Osmosis Review
The Decentralized Finance (DeFi) industry seeks a massive change in cryptocurrency trading as it challenges the functions of existing centralized exchanges. Since 2020, the decentralized exchange has continued to grow in popularity and usage. Centralized exchanges have remained a majority with high trading volume and this is because it has provided high convenience in trading crypto and fiat currency. However, these centralized exchanges have limitations in areas like security, anonymity, and control. In this case, decentralized exchanges are providing all-encompassing solutions. This Osmosis Exchange Review has all you need to know about decentralized exchange.
Decentralized exchanges offer new integrated features that distinguish them from centralized exchanges. They offer Automated Market Maker which changed the entire ecosystem entirely. One of its amazing features is user anonymity. Privacy is one of the limitations of centralized exchanges and while Bitcoin and Ethereum claim to be pseudonymous in nature there is no complete anonymity. Transactions done on the blockchain are accessible to everyone. Hence, users are vulnerable to risks since their public addresses are shared. The decentralized exchange aims at ensuring transparency while ensuring that users trade without having to worry about their privacy.
Automated Market Maker is a major part of the Decentralized Exchange (DEX). The AMM has changed the style of trading by introducing the Peer-to-contract method. AMM ensures increased decentralization as traders can trade without prior permission and prices are determined by algorithms and not order books. The DeFi industry is still a growing innovation and progressive changes are made to ensure that users trade without any difficulties. Also, Automated Market Maker has made a space for itself in the crypto market through the introduction of new technologies and altering the existing regulatory frameworks.
The decentralized exchanges have issues with the fluctuations of liquidity rates. AMM is aimed at ensuring that liquidity is created and remains constant by encouraging trade on decentralized exchanges. Automated Market Maker solves the problem of liquidity by creating liquidity pools and making it easy for traders to create liquidity and rewarding them with incentives.
| Exchange Platform | Osmosis Exchange |
| Website | https://osmosis.zone/ |
| Account Needed | None |
| Payment Method | Cryptocurrency |
| Language | English |
| Trading Volume | Not available |
| Trading Platform | Web-based |
| Customer Support | https://twitter.com/osmosiszone |
What’s Osmosis Exchange?
Osmosis is a new innovation of Decentralized Exchange built on an entirely different ecosystem. Decentralized Finance has continued to witness progressive innovations different from the existing ones. Osmosis is a decentralized exchange created by making use of the Cosmos SDK built on the Cosmos ecosystem a framework used for creating blockchains. Osmosis also adopts the use of the Automated Market Maker features enhancing liquidity on the cosmos system.
The Osmosis exchange was developed on public and open-source software that allows peer-to-peer transaction and allows trading of tokens accepted by the IBC. Users are allowed to access pools by making use of webs or mobile interfaces. So operations are not limited to the website alone but users must understand that they are responsible for the interfaces and fees. Osmosis exchange is highly volatile and users may experience fluctuation of token prices in their trading pair.
Osmosis is an autonomous chain secured by the cosmos network and it was fashioned in a way that it remains one of the powerful decentralized Automated Market Maker protocols to be built on the Cosmos hub. It was launched as a great decentralized token supply to ATOM holders secured by validators. The Osmosis exchange allows flexible operations of the Automated Market Maker on the Cosmos ecosystem and ensures that it is interoperable.
The cosmos SDK is known for its amazing features to meet up users’ requirements. The Cosmos network has not only been the best by ensuring scalability; the most suitable network to grow its user base. It allows easy communication of tokens and ensures maximum security through the use of control firewalls to protect the blockchain against malicious wares. Users have access to enjoy proof-of-stake, autonomy, and open-source network.
One of the distinctive features of the Osmosis exchange is its flexibility. It was developed to provide solutions to the major problems other Automated Market Marker exchanges are dealing with, for instance, when users need access to stablecoin assets on Uniswap can only make use of Curve Finance. Also, users’ are required to make use of a balancer to avoid impermanent loss. All these limitations have led to the development of the Osmosis exchange to ensure that traders are able to get things done without any complications. Osmosis is aimed at achieving this by integrating the functions of the Uniswap, balancer, and the curve finance into their pool. So, users do not need to worry about liquidity and the reliability of the network; the aim is to ensure that it is easy to scale.
