 

Unlike Polkadot parachains, which do not need their own validators, every Cosmos Zone needs to spin up its own set of validators using Proof of Stake (PoS) consensus. As we’ll mention later, this can be expensive and time-consuming and could pose security risks to individual Cosmos Zones.  

To achieve interoperability between different Zones, the Cosmos ecosystem utilizes the IBC (Inter-Blockchain Communication) protocol, which (at least in theory) permits communication and assets to flow freely across the ecosystem. 

Consensus Mechanisms 

Polkadot 

Polkadot uses a consensus mechanism called Nominated Proof-of-Stake (NPoS). 

NPoS is a variation of the Proof-of-Stake (PoS) consensus mechanism. This allows users to stake their DOT tokens to become validators or nominate other validators to secure the network and validate transactions. 

According to the Polkadot Wiki: 

“Polkadot uses a hybrid consensus composed by the finality gadget (GRANDPA) and the block production mechanism (BABE).

This is a way of getting the benefits of probabilistic finality (the ability always to produce new blocks) and provable finality (having a universal agreement on the canonical chain with no chance for reversion).” 

Cosmos

The Cosmos network employs the Tendermint Byzantine Fault Tolerance (Tendermint-BFT) consensus mechanism, a highly efficient and secure protocol designed to enable fast finality and high throughput. 

Using the Delegated Proof-of-Stake (DPoS) method, token holders delegate their tokens to validators, who act on their behalf in securing the network. Validators with the most stake are responsible for proposing and validating blocks.

As Tendermint is Byzantine Fault Tolerant, it can tolerate up to one-third of validators acting maliciously or failing to perform their duties while still maintaining the integrity and liveness of the network.

Speed and Finality 

Polkadot 

According to Polkadot’s official documentation, performance benchmark tests show blockchains in the Polkadot ecosystem achieve over 1,000 TPS for balance transfer transactions. If Polkadot runs over 100 parachains, the projected theoretical TPS of the Polkadot Network is well over 100,000. Additional stress-testing data released in December 2024 suggests that Polkadot could run as fast as 140,000 TPS. 

Cosmos 

Chains in the Cosmos ecosystem can reportedly process a maximum of around 10,000 TPS. However, since each chain is customized, some chains may be optimized for lower or higher transaction speeds. 

Token and Tokenomics 

Polkadot (DOT)

Polkadot’s native token is DOT. The DOT token is utilized for transaction fees, staking, governance, and ensuring interoperability between blockchains within the broader Polkadot ecosystem.

DOT is also an essential part of the parachain auction process, in which various bidders compete to get the opportunity to lease a parachain on the Polakdot Network. 

As of mid-April 2025, the DOT token had a price of $3.70 and a market cap of just over $5.7 billion. This is a far cry from the token’s height during the crypto bull run of November 2021, when the token had a top price of nearly $54 and a market cap of over $53 billion. 

Polkadot’s decreased price may be partly due to its inflationary token policy, with the number of tokens generally rising at 10% per year, though it’s more likely to be a result of the slow growth of the Polkadot network and the relative increase in popularity in new Layer-1 and Layer-2 blockchains. 

Cosmos (ATOM)

Cosmos’s native token is ATOM. Much like the DOT token, the token is utilized for paying transaction fees, staking, and governance (i.e., voting on new network proposals). 

As of mid-April 2025, the ATOM token had a price of $4.12 and a market cap of slightly more than $1.6 billion. This means that ATOM has fallen significantly since its all-time high price of $44.27 in September 2021 and its all-time high market cap of $10.6 billion in January 2022. 

However, as we’ll mention later, it’s important to realize that the ATOM token is just one token on the Cosmos Network. As of early 2025, the combined value of all tokens on the Cosmos Network was more than $30 billion, with some tokens, like Mantra (MANTRA), sometimes eclipsing the ATOM token in market cap. 

