Osmosis: A Primer
Osmosis is an Automated Market Maker (“AMM”) hub built on the Cosmos SDK and its utility is mainly based on semi-sovereign liquidity pools. Projects found in the Osmosis Zone receive the benefit of high liquidity and provide a diverse range of reward-generating strategies for a wide range of tokens through a single service. Osmosis provides this through native IBC functionality, and through this users have access to any Cosmos SDK network that has also adopted IBC.
This range of utility allows Osmosis to provide liquidity services, exchange functionality, and a host of other services for holders of any of the 53 tokens currently supported on the main interface (though many more are available on the Osmosis Frontier). On-chain governance also ensures that there is minimal disconnect between users and the direction of the network. In effect, Osmosis users have full control of their destinies in the Cosmos ecosystem.
What can you do on Osmosis?
Osmosis allows users to leverage liquidity provisioning functionality made available on the Osmosis dashboard. Providing liquidity can also result in boosted rewards through Superfluid Staking, where assets are locked into a pool for a minimum period of 14 days and the provided OSMO tokens are staked for additional rewards.
Users can alternatively stake their tokens directly for protocol rewards to avoid the impermanent losses inherent to liquidity provisioning. Users can also use their tokens to vote on governance proposals.
Why is Osmosis important to the Cosmos?
Osmosis is one of the most interconnected protocols in the Cosmos ecosystem. It has accomplished this by being one of the first adopters of IBC functionality, arguably becoming the most successful IBC-native DEX through an intuitive offering for DeFi users. It has cemented this position by adopting a canonical bridge for chains such as wBTC, wETH, DOT, LINK, MKR, and USDC through Axelar, which can then be used in the DeFi Staking pools housed within the platform. It currently boasts over $200 million in liquidity and roughly $11 million in continuous daily trading volume.
Osmosis can be considered a common crossroads for nearly all Cosmos chains and an essential utility source for their users. Osmosis maintains a very active community of developers and supports new projects through affiliated groups such as the Osmosis Grants Program, which provides grants to proposed projects which are paid in native OSMO tokens after they pass review by the OGP board. It also boasts one of the most active governance systems in the Cosmos ecosystem.
What’s new on Osmosis?
Osmosis has a slew of new features available to direct users of the platform:
- Superfluid Staking
- Bridged ETH, DOT, and other assets via Axelar
- ION DAO: One of the first projects built on top of Osmosis
- Interchain accounts: Seamless transfers and swaps between networks
- Restake: An OGP-approved dApp that helps users autocompound rewards daily
- Apollo DAO: A dApp for creating a multisig safe for assets
- CosmWasm: Smart contract builder functionality that allows builders to create dApps like the ones above and much more in Osmosis
Why should you stake your OSMO? Why with Ledger?
Protocol staking rewards users for securing the underlying network with their tokens, and offers one of the most reliable ways to earn rewards on Osmosis (provided you use a reliable validator, like Figment). Notably on Osmosis, staking may also result in airdropped tokens from other networks, which have become more common as IBC networks work together to incentivize network participation.
Although many of the functions described above require use of a “hot wallet” like Keplr to participate, protocol staking through Ledger provides a higher level of security for your assets. This allows you to help secure the network through staking, while in turn securing your tokens and the associated rewards with Ledger.
Why stake through the Ledger Live app?
Staking through the Ledger Live app gives the user full control over their assets through self custody.
While there are other staking options available, like utilizing third-party custodial solutions, or staking through exchanges, staking through these methods typically means that you don’t truly own and control your digital assets. Sometimes these staking solutions also have drawbacks such as complexity, security flaws, and lockup periods.
In contrast, staking through Ledger has clear benefits:
- Professional validator services. Figment has the most secure and reliable Web 3 infrastructure built from the ground up to maximize security and minimize risk. Learn more about our infrastructure here.
- Convenience and Security. By choosing Ledger by Figment validators, your coins are staked in the world’s most secure environment. You can gain rewards while securely holding your crypto in your Ledger hardware wallet.
- Self-custody. Only you have the possession of your cryptocurrencies as your are the owner of your private keys. Remember: not your keys, not your coins.
- Multiple currencies supported. Ledger hardware wallets allow you to securely stake up to 7 coins simultaneously.
