Hope everyone is having a fantastic week as some green tails start to show up again in the markets. Taking the lead by a lot this week, we have Axie Infinity AXS token gaining a massive 200%. As reports show, it’s revenue decimation against all other NFT protocols on the market with on-chain transactions 40% greater than second in line PancakeSwap. With Axie Infinity generating more revenue than Aave, Compound, Uniswap, or any other DeFi protocol over the past 30 days. Looking ahead this week we’ll be reviewing a brand-new Cosmos AMM previously outlined in our weekly Airdrop section called Osmosis.
Introduction
Osmosis is a decentralized peer-to-peer blockchain that anyone can use to create liquidity and trade Inter Blockchain Communication (IBC) enabled tokens. This advanced AMM protocol built using the Cosmos SDK will allow developers to design, build, and deploy their own customized AMMs. Heterogeneity and sovereignty are two core tenets of the Cosmos ecosystem, and Osmosis takes these two values and extends them into core characteristics of this AMM protocol. Rather than aim for a one-size-fits-all homogeneous approach for AMMs and their liquidity pools, Osmosis is designed so that the most efficient solution is reachable through the process of experimentation and rapid iteration by leveraging the wisdom of the crowd. It achieves this by offering deep customizability to AMM designers, and a governance mechanism by which each AMM pool’s liquidity providers can govern and direct their own pools. It will have IBC built-in from day one, allowing it to connect to the entire ecosystem of Cosmos chains and over $10 Billion of native assets. After integrating native Cosmos assets, Osmosis will integrate with non-IBC enabled chains, including Ethereum-based ERC20s (using the Althea gravity bridge), a variety of chains including Bitcoin-like chains, and alternative smart contracting platforms by leveraging custom pegs.
In Osmosis, nothing about the underlying structure of AMMs is hard-coded. Not only are key parameters such as swap fees or token weights parameterizable for each liquidity pool, but entire components such as the curve algorithm and TWAP calculation are also customizable. Pool creators don’t have to decide between constant product and constant sum, but can instead input their own novel mathematical expressions. New curves can be generated on the fly. Such new curves can be much more powerful than existing AMM models, which only accept token balance quantities, by leveraging data points such as time dependencies, volatility indexes, and off-chain oracles as inputs. Osmosis inputs enable the creation of newer DeFi asset types like options, dynamic fee markets that adapt to moments of high volatility and work to mitigate undesirable outcomes like an impermanent loss for liquidity providers (LP). Rather than going through the process of launching a new AMM protocol for each AMM model upgrade, curve developers can easily deploy new curves on Osmosis, taking advantage of the existing wallet integrations, IBC connections, order flow, and liquidity within the Osmosis ecosystem.
Beyond software and feature upgrades, Osmosis requires regular participation in more fine-grained on-chain governance of the protocol such as determining the distribution of liquidity mining incentives on a weekly basis, changing global AMM…
Hi! My name is Lark Davis!
I’m a cryptocurrency investor with years of experience and I’ve been making consistent profits in the crypto space.
I’m passionate about helping others do the same, so I run multiple educational channels on crypto investing.
