The launch of Osmosis is almost upon us, and the excitement in the Cosmos eco-system is building. With the first implementation of IBC (Inter-Blockchain communication protocol) at scale, and the first major Dex for Cosmos eco-system tokens, it will be an important moment for the Cosmos community. But what is actually being launched, and what benefits will there be for people to get involved? Read on...
A new chain.
Osmosis is launching a brand new chain (called Osmosis obviously) with it's genesis blocks expected around 4-5 PM UTC 19 June. This chain is based on the Cosmos SDK (Software development kit) and is being launched with IBC enabled, so it can host a Dex linked to all the other IBC enabled chains.
There are a number of validators lined up and ready to start running the chain, with an initial requirement that validators have previous Cosmos chain experience, be receiving some airdrop, and experience with a chain genesis event. The experience that will be brought to the table by this validator set will assist with the smooth launch of this new chain.
Osmosis will be a fast and low fee chain. DPos is a great solution for enabling a low cost network, with fast blocks and much higher efficiency when compared to POW chains like Bitcoin. From my personal experience with other Cosmos based chains like Akash, Osmosis will be a fast and cheap chain to interact with. The IBC connection will be interesting to watch at scale, with this being the first real "stress-test" at scale with live funds. Some channels and token transfers have occurred, smoothly and without issues, but a full scale Dex with a high transaction throughput of multiple coins from multiple sovereign chains will be the ultimate test of the scalability of the IBC protocol.
A new Coin.
OSMO token will launch along with the chain. There is an airdrop that will occur, with wallets on Keplr being launched with airdrop tokens in them from the start. A portion of the airdrop people qualify for will be available instantly, with the remaining funds released depending on the performance of certain tasks - stake, make a swap, add to an LP - to unlock the full airdrop amount.
The price of OSMO at launch is completely unknown. The Osmosis team will not be setting up the first pools, there was no pre-sale or any price discovery event in the lead up to this launch. It will be up to community members to establish the initial pools, and "price" OSMO in the process, and then up to early market forces to establish price discovery.
It really is hard to say what the initial price of OSMO could be. How in demand will it be for adding to LP's, as it isn't a required coin for all pairs. It is likely that an OSMO/ATOM pool will be one of the biggest early on, but who knows really. Also, how much OSMO will be staked to Validators, with stakers set to receive a share of inflation, and a share of fees which I'll look at more in detail below.
Demand for OSMO is an unknown, and the price will likely be highly volatile in the early days. Tread carefully if you are planning to LP in size, as sudden swings in price as the market finds its levels could lead to big Impermanent Loss levels early on. I am planning on adding to LP's, but not in the opening hours. I'll wait to see a little stability before committing anything more than a small amount.
For more information on the tokenomics of OSMO - check this medium post for all the details.
A new Dex.
The purpose of Osmosis is the Dex that is being launched, for cross-chain swaps and liquidity pools, as an implementation of the IBC protocol. To build the framework of the Dex, the Osmosis team have based its design on the Balancer protocol. It will be a dynamic, flexible set-up, with multi-coin capabilities (more than two tokens in a pool) and a high degree of customization options.
This post from the team goes into detail on how liquidity mining will work on Osmosis. It will have a lot of flexibility built in to it, with options for "liquidity gauges" allocating different reward levels for locking your liquidity for different time periods, multiple coin rewards, and governance voted incentives for pools as voted.
Governance.
The OSMOS tokens that get staked will drive the direction of Osmosis in a very tangible sense. Initially, governance votes will be required to allocate liquidity mining incentives, with the team launching the chain and enabling a quick 3 day vote window for people to start allocating OSMO inflation to various pools. The teams goal is a highly active, engaged community that actively participates in governance and steers the direction of Osmosis.
Investors planning to add significant liquidity to pools on Osmosis will have a large incentive to also stake OSMO, and campaign for their preferred pools to be actively incentivized. This will be a fascinating dynamic to watch play out, and projects whos tokens will be listed on Osmosis are already actively encouraging their community members to stake OSMO and vote for pools containing their tokens to be incentivized with OSMO rewards. They will also have the ability to add their own incentives, in their own token, via the gauges system mentioned above.
For all the details on how Liquidity Mining will work on Osmosis - take a look at this medium post which goes in to it in great detail. It is a complicated system, and this article is definitely one to read if you are planning on getting involved.
A new cloud provider for a new front-end.
Osmosis's front end, and some other infrastructure will be launched on the Akash cloud. This will be a significant milestone for both Osmosis and Akash, and while exciting for members of both communities (who overlap quite a bit from what I can see), it also presents different risks. How will the Akash network handle the scale and throughput of a major new Dex being launched on its platform? Time will tell, but as an Akash holder, I have every confidence that it is ready to run the Osmosis front-end and services without issue. This launch will be a great advertisement for Akash, and a smooth and successful launch will go far in driving further adoption of the Akash network.
A new community is born.
The community around Osmosis has been forming up in it's telegram channel and on Discord. Much of the community will come from ATOM holders, who will receive the initial airdrop based on a snapshot taken back in February. There are also many people getting involved from the projects that will have their tokens listed on Osmosis.
A strong community helps a crypto project take form and gain traction, providing free marketing (content on twitter, reddit and posts like this one as examples) and no doubt a steady stream of high quality meme's to build awareness of the project. From what I have seen so far, the Osmosis community will be a highly engaged, passionate one and a great "layer zero" for this new project. I'd just love to see them sign up for a HIVE account through Leofinance as a great place to share long form content, and get involved in the comments section on posts like this.
Launch party.
A launch party will occur, with the details available in this tweet. The Livestream will be available on YouTube at this link from 4PM UTC today (19th June). Just 15 hours from the time this post gets published.
Are you ready for Osmosis? Are you participating from the start? I'd love to here from you in the comments section on this post.
For more Osmosis content, check the following links out:
This post has been shared to Twitter If you enjoyed it, please feel free to share.
Thanks for reading, make sure you follow on Leofinance and twitter so you don't miss future Osmosis content.
JK.