Osmosis ($OSMO)

Osmosis is an advanced AMM (automated market maker) that utilizes Cosmos SDK as well as IBC (inter-blockchain communication) to allow cross-chain transactions within the Cosmos ecosystem. Osmosis aims to align the interests of multiple stakeholders such as LPs, DAO members, and delegators.

Osmosis allows developers to build, design and deploy their own customized LPs with unique and customizable parameters like bonding curves and multi-weighted pools. This benefits users because instead of a one-size-fits-all approach Osmosis allows the most efficient solutions to be found through experimentation and iteration through deep customizability. Osmosis also allows for customizable incentive structures allowing strategically targeted incentives.

Governance is critical to Osmosis as almost every element of the protocol is meant to be upgraded and adapted as time goes on. Stakeholders will vote on and help plan to implement new features for the protocol, like front-running protection, validator-backed oracles, and more.

Governance also allows for rapid fine-tuning of existing parameters such as liquidity mining incentives. Even core tokenomics can be changed and encouraged as new innovations come to the platform.

CUSTOMIZABLE LP’S

Liquidity Pools (LP’s)

The majority of major AMMs limit the changeable parameters of liquidity pools and set global parameters for all liquidity pools within the AMM. Osmosis realizes that as the DeFi market size grows and the participants mature there is a need to allow for customization of LPs based on market conditions. Osmosis allows the market participants to self-identify opportunities and react by adjusting various parameters.

Each separate LP pool has the ability to allow for complete customization by participants and allow for competition through experiments and iteration to flourish and evolve the protocol as a whole. Each new strategy and experiment leads to more innovation for both the users and the developers.

Self-governing liquidity pools allow LP providers to participate in strategic decision-making by calculating their fractional ownership of an LP pool through their shares. In order to incentivize long-term liquidity commitments shares must be locked up for extended periods of time. Longer time period locks = more voting power. This incentivizes long-term stakers and not short-term mercenary farmers. The more skin in the game the more influence users have over the direction and changes of the LP pools in order to provide the best returns and the most meaningful changes.

SUPERFLUID STAKING

Superfluid staking is one of the biggest advances we have seen in DeFi in a long time and it is native to Osmosis. Superfluid staking opens up the door to many many more DeFi use cases in the future.

Superfluid staking allows the $OSMO portion in a liquidity pool to be staked in addition to the LP (earning additional rewards). Typically when a user stakes their tokens in an LP they cannot use them elsewhere.

With superfluid staking a user can use their tokens for staking AND liquidity providing at the same time. This additional helps secure the network while earning you more rewards.

Superfluid Staking will allow you to stake your 14-day bonded LP shares with a validator and earn a portion of the Osmosis staking APR in addition to the APR you already get from bonding your LP shares in a liquidity pool.

Starting out, the only available Superfluid LP will be ATOM/OSMO pair. LP tokens must be bonded for 14-days to be able to participate in Superfluid staking. Only one validator per pool can be chosen to delegate to.

Additional information here

https://docs.google.com/document/d/1VUrJeqnzGrnw0MKaFbxS_AionQVqTQ6weWA1wBxGdU4/edit#heading=h.lsffva3xn4rf

TOKENOMICS

The governance and native token of Osmosis is the $OSMO token. Governance is critical to Osmosis and the $OSMO token offers holders a decentralized method of coordination to influence the strategic direction and future changes of the protocol. Some of these governance functions are

Voting on protocol upgrades

Allocating liquidity mining rewards for liquidity pools

Setting the base network swap fee

Adding new features

Software upgrades

The $OSMO token was fair launched through a “Quadratic Fairdrop” to $ATOM holders the native token of Cosmos. The fairdrop was designed to give a fair opportunity to participants and those who helped secure the Cosmos Hub through staking $ATOM.

Newly released tokens will be distributed to a combination of staking rewards, liquidity mining incentives, developer vesting, and community pool according to the following distribution:

Staking Rewards: 25%

Developer Vesting: 25%

Liquidity Mining Incentives: 45%

Community Pool: 5%

OSMO is highly inflationary at the beginning. Within a few years, the genesis supply will only comprise a small percentage of the total supply.

More info on rewards, vesting, the fairdrop, and tokenomics can be found here - https://medium.com/osmosis/osmo-token-distribution-ae27ea2bb4db