Designed for Cross-chain Assets
Osmosis is cross-chain native and currently connects to the entire ecosystem of Cosmos chains, which contains over $10B of native assets. Additioanlly, Osmosis can integrate with non-IBC enabled chains, including Ethereum-based ERC20s, and a variety of chains including Bitcoin-like chains and alternative smart contract platforms by leveraging custom pegs.
Liquidity Provider Incentives
On top of native OSMO token incentives Osmosis allows third parties to easily add incentive mechanisms to particular liquidity pools. For example, if the Cosmos Hub Community Pool wanted to incentivize liquidity for an ATOM/stablecoin pair, they could use Osmosis’s built-in incentives module to distribute ATOM rewards to LPs who stake their LP tokens.
Often, incentive providers want to reward long-term liquidity not just short-term mercenary farmers. The incentives module allows rewards to be weighted towards LPs who timelock stake their LP tokens with longer unbonding periods which decreases liquidity volatility of the pools and provides a dependable and consistent experience for traders.
The OSMO token
The OSMO token is a governance token that provides a decentralized coordination method for token holders to decide the strategic direction and all future changes to the Osmosis protocol. OSMO is primarily used in the following functions:
- Voting on protocol upgrades
- Allocating liquidity mining rewards for liquidity pools
- Setting the base network swap fee
Most AMM protocols set global parameters for all liquidity pools within the AMM. While this signiﬁcantly simpliﬁes the design of the AMM, it reduces the decision-making that LPs are able to make for the pools they create. Given that AMMs are such novel protocols, projects competing in the design space are constantly iterating on making better models for them. To stay relevant, pools must keep up with cutting-edge innovations by upgrading curve design, fee models, and more. Safety procedures such as rage-quit functionality inspired by MolochDao are included in order to provide LP protection against malicious governance attacks.
Staking on Osmosis is only possible with the Keplr wallet browser plugin. If your don’t already have Keplr you will need to install it prior to staking.
If you are unfamiliar with the installation and use of Keplr, please use our guide on how to Install and Use Keplr.