$1.12b in December trading volume
Osmosis Deep Dive
Cosmos is exploding with opportunities.
Osmosis, the liquidity hub, is perfectly positioned to ride this wave of growth.
With potential lucrative airdrops in the mix, it could lead the bull run.
Here's my January 2024 research report on OSMO.
Here's what we'll cover in today's edition:
Overview
Use Case
Adoption
Revenue
Tokenomics
Treasury
Governance
Team & Investors
Competitors
Risks & Audits
Summary
Osmosis is the largest DEX and liquidity hub on the Cosmos Interchain. It serves as the leading cross-chain DeFi platform for protocols built with IBC.
Osmosis offers a range of features, including:
Swap
Stake
Margin trading (Mars)
Perpetuals (Levana)
LPs
The Cosmos ecosystem is thriving, with over 100+ chains built using the IBC protocol. Including:
Cosmos Hub
Axelar
dYdX
Celestia
Kujira
Injective
I'm highly optimistic about the Cosmos ecosystem, and I believe Osmosis can greatly benefit from its growth.
TVL on Osmosis chain: $209m, up 3x from October 2023 lows ($68m).
87% comes from the Osmosis DEX.
Still far below 2022 peak of $1.8b TVL.
Plenty of room for growth and upside potential in the impending bull market and altcoin season.
In the past 30 days, Osmosis Dex generated $1.79 million in fees, placing it at the 43rd position overall and 8th among other Dexes.
Transaction fees are paid by any user to post a transaction on the chain. This transaction fee is distributed to $OSMO stakers on the network.
The $OSMO token serves as a governance token, granting staked token holders the power to shape the protocol's future. It offers several key functionalities:
Voting/ Governance
Transaction fees
Securing the network
OSMO 2.0 tokenomics upgrade was implemented in 2023.
The main problem: $OSMO inflation rate was higher than staking rewards. You would be losing money unless you went for higher risk LPs.
@Flowslikeosmo explains the improvements that were passed, resulting in:
Reduced inflation
Increased net yield
Increased LP net yield
https://twitter.com/Flowslikeosmo/status/1641968640420614148
Current supply stats:
Circulating supply: 633m
Max supply: 1b
Market cap: $963m
FDV: $1.52b
Market cap/FDV: 0.63
According to the unlock schedule, there are two main entities that could be considered the treasury.
Community Pool: 74.6m $OSMO = $117m
Strategic Reserve: 50m $OSMO = $78.5m
The ProtoRev module account is currently worth $1.5m- (910k $OSMO, 7.5k $ATOM, 15k $axlUSDC).
A decentralized governance forum has been established, allowing the community to vote on proposals.
Osmosis boasts a robust governance forum, with the following:
Total proposals submitted: 642
Proposals passed: 569
Proposals rejected: 65
Proposals in progress: 5
Osmosis was founded by Sunny Agarwal and Josh Lee in 2021.
The Osmosis Foundation raised a total of $21m through its Initial Coin Offering on October 27, 2021.
Investors included Paradigm, Robot Ventures, Nascent, Ethereal Ventures & Figment Capital.
The Osmosis DEX is the 8th largest in terms of TVL according to DefiLlama.
However, it is by far the biggest and most established DEX on the Cosmos ecosystem.
Osmosis has a significant competitive advantage in this respect and is set to prosper as the Cosmos ecosystem expands.
In June 2022, Osmosis experienced a $5m exploit of the protocol.
Validators halted the chain upon discovering the issue, and the team swiftly rectified it, covering all losses.
No exploits since then.
CertiK had audited the project but the vulnerability was not discovered.
I am very bullish on the Cosmos ecosystem and the network expansion effect could have a positive impact on Osmosis.
Upcoming catalysts:
Airdrops
Supercharged Liquidity
Bitcoin trading in 2024
$TIA liquidity hub
Perps (Levana)
Overall weighted score = 8.05
Note: I am NOT an ambassador or advisor of Osmosis. This is NFA.