What Is Osmosis?

About Osmosis (OSMO)

Osmosis is a DEX (decentralized exchange) built to work with Cosmos. In this ecosystem, developers are able to create blockchain applications that are interconnected due to its Inter-Blockchain Communication (IBC) protocol. The Osmosis platform has a native token which is called OSMO.

Osmosis is a Proof-of-Stake blockchain and an automated market maker (AMM) protocol. The project’s main goal is to enhance and extend the usage of AMMs in the Cosmos ecosystem by providing the ability to customize their parameters. As such, they offer custom-curve AMMs, dynamic adjustments of swap fees, and other features.

It uses a system of liquidity pools that allows its customers to make transactions quickly, provide liquidity and get rewards. They receive a part of trading fees in addition as well as newly issued tokens. What is more, Osmosis allows customers to stake their tokens for incentives from the platform.

The unique feature of the platform is superfluid staking which means that unlike other AMMs, where users choose whether they want to stake tokens or provide liquidity, Osmosis customers can do both at the same time. However, not all pools are superfluid. Still, this unique staking system not only brings more profit to users but also enhances the blockchain’s security.

Another interesting characteristic of Osmosis is that the project aims to give its customers as much sovereignty and independence as possible. They can create new liquidity pools and change the parameters of those (rates, rewards, fees, etc.) by voting. This is done so LPs could increase the pools’ competitiveness. OSMO holders vote on general matters that are essential to the project. For example, users decide which liquidity pools should get rewards.

The competitive model of Osmosis also gives an opportunity for the users to receive additional rewards directly from other projects thanks to its built-in incentive module. It encourages providing liquidity by giving the chance to distribute those projects’ tokens to the users in the pool.

Where did Osmosis (OSMO) come from?

The project was created by Osmosis Labs. It was first announced in 2020 and launched the following year by developers Sunny Aggarwal and Josh Lee.

Since the beginning, the two core values of Osmosis have been heterogeneity (high levels of customization and competitiveness) and sovereignty (independence of users and prevalence of voting). These principles can still be seen in all aspects of the project’s work.

In the future, Osmosis has ambitious plans to branch out to other chains (Ethereum-based and other ones).

What are the advantages of Osmosis (OSMO)?

1. Innovative superfluid staking allows users to stake their tokens and provide liquidity at the same time, so they receive more awards.
2. Osmosis is the prevalent decentralized exchange in the Cosmos system which means there’s more diversity in terms of the availability of tokens.
3. A liquidity pool system allows for fast and cheap transactions.

What are the disadvantages of Osmosis (OSMO)?

1. The number of available tokens is quite limited at the moment. For example, users cannot swap BTC or ETH.

How to buy Osmosis (OSMO)?

If you have made plans to purchase OSMO, we have the right solution for you. You are welcome to do the following:

1. Choose the currency you want to exchange (e.g. BTC). Enter the amount you would like to swap during the BTC to OSMO exchange.
2. Select OSMO in the second drop-down list. You will see the estimated amount that you will receive after the exchange.
3. Click the Exchange button.
4. Enter the Recipient's Address. OSMO will be sent to this address. Be careful and make sure you use the correct address.
5. Create the exchange.
6. You will see the Bitcoin deposit address. You need to transfer the necessary amount of BTC to this address to start the exchange. Then wait for OSMO tokens to reach your wallet.

SimpleSwap reminds you that this article is provided for informational purposes only and does not provide investment advice. All purchases and cryptocurrency investments are your own responsibility.