Also, just the DOT token, Cosmos’s native ATOM token, relies on an inflationary supply model. However, unlike the DOT token, ATOM’s inflation rate is adjustable and based on network demand. The more ATOM staked on the network, the more ATOM is generated in rewards. In general, annual inflation is expected to range between 7% to 20%. 

Top Chains and TVL 

Top Polkadot Parachains

Top parachains on Polkadot by TVL percentage, early 2025: Source: Defillama. 

As of mid-April 2025, all parachains on Polkadot had a combined TVL of approximately $196 million. The top chains on Polkadot by TVL were: 

• Acala: $69 million 
• Bifrost: $44 million 
• Hydration: $41 million 
• Astar: $30 million 
• Moonbeam: $6 million

Acala

Acala is a DeFi-focused L1 built on the Polkadot network, designed to offer scalable and interoperable financial solutions. Acting as a “Universal Asset Hub,” it hosts protocols for DOT liquid staking tokens (LST), a decentralized exchange (DEX), and a multichain asset router bridge, which facilitates seamless asset transfers across networks. These tools empower users to access liquidity, earn yield, and manage assets efficiently within an integrated ecosystem.

With features like cross-chain compatibility and micro-gas fees payable in any token, Acala aims to simplify DeFi access while driving innovation.

Bifrost

According to its official website: “Bifrost is a liquid staking appchain tailored for all blockchains, utilizing decentralized cross-chain interoperability to empower users to earn staking rewards.” The Bifrost ecosystem currently consists of a liquid staking platform, a DEX, and a liquid crowdloan platform. 

Hydration

Hydration is a DeFi ecosystem that “unites swaps, lending, and the Hollar stablecoin under the roof of a scalable appchain.” It focuses on automated trading and investing and combines several trading AMMs to get traders the best prices with the lowest slippage, with options including “Omnipool, Stablepools, and Isolated Pools.”

Astar

Astar is a leading parachain on the Polkadot network, designed to provide a robust and interoperable platform for developers. By supporting both Ethereum Virtual Machine (EVM) and WebAssembly (WASM) environments, Astar enables seamless deployment of smart contracts using Rust, ink!, and other popular programming tools. 

With a focus on enabling low fees and high dApp staking rewards, Astar aims enable high-qulaity “public goods” for ordinary blockchain users while still providing a great environment for builders and developers. 

Moonbeam 

Moonbeam is another popular Polkadot parachain with a focus on blockchain infrastructure, real-world asset (RWA) tokenization, GameFi, and DeFi. Moonbeam currently hosts over 200 dApps, and has a $10 million innovation fund, as well as grant programs and accelerators. 

The blockchain is also well-known for its interoperability, as it easily allows users to bridge assets to and from 100+ other popular chains. 

Top Cosmos Zones

As of late mid-April 2025, all Zones on Cosmos had a combined TVL of approximately $2.35 billion. The top chains on Cosmos by TVL were: 

• Sei: $6771 million 
• Cronos: $609 million 
• Thorchain: $308 million 
• dYdX: $208 million 
• Kava: $191 million
• Osmosis: $85 million
• Injective: $58 million

Cronos

Cronos is an Ethereum-compatible Layer-1 blockchain built on the Cosmos SDK, designed for scalability and sustainability. It prioritizes carbon neutrality, leveraging its efficient consensus mechanism to reduce environmental impact. The platform also supports AI agents, enabling advanced automation and innovation in DeFi and GameFi applications.

Cronos also features the Cronos zkEVM, a cutting-edge Layer-2 network that enhances scalability and reduces transaction costs while maintaining compatibility with Ethereum. 

Thorchain 

According to its official website: 

“THORChain is a network that facilitates native asset settlement between Bitcoin, Ethereum, BNB Chain, Avalanche, Cosmos Hub, Dogecoin, Bitcoin Cash, Litecoin & Base

THORChain is secured by its native token, RUNE, which deterministically accrues value as more assets are deposited into the network.”