Osmosis exchange has its own token known as the OSMO token which is not sold out except on the Osmosis exchange. Instead, tokens will only be circulated on the platform through liquidity mining, Airdrop, staking, and developers can also have access to it through unlocking it. Osmosis allows users to earn and own the OSMO token. Users are allowed access to the OSMO token after they have proved that they are active on the platform. Users must have done transactions, provide liquidity, must stake the OSMO token, and vote in the governance of Osmosis. Osmosis exchange allows users to earn and build their portfolios after they have met all these criteria. Osmosis exchange also ensures that 20% of the OSMO tokens that are to distributed must be airdropped into all users’ account.
The perks of Osmosis exchange is that users can swap tokens built on the cosmos blockchain, the likes of ION, DVPN, IRIS, XPRT, Regan, and a lot more. Osmosis exchange operates in a more different way; users are expected to pair a token to the OSMO token alone to create liquidity. Traders are charged for swapping tokens on the Osmosis exchange but they are only allowed to pay with the Osmosis native token (OSMO token). There is a lot to enjoy on the Osmosis exchange ranging the speed, scalability, security, neutrality, and staking.
Osmosis Trading Services
One way you can understand the trading services of exchange is when you study its trading view. Trade views make you aware of the necessary things you need to know about the exchange from the price to the order history. This is to encourage new traders to know what steps to take and stay updated.
Osmosis like most Automated Market Maker exchanges does not operate with the order book. Osmosis has trading pairs which traders can choose from but it only allows one other token to be paired with the Osmosis native token. While it does not have an order book like most centralized exchanges, Osmosis trading is made up of two factors; the maker and the taker. While the maker ensures that there is liquidity, the taker trade against the liquidity pool.
The trading services of Osmosis exchange includes swapping, staking, and liquidity withdrawal fee. The trading services help you stay updated on the trading volume, market cap rank, and price of exchange. You also need to know the payment method of exchange and the transactions fees charged. All this is to shape your trading decisions.
Osmosis ensures that traders enjoy trading with their network. For users that do not have the Osmosis native token, they can swap using low fees. It is important that as a new trader you ensure that you trade carefully because you might experience high volatility. Osmosis is a relatively new project which is just growing its user base; this as a result has led to high volatility.
Being a decentralized exchange, you are going to enjoy high anonymity, autonomy over your assets, and maximum security. As always, liquidity providers enjoy a big deal in the Automated Market Maker protocol.
Osmosis Trading Fees
Osmosis generates its revenues from its trading fees and liquidity mining. The trading fees include the transaction fees (withdrawal and deposit), swap fees, and exit fees. Users are charged when a transaction is done on the chain. The determinant for the number of fees charged is the storage costs, low gas fees, and computation. The method of payment is decided by the high-quality validators.
Users are charged exit fees when they want to withdraw their liquidity from the liquidity pool. However, the price is only determined by the liquidity provider. For every liquidity withdrawal, users are charged 1% of all their tokens on the liquidity pool. Users that want to withdraw from the liquidity pool are only paid in tokens. The shares are then burned and distributed to other liquidity providers as a reward. It is important to ensure that liquidity is maintained.
The fees charged for every swap are fixed by the liquidity providers. The payment is measured by the total amount of a particular trade done by a trader. So, a trader will charge a percentage from the total amount of transactions done for their swap fees. To ensure that liquidity increases, all these fees gotten are added to the liquidity pool. To ensure that long-term liquidity is sustained, Osmosis charges exit fees and bonded liquidity gauges so that when users pull out their liquidity contribution it doesn’t affect the whole pool. Bonded liquidity gauges ensure that liquidity incentives are distributed to bonded tokens. So at least, 45% of Osmosis native tokens are issued daily as incentives for liquidity.
45% of the OSMO token are distributed based on the numbers of gauges. A gauge that has more allocation points gets a high share of the incentives issued daily. For instance;
Gauge #2 – 10 allocation points
Gauge #5 – 5 allocation points
Gauge #7 – 5 allocation points
While there are total of 20 allocation points, gauge #2 gets to receive the highest which will be 50% of the 45% issued and gauge #5 and gauge #7 will receive 25% each.
Withdrawal and Deposit Fees
The prices on the Osmosis exchange are not determined by the market average but mostly by the liquidity providers. Osmosis exchange does not accept currencies or wire transfers as a deposit instead users are only meant to pay with tokens.
For deposits, you are expected to connect to the Keplr wallet which is the only accepted crypto wallet for Osmosis exchange. So, you need to ensure that your wallet is funded already only then can you transfer assets to your Osmosis account. On the Osmosis website, you will find an “Asset” icon at the left. There you will find different tokens available on Osmosis. At the right, you will see a “button” icon, click on the button to get started.
