Osmosis built its platform with the SDK, where developers can build their AMMs. Furthermore, they are the Cosmos-based DEX of choice. This is also of great help for small and/or new projects with very low liquidity. Therefore, let’s have a look at the Osmosis DEX.
What is Osmosis?
Osmosis is a decentralized exchange where people can:
- Swap Cosmos-tokens.
- Invest in attractive and create them.
- See your cosmos asset portfolio in a dashboard
- using the Keplr wallet.
- governance votes using the Keplr wallet.
- live stats about Cosmos-tokens
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At the time of writing this article, Osmosis ranks 12th on DeFiLlama for most TVL. They have a solid $1.34 billion locked. Above all, this is for the most part organic. They have well over 100 pools live. APR ranges from 6.07% ATOM/DEC to 166.97% HUAHUA/OSMO. They offer many juicy liquidity pools.
On the other hand, the team behind Osmosis consists of various Cosmos experienced heavy hitters. The co-founder of the popular Cosmos wallet, Keplr, is also in on Osmosis. This resulted in Osmosis Labs, founded by Sunny Aggarwal and Josh Lee. Sunny is since 2015 involved in crypto. This shows that the team knows its way around the Cosmos ecosystem.
What Makes Osmosis Different?
Osmosis has a couple of things going for them. On one side there are general Cosmos-related benefits. On the other hand, there are a few key features that make them stand out as a . So, let’s take a look at this.
- Cross-chain is the way forward—Inter-chain communication will be of utter importance. Demand will keep growing. Ethereum/EVM ecosystem asset integration will see more growth.
- The Cosmos ecosystem keeps growing—With IBC, Cosmos can pick up the pace. More liquidity and users flow into the Cosmos ecosystem. In turn, this will grow Osmosis.
- Innovation and user experience—Osmosis is well-known as an innovator. Front running is a key concern they are working on. Furthermore, they embraced CosmWasm. This is a cross-chain smart contract library. It allows the building of complex DeFi products. Furthermore, the platform has a very user-friendly approach. Their UI is easy-to-use.
Osmosis Features
Osmosis has a couple of key features that make them stand out as a DEX. Here they are.
- Liquidity pools that self-govern—The team did not use any hard code in the AMMs. As a result, you as a user can vote on any change you can think of in the pools. For example, token rates, swap fees, or TWAP calculations. In addition, curve algorithms or reward incentives are up for change by voting.
- Superfluid staking—Adding liquidity to a pool earns LP tokens of that pool. You can add these tokens to a validator. This way, earnings double your passive income. Once from the liquidity pool swap fees. The second time from securing the network through a validator. However, a malicious validator will get slashed. This includes his delegator’s stake.
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- Interfluid staking This allows validation of other chains in the IBC system. The picture below shows how active Osmosis is on the map of zones within the Cosmos ecosystem. The platform logo is on the right-hand side. This picture shows 30 days.
- Standard staking is also possible. You can delegate your staked tokens to a validator on Kelpr.
Risks and Competitors
The Cosmos ecosystem is big, and Osmosis is not the only one offering a DEX service. One thing in life is always certain, and that is change. So, what could change Osmosis’ current position?
The Cosmos ecosystem sees slow growth. This will directly affect Osmosis. Other chains also offer fast and cheap transactions. For example, Avalanche, or L2 solutions like roll-ups. However, if the blockchain space as a whole sees enough growth, more than just one chain can survive.
In the picture below, you can see how integrated is the Cosmos ecosystem:
Source: Map of Zones (Cosmos ecosystem)
We already mentioned the possibility of slashing your stake. Something to consider when choosing a validator.
Moreover, Crescent Network is eyeing the Osmosis position as DEX #1. Furthermore, is working on cross-chain solutions. They want to connect EVM chains with Cosmos.
Which direction will Osmosis develop in? Build a super easy-to-use platform for the ‘masses’? Or, on the other hand, build a more complicated platform. This would cater more to pro traders and institutional markets. Either way, they could grow bigger, regardless of what direction they decide.
Conclusion
Osmosis is currently the most popular DEX in the Cosmos ecosystem. They also brought in Ethereum ERC-20 tokens to join the party. This cements their top position even more. With even more blockchains that are in the cards. Fast and cheap transactions are part of the Cosmos ecosystem. Osmosis is guilty by association and runs with it.
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