What is Osmosis?
Osmosis is a layer 1 protocol built with Cosmos SDK, providing developers with customizable infrastructure for AMM deployment.
Osmosis DEX was the first product built on top of the protocol and has grown to be the most popular DEX in the Cosmos ecosystem.
Osmosis is an automated market maker (AMM) protocol that allows developers to build customized AMMs with sovereign liquidity pools. Built using the Cosmos SDK, Osmosis utilizes Inter-Blockchain Communication (IBC) to enable cross-chain transactions.
It is an L1 blockchain with delegated Proof-of-Stake consensus mechanism, designed to be a sandbox for automated market makers. The protocol enables developers to design and deploy customized AMMs by using its various modules that are already running on Osmosis. Additionally, by leveraging Osmosis' on-chain governance system it allows stakeholders to control and manage their own pools through its native token OSMO, which grants holders the right to vote on proposed network changes and earn rewards for helping secure the network.
The project was officially announced in October 2020 and launched in June 2021 with a vision to provide a sandbox for AMM development instead of having a one-size-fits-all strategy for AMMs and their liquidity pools. The first application to be launched on Osmosis protocol was also called Osmosis – an exchange that featured ATOM and OSMO as the initial base trading pairs and was the first AMM on Cosmos offering the ability to trade and earn rewards by providing liquidity. It kick-started the utilization of IBC transfers which had been available for several months before Osmosis launched but did not see much utilization up to that point. Since then, there have been many projects such as SlingShot and restake.app that have become a part of Osmosis ecosystem with many more going live in the future.
Many Osmosis holders prefer to not sell their OSMO and find OSMO staking to be a great way to passively earn more and grow their holding. Learn more about staking and how you can earn more through Omni.