What is Osmosis (OSMO)?
Osmosis is a decentralized exchange (DEX) that operates within the Cosmos ecosystem, which consists of independent blockchains connected through IBC (Inter-Blockchain Communication Protocol). In addition to this, Osmosis allows for assets from Ethereum and Polkadot to be transferred across its platform. Initially built on Balancer-style pools, Osmosis is now transitioning into a more efficient concentrated liquidity model in order to improve trading and liquidity services.
Osmosis aims to create a DEX and trading suite that utilizes the Inter-Blockchain Communication Protocol (IBC) to link Ethereum, Bitcoin, and other blockchains. The DEX will have numerous features such as lending, credit, margin trades, fiat integration, DeFi strategy vaults, NFTs, stablecoins, and more. These functionalities provide users with all of the advantages of centralized exchanges (CEX) but with trustless qualities associated with DeFi.
The OSMO token is the native utility and governance token of the platform. On the live Osmosis price chart featured above, you can see the current OSMO price.
Use Cases of OSMO Tokens
OSMO crypto asset holders can take part in preserving the blockchain by staking the token, as part of a Proof-of-Stake (PoS) consensus mechanism employed by the platform. They can join in providing security to the system either as delegators or validators. Validators take part in the network consensus by managing validator nodes, while delegators can assign their staked OSMO coins to validators. By assigning to a validator, the individual is permitting them to make use of their assigned stake for participation in consensus.
A validator must own enough stake (self-bonded + delegated) to become active and earn rewards for participating in consensus. Besides, if you want to delegate your OSMO, no specialized technical knowledge is required. You can lock up your tokens and receive rewards in return. When you decide to unbond them, they will be locked for 21 days and not generate any rewards during that period; if the validator is outside of the active set, though, the unbonding happens immediately.
Moreover, note that Osmosis is one of the first platforms to provide users with Superfluid Staking rewards for staking OSMO tokens. This means that users can join a liquidity pool and receive two types of rewards simultaneously: a portion of transaction fees from the liquidity pool that corresponds to their contribution and staking rewards. This is unlike other platforms where individuals are only allowed to pick one reward option.
Finally, OSMO stakers can take part in the governance of the protocol. There are several ways they can do this, ranging from talking about matters on the Osmosis governance forum to submitting a proposal via the chain. Participating in governance is especially significant for Osmosis as it allows the community to make decisions about updates to the protocol, changes of parameters, spending from communal pools, and other matters related to signaling. To find out the cost of participating in governance activities, you can check the current OSMO price on the aforementioned live Osmosis price chart above.
Who Founded Osmosis?
The Osmosis crypto project was launched by Sunny Aggarwal, Dev Ojha, Josh Lee, and Tony Yun. Aggarwal and Ojha also work with Sikka validator and Tendermint projects, while Lee and Yun work with Keplr. These projects all belong to the Cosmos network.
Furthermore, Paradigm, a digital asset investment company that has ownership in numerous other blockchains and protocols, such as Uniswap or Maker, is one of the main Osmosis investors.
OSMO Tokenomics
There is a max supply of 1 billion Osmosis tokens. It's worth noting, though, that the token has an inflationary nature. This is the case because its issuance decreases annually by one-third through Osmosis' thirdening model. Thus, fewer new tokens are released each year.
In terms of the allocation of OSMO tokens, 45% is dedicated to liquidity reward mining. Furthermore, developer vesting and staking rewards each were allocated 25%, while the remaining 5% was set aside in the community pool.
Just as a reminder, you can check the live OSMO price on its price chart above.
