What Is Osmosis (OSMO)?

Osmosis (OSMO) is an automated market maker protocol (AMM) for the ATOM ecosystem. Osmosis was inspired by Balancer and Uniswap and wants to provide tools that go beyond traditional token swaps and offer users DeFi functionality for a cross-chain world. For example, developers can build customized AMMs with sovereign liquidity pools and users can launch liquidity pools with unique parameters like bonding curves and multi-weighted asset pools. That means a liquidity pool does not always have to follow a 50:50 distribution between its assets but can be customized according to the wishes of the party setting up the pool.

Osmosis's vision is to build a cross-chain native DEX that connects to all Cosmos ecosystem chains. Later, it plans to expand to non-IBC chains like Ethereum and chains similar to Bitcoin. In this fashion, Osmosis will transfer its unique customizability like custom-curve AMMs, dynamic adjustments of swap fees, and multi-token liquidity pools beyond blockchains in the Cosmos ecosystem.

Who Are the Founders of Osmosis?

Osmosis was launched by Sunny Aggarwal, an Indian blockchain entrepreneur that runs Sikka, a blockchain infrastructure company focused on participating in protocols and networks for the decentralized internet. His company is also a top five validator on Cosmos. Sunny served three years as a research scientist at the Tendermint protocol and Cosmos Hub before developing Osmosis.

One of the investors in Osmosis is Paradigm, a digital asset investment firm with stakes in countless other blockchains and protocols like Axie, FTX, and Maker, to name a few.

What Makes Osmosis Unique?

The Osmosis blockchain protocol has three key strengths that set it apart from other AMM money market protocols.

First, Osmosis has customizable liquidity pools. Unlike Uniswap, where LPs can provide liquidity only to a two-token pool with an equal ratio, Osmosis allows for providing liquidity to pools with several tokens and unequal ratios. Osmosis argues that agents in a maturing DeFi market like arbitrageurs and LPs need a more flexible solution that allows them to self-identify opportunities and react to them by adjusting parameters. Thus, on Osmosis LPs can adjust factors slippage, transaction fees, and more.

Coordination between stakeholders is of equal importance, which is why liquidity pool shares on Osmosis are not only used to calculate the fractional ownership of a liquidity pool, but also the right to participate in the strategic decision-making of the liquidity pool as well. This incentivizes long-term liquidity provision and prevents possible vampire attacks from other protocols. Thus, liquidity providers with more skin in the game get a bigger say in the strategic direction of the pool, which is in line with the bigger risk they're taking.

Finally, Osmosis introduces the idea of "AMMs as serviced infrastructure." With an increase in the amount and complexity of DeFi products, AMMs have had to:

Compromise efficiency and trade on AMMs with non-optimal bonding curves.

Take on the risk of building a custom AMM to maximize efficiency.

Osmosis wants to remedy that by providing AMM creators with an option to define the bonding curve value function and reuse the rest of the infrastructure using Osmosis' products.

-CoinMarketCap-

Link : https://app.osmosis.zone/