The Death of Cosmos: Why the King of Cross-Chain Has Become a 'Value Black Hole'?

Written by: Yanz, Shenchao TechFlow

Original Title: Who Killed the Cross-Chain King Cosmos?

The performance of the Cosmos ecosystem at the end of 2024 and the beginning of 2025 is particularly noteworthy, but not for good reasons.

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

Once experiencing counter-cyclical growth in 2022 and ranking second in TVL, Cosmos now faces a collective value destruction. What exactly happened to the Cosmos ecosystem, which was regarded as the core of blockchain internet at that time? From being a star project in the DeFi boom of 2021 to the current sluggish market performance, what are the reasons behind this transformation?

When we carefully analyze its recent performance, we will find that there is a deeper background behind this significant decline—not just market fluctuations.

Airdrop Frenzy, Death Loop

At the beginning of 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, and a wave of sell-offs came crashing in, causing the price of TIA to plummet by 91.9% as if in free fall, and it is 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 - sell-off" vicious cycle in the Cosmos ecosystem. When the airdrop news was released, a large amount of speculative funds rushed 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 went through a similar process during the liquidity mining boom in 2022, with the price dropping from a peak of $11 to the current $0.17.

Every cycle like this consumes the trust and financial foundation of the ecosystem. This kind of short-term speculation drives away genuine long-term builders, causing the entire ecosystem to fall into a restless atmosphere.

Puppet Emperor and the Divided Kingdom

The ecological project cannot break out of the death spiral, and the price performance of ATOM, as a core asset of the Cosmos ecosystem, is also facing a bottleneck issue.

In a 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, resulting in difficulties for ecological traffic and value to flow back.

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

ATOM has become the puppet emperor of Cosmos, further spreading governance issues, and the federation has not benefited.

The JUNO project is the most typical case: In April 2022, the JUNO community discovered that a whale user circumvented airdrop restrictions through multiple wallets, obtaining 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, with the decision taking effect on May 4.

This controversial decision severely divided the community and significantly reduced investor confidence in the governance mechanism of the JUNO project. The failure of the governance mechanism not only failed to address the technical and market challenges faced by the project, but also accelerated its decline, with the JUNO price plummeting from $43 to $0.09, a decline of up to 99%.

However, these are not the only problems faced by Cosmos, nor are they a crisis unique to Cosmos.

The "Midlife Crisis" of Multi-Chain Ecosystems

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

In April 2025, Cosmos development events ranked first among blockchain projects. Although it seems to be leading, it cannot hide the fatigue of gradually decreasing active developers in the crypto space.

Source: developer report

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

Polkadot ranks tenth with 3.4K developer activity, with contributors decreasing by 0.91% to 325. In the face of the JAM upgrade and slow responses to 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 outstanding development talent.
• Ambiguous market positioning: In the competition with Ethereum, these projects often fall into the dilemma of having superior technology but lacking applications.

This intrinsic dilemma has been further amplified under the current special 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 leader of this growth was institutional funds, which have a distinctly different investment logic: controllable risk, ample liquidity, and regulatory compliance.

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

Worse still, the institutionalization process has brought about another unexpected consequence—the "Matthew Effect" of infrastructure construction is accelerating.

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

This predicament forces these ecosystems to reassess their value propositions, shifting from mere technological competition to a more pragmatic approach that emphasizes user experience and practical 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

At the time point of 2025, the Cosmos ecosystem is at a critical historical moment of life and death.

From the grand vision of blockchain internet when the mainnet launched in 2019, to the market's 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 $3.5 during the bear market of 2022-2024, 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 for the Cosmos (ATOM) ecosystem and price trends. The 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 perspectives from CoinLore and CryptoNewsZ anticipate a bull market pushing prices to break through $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 need time to be verified.

The competitive pressure from Layer-2 and other interoperability solutions continues to exist, and the impact of Federal Reserve policies and geopolitical risks on the entire crypto market cannot be ignored. More importantly, the 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 awaits is the future or a deeper darkness.