Overview

• Osmosis is currently the largest DEX in the Cosmos ecosystem.
• Osmosis allows for customizable - Automated Market Makers (AMMs) with sovereign liquidity pools.
• It also offers self-governing liquidity pools, and uses the $OSMO governance token for decision-making.
• Osmosis also introduced Superfluid Staking, which allows users to stake their bonded LP tokens with validators to earn additional rewards.
• Osmosis has implemented OSMO 2.0, reducing its inflation rate by 50% to ensure long-term sustainability and a smoother token distribution.
• Osmosis is introducing taker fees to its decentralized exchange (DEX) in order to capture volume relative to total value locked (TVL)
• Osmosis plans to introduce further flexibility, including VIP programs, fee discounts based on staked OSMO, referral systems, and fee rebates.
• Not seeing significant TVL growth, Osmosis has plateaued and declined throughout the year, likely due to the decline in OSMO token price and net outflow
• The community governance has authorized the deployment of supercharged liquidity pools, allowing liquidity providers to concentrate their assets within specific ranges.
• Osmosis has consistently topped IBC volumes and is the most-connected among all other chains

How it works

• Osmosis is a DEX built on a blockchain built on top of the Cosmos network
• Osmosis Mesh security
  • Osmosis is introducing a new security model called Mesh Security, which allows delegators to restake their tokens towards validators on other Cosmos chains.
  • Osmosis will also implement a fraud-proof system to detect and respond to fraud between mesh secured chains.
  • This is different from Cosmos Interchain Security, where Cosmos Hub validators are required to operate as the validator set of Consumer Chains that do not wish to bootstrap their own validator set.
  • In this model, token delegators (not validators) with staked tokens on one Cosmos chain can restake them on another partner chain. If the validator they have chosen to restake with on the partner chain misbehaves, the staked tokens get slashed on both chains. In return for taking this risk, token delegators receive staking rewards.
• Osmosis with Celestia (from Messari)
  • Tweet thread
  • Osmosis is integrating with Celestia's DA layer to bridge liquidity between rollups on Celestia and existing IBC-connected chains.
  • The integration with Celestia's DA layer will allow Osmosis to provide liquidity to rollups on Celestia This will make it easier for users to move their assets between rollups and other chains, and will help to improve the overall liquidity of the Cosmos ecosystem.
  • Osmosis will abstract DA layer fees for rollups that opt-in to the bridging system, allowing them to pay in whichever token they desire, so long as it is available on the DEX.
  • Osmosis will implement a cross-rollup bridging system whereby Osmosis validators will run Celestia light nodes to verify the state transitions of each connected chain. (in partnership with Hyperlane). As of now, IBC-connected chains trust the consensus of the other participating chains as light clients accept and officiate transactions provided to them by each chain.
  • This effectively makes the project both a DEX and a cross-rollup communication protocol.

Notable partnerships and announcements (from Kaito etc)