What is Osmosis (OSMO)? | The Cosmos Universe Guide Vol. I
One of the key networks that remains constantly booming is Osmosis (OSMO), which is part of the Cosmos ecosystem. Here you will discover everything you need to know about Osmosis and how to make the most of your OSMO.
What is Osmosis in crypto?
Osmosis is a pioneering AMM (Automated Market Makers) blockchain that is part of the Cosmos ecosystem. This blockchain is inspired by other AMMs, such as Uniswap, Balancer and Curve, and has taken from each of them their best virtues in order to get the most out of the decentralized financial products it supports.
In Osmosis, liquidity providers (LP), DAO members, and delegators are all able to assess market conditions and make decisions based on what is most appropriate for their environment in order to maximize efficiency.
The main features of Osmosis
The Osmosis network stands out mainly for four main features:
- It is customizable: the network uses a customizable bonding curve algorithm as a balancer to achieve balanced prices in the exchange of tokens between different pools.
- It grants autonomy to liquidity pools: it allows users to create liquidity pools and set their operating parameters, in order to ensure fairer exchanges.
- It is based on IBC (Inter Blockchain Communication): this system allows it to connect to the entire Cosmos ecosystem and include all its native tokens within its protocol.
- It uses the Time Weighted Average Price (TWAP) mechanism: it employs the reliable average price mechanism to avoid price fluctuation or arbitrage risks that may affect its liquidity in the short term.
What is OSMO?
The network has a native token called OSMO that provides security to the Osmosis protocol and is distributed through staking, liquidity pools, and developers, while behaving as a governance token too.
In this way, OSMO token holders can stake to contribute to the security of the Osmosis protocol and obtain generous rewards for their contribution thanks to its high incentives.
OSMO users can also decide on the direction of the protocol, voting for or against updates, rewards for liquidity pools, or setting exchange fees. In short, they can create and vote on governance proposals.
This guarantees Osmosis' long-term operation and gives it a unique quality, as it allows it to adapt to the constant changes in the market.
What are Osmosis wallets?
To buy, store and exchange the OSMO token, users can use the following wallets:
Keplr wallet: it is a web wallet. The extension can be downloaded in the browser and from there connect to the Osmosis application.
WalletConnect: it allows connection to the Osmosis dApp via mobile devices.
Want to know more about Osmosis staking?
Osmosis, like the rest of the Cosmos ecosystem networks, uses the Proof-of-Stake consensus protocol, which is based on a series of validator nodes to guarantee its security, stability and decentralization. By delegating your tokens to these validators you can staking OSMO and get rewards directly in your wallet.
In short, Osmosis was born as an AMM protocol to pool the liquidity of tokens native of the entire Cosmos ecosystem, and distributing incentives through the different pools that make it up. The fact that it is a cross-chain network will allow it to expand to other blockchain networks, so it can easily add cryptocurrencies that are not native to the Cosmos ecosystem, and thus pool more liquidity.
One of the important particularities of Osmosis is that it allows users to create markets on their own, to create their own liquidity pools and set their own parameters and conditions. This, and the possibility for users to participate in its security and management, make Osmosis a unique AMM protocol that should not be overlooked.