Sei 

Sei is an open-source Layer-1 blockchain optimized for trading and DeFi, achieving 12,500 transactions per second (TPS) with an impressive 380 ms time to finality. Built using the Cosmos SDK, Sei operates as a parallel blockchain, leveraging Cosmos’ Inter-Blockchain Communication (IBC) to enable seamless cross-chain interoperability.

Designed for performance, Sei includes a native order-matching engine and low-latency infrastructure, making it the ideal choice for decentralized exchanges (DEXs) and other high-throughput applications. 

dXdX 

dYdX is a leading decentralized exchange (DEX) specializing in perpetual contract trading. These contracts allow traders to speculate on the price of crypto assets without owning them, offering leverage of up to 20x. Initially built on Ethereum, dYdX later transitioned to its own Layer-1 blockchain built on the Cosmos SDK to reduce transaction costs. 

Kava

Kava is a Layer-1 blockchain that integrates the Ethereum Virtual Machine (EVM) with the Cosmos SDK, combining Ethereum’s smart contract capabilities with Cosmos’ scalability and speed. This dual-architecture allows developers to build decentralized applications (dApps) efficiently. 

Kava has focused mainly on traditional DeFi, but is attempting to broaden its capabilities to focus on newer trends like AI agents and tokenized real-world assets. 

Osmosis

Osmosis is the leading decentralized exchange (DEX) on the Cosmos network, offering users a seamless and highly customizable platform for trading and liquidity provision. Osmosis currently boasts over one million users. 

Injective 

According to its official website, Injective “is the first blockchain to offer auto-executing smart contracts which empower faster, more innovative and groundbreaking applications.” 

Injective also boasts a wide array of integrations and partnerships, including with Google Cloud and Coinbase Institutional. Popular dApps on Injective include Hydro Protocol, which combines “real world and crypto assets for optimized yield strategies,” as well as Helix, a decentralized orderbook crypto exchange with zero gas fees and niche interchain markets. 

The below image is a map of the top Zones on Cosmos and how they interact with each other: 

Future Potential and Conclusion

Polkadot and Cosmos are both relatively high-throughput, technically advanced blockchain ecosystems that allow individual dApp developers and organizations to create their own blockchains within a broader blockchain network. 

Despite their technical benefits, it’s clear that Polkadot and Cosmos have not yet recovered their popularity (or their token price) from their heights during the late 2021 crypto bull run. This is likely due to several factors, including the increasing popularity of new Layer-1s like Sui and Aptos, the success of certain Ethereum Layer-2s like Arbitrum and Optimism, the rise of established Layer-1 competitors like Solana, and the relative difficulty and expense of setting up Cosmos Zones or winning a Polkadot parachain auction. 

While these networks will likely remain relevant, they may need to reinvent themselves to make it easier for smaller projects to spin up Zones or win parachain auctions if they want to stay relevant in 2025 and beyond.  

FAQs

1. What are the main differences between Polkadot and Cosmos?

The main differences between Polkadot and Cosmos lie in their architecture; Polkadot utilizes a relay chain in conjunction with parachains for interoperability, whereas Cosmos relies on the Cosmos Hub and Zones interconnected via the Inter-Blockchain Communication (IBC) protocol.

2. How do Polkadot and Cosmos achieve consensus?

Polkadot achieves consensus through a hybrid mechanism incorporating BABE for block production and GRANDPA for finality alongside Nominated Proof of Stake. In contrast, Cosmos utilizes the Tendermint consensus algorithm, facilitating rapid transaction finality and decentralized validation. 

3. What challenges do Polkadot and Cosmos face?

Polkadot faces challenges with limited parachain availability and high capital requirements. In contrast, Cosmos contends with economic security issues and centralization risks from dominant zones. As previously mentioned, each faces fierce competition from other Layer-1 and Layer-2 blockchain projects.

4. How do Polkadot and Cosmos enhance interoperability?

Polkadot enhances interoperability through Cross-Consensus Messaging (XCM), enabling secure communication between parachains, while Cosmos utilizes the Inter-Blockchain Communication (IBC) protocol to connect different blockchain networks.