Osmosis charges its users a transaction fee for every transaction done on the chain from swapping to staking to liquidity withdrawal. However, the exact withdrawal fee can only be determined by the individual wallet you are connecting to the Osmosis exchange. You can only begin a transaction after you have successfully connected your wallet.
Osmosis Wallet
Although the aim of decentralized exchanges is to ensure that users have increased autonomy over their funds and control every trading activity, they do not have a crypto wallet. Osmosis exchange do not have direct wallet which users can use to store their wealth but it allows users to connect an external wallet. The wallet is very important because it helps you store your assets and allows you to trade.
You cannot start trading on the Osmosis exchange except your wallet has been connected. The only accepted wallet is the Keplr wallet because it allows you to transfer all assets built on the Cosmos ecosystem through IBC.
To access the Keplr wallet, you need to first install the browser extension on your Google Chrome. Then you can proceed to create a wallet and fund it. After you have successfully created and funded your Keplr wallet, go to the Osmosis website then connect your funded wallet. Your wallet allows you to make deposits on the Osmosis exchange, Swap assets by pairing them to the OSMO token and add liquidity to the liquidity pool. You also have access to features like the airdrop of 20% and you also get to bond your liquidity pool tokens and get rewards for your contribution.
Osmosis Portfolios
Osmosis exchange has amazing features to ensure that users are able to earn and hold its native token so they can build their portfolio. You are allowed access to governance when you hold the token. Apart from the reward you get when you are connected to the Osmosis exchange, you are allowed bugger rewards and opportunities to build your portfolio when you have proved you are active on the platform.
You don’t only have to create liquidity; you are also rewarded when you add to the liquidity pool. From the staking, swap, Bond liquidity token gauge, airdrop, others are to ensure that you are able to build your portfolio.
Osmosis Limits and Liquidity
Liquidity is the main focus of the Osmosis exchange. The aim is to ensure that there is liquidity on the Cosmos network. In Osmosis, liquidity is created through swaps and users can add to liquidity by depositing tokens in the available pools.
Osmosis exchange ensures that traders are rewarded with the OSMO token after they have contributed to the pool. You can also choose to be a liquidity provider by bonding your tokens for at least 14 days. Liquidity is also added to the liquidity pools after pool tokens have been minted and some percentage of other tokens like ATOM, IRIS, KAVA are also added to the liquidity pool.
To add liquidity to the pool, you need to choose a pool from the pools button on the website. You are allowed to choose whatever pool you want to be a part of. After you have chosen a pool then you can add liquidity by clicking on the “Add Liquidity” icon at the top of the website. You will be expected to add a particular value of token but you have the power to determine the amount you want to add to the pool. The reward of a liquidity provider is that you get to earn OSMO and other rewards.
Cryptocurrencies Available on Osmosis
Being an exchange, it is important that there are trading pairs which traders can choose from. Osmosis allows seven currencies which include US Dollars, Euros, and a lot more with a total of 11 trading pairs. There are also about 27 cryptocurrencies available on the exchange platform.
Osmosis does not restrict any trader from trading on its platform. US investors are also allowed because the website is to bind by the Security Exchange Commission (SEC).
Osmosis User Interface
There is no doubt that Osmosis has amazing features to ensure that users trade easily. It is flexible, easy to scale, credibly neutral, and highly autonomous. The interface is user-friendly and very understandable for new users. Osmosis is aimed at ensuring that users enjoy fast transactions but in situations where they are break up in the networks, it is advised that you stay patient.
Trade is made easier and more profitable with the Osmosis exchange.
How Secure is Osmosis Exchange?
Osmosis is built on a much-secured network and there are cross firewalls to ensure that the system is protected from malicious operations. Osmosis ensures security through shared security, that is, security is enhanced by validators. The exchange is reliable and transactions are executed on an open-source network to ensure your information is protected.
Customer Support
There is customer support to ensure that your grievances are attended to. You can also follow up on social media to help you stay updated.
You can reach Osmosis exchange on Twitter through: https://twitter.com/osmosiszone
Conclusion
Osmosis is a decentralized exchange built on a completely different ecosystem with the aim of providing solutions to the limitations of other decentralized exchanges. It has an amazing interface and aims at ensuring that users have an amazing trading experience by making rewards available. It is a high incentive, flexible, fast, scalable, neutral, and autonomous.
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