Osmosis app review

Osmosis

Osmosis app review

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Open Dapp

Yolanta Chomag

Last updated: Jul 07, 2022

What is Osmosis

Osmosis is an automated market maker (AMM) protocol that enables developers to build customized AMMs with sovereign liquidity pools. Built with Cosmos SDK, Osmosis utilizes Inter-Blockchain Communication (IBC) to enable cross-chain transactions. 

The project was announced in October 2020 and launched on June 19th, 2021. As the first AMM on Cosmos, Osmosis offers trading and earning rewards through liquidity provision.

Osmosis allows users to launch liquidity pools with unique parameters, like bonding curves and multi-weighted asset pools. 

How does Osmosis work

Osmosis is designed to be cross-chain native. It has a built-in IBC (Inter-Blockchain Communication), allowing it to connect to the entire ecosystem of Cosmos chains and their native assets. After integrating native Cosmos assets, Osmosis will integrate with non-IBC-enabled chains, including Ethereum-based ERC20s (using the Althea gravity bridge), Bitcoin-like chains, and alternative smart-contract platforms.

Rather than going through the process of launching a new AMM protocol for each AMM model upgrade, curve developers can deploy new curves on Osmosis, taking advantage of the existing wallet integrations, IBC connections, order flow, and liquidity within the Osmosis ecosystem.

How to use Osmosis

As Keplr is the only wallet Osmosis supports, to interact with the Osmosis app users need to install and connect it with the dApp. The next step is to deposit funds, to do so users need to click on the deposit link next to the asset they prefer, select their desired amount, and click on the “Deposit” button. Next, the Osmosis app displays a series of confirmations and the deposit is complete. Following that, users can trade or bond tokens and deposit funds to liquidity pools as well as create new ones, on the platform by navigating to the Trade tab on the Osmosis app and following the instructions.

Osmosis fees for transactions are paid by users posting transactions on the chain, the amount of them is determined by the computation and storage of the transaction. Osmosis fees are distributed to OSMO stakers on the network and their denomination can be chosen by the validators - an option unique to the Osmosis app.

Osmosis fees for token swaps are charged when utilizing the platform’s liquidity pools and are paid by the traders in the form of the input asset. These Osmosis fees are specified by pool creators when a new liquidity pool is established, and are calculated in the form of a percentage of the swap size.

The last type of fee Osmosis charges its users is a so-called exit fee, paid when withdrawing assets from liquidity pools and also predetermined by the pool’s creator. These Osmosis fees are paid exclusively in LP tokens and are burned.

The OSMO token

Osmo (OSMO) is a native Osmosis governance token. It was launched with an initial supply of 100 million OSMO, 50% of which was airdropped to ATOM stakers. The other half went to an on-chain treasury called the Strategic Reserve. This allocation will be controlled by a multisig DAO, initially composed of members of the development team. The team intends to expand membership to community members down the line.

Osmo is expected to be used primarily for staking and governance purposes (the community may vote for adding or removing the token functions). 

At the consensus level, OSMO is the staking token used by validators and delegators to verify transactions and produce new blocks. They receive inflation rewards for their contribution to the network.

OSMO token holders can participate in on-chain governance by creating and voting for governance proposals, such as allocating liquidity mining rewards for liquidity pools or setting the base network swap fee.

How to buy Osmosis OSMO token

Osmosis OSMO token can be purchased on centralized exchanges like BKEX, Hotbit, and CoinEX.

Disclaimer

To understand if Osmosis is a good investment and try to make an OSMO price prediction, you need to do your own research on the project.

All the data for research is available on the project page on our website: check out the technical features of the project in this review, try to use the app, and see if the information about the team is available and if the team is open for communication, and using the project dashboard and the OSMO price chart, assess the project usage rates as well as the token price movement and the number of its holders.

Is Osmosis safe

The Osmosis team was gathered by Sunny Aggarwal and Josh Lee. Aggarwal worked as a Research Scientist at Tendermint in 2017. In 2018, he founded Sikka, a blockchain infrastructure company focused on participating in protocols and networks for the decentralized internet. Sikka currently operates as a Top 5 validator on the Cosmos Hub, Kava, and Akash networks.

Lee was Aggarwal’s colleague at Tendermint 2019. Then, he founded Chainapsis, which built Keplr wallet, an IBC-enabled wallet for the Cosmos ecosystem.

So far, there are no audits Osmosis has published, however, the Osmosis team has stated that there is a first round of audits planned for shortly after the launch of the platform. At the time of writing this review, the project has been launched for nearly a year.

In the beginning of June 2022, a Reddit user disclosed a vulnerability in the Osmosis DEX protocol that was later exploited in an exploit worth around $5 million. The bug would increase a user’s position by 50% if they add and remove funds to one of Osmosis’ pools. The incident made the team halt the Osmosis chain in an emergency move to avoid further damage. 

Although the chain remained halted for several days, the bug was identified and a patch for it was released hours after the network’s stop. Moreover, shortly after that announcement, the Osmosis team released an update stating that four individuals accounting for 95% of the realised exploit amount have been identified and expressed intent to return the exploited amount in full. 

What’s next

Going forward, there will be a synergetic relationship between Osmosis and the Cosmos Hub. Osmosis is going to become a chain of the Cosmos hub further supporting other chains.

Links

https://docs.osmosis.zone/

 

Basic info

  • Token OSMO
  • Audited no
  • DAO no
  • Yield farming yes
  • Team public
  • Hacks no

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