The Osmosis revamp: New tokenomics and supercharged liquidity

Osmosis’ v16 upgrade will bring more incentives to stakers

article-image

Praveen Nanu/Shutterstock modified by Blockworks

share

Automated market maker and decentralized cryptocurrency exchange Osmosis is preparing for its v16 Magnesium upgrade, set to bring about supercharged liquidity pools

Supercharged liquidity is Osmosis’ take on concentrated liquidity, designed to equate to users specifying pool positions — and granting flexibility over the use of assets in the process. 

“It allows for users to set positions in spot pricing intervals rather than percentages, this means you can set positions to $1.21.1 to $1.21.2,” contributor to Osmosis who goes by Emperor Osmo told Blockworks.

Liquidity providers will also have the ability to secure positions across an entire price range, Osmo said.

“The new model will allow for continued participation in Superfluid Staking pools without any interruptions,” he said. “This means that LPs can benefit from swap fees while also earning staking rewards using their OSMO tokens.”

The first supercharged liquidity pool set to be introduced alongside the v16 upgrade will be the DAI/OSMO pool.

The upgrade will occur on July 13 at around 12 pm ET — if the proposal passes — and is supposed to take approximately 30 minutes, with the network shut down over that half hour span. 

Introducing supercharged liquidity pools have also enabled the protocol to revamp the tokenomics of its native token, OSMO. 

Osmo 2.0 is designed to reduce inflation and realign emissions to favor stakers over liquidity providers. 

“The updated Tokenomics model serves to upgrade Osmosis from being an incentives-driven DEX to a volume-focused DEX,” Emperor Osmo said. “The reduced emissions, combined with the increased capital efficiencies, focus on volume and not liquidity depth. This is key, as the high emissions needed to curtail the liquidity to accommodate for large trades is no longer needed thanks to Supercharged Liquidity.”

Check out our Blockworks Research report on Osmosis here.

Additional proposals are in the works. That push includes a proposal aiming to provide stakers with a share in swap fees earned through Osmosis liquidity pools. 

Although the protocol taker fee will accrue value for Osmo holders, an Osmosis community member that goes by Seppmos said “it should not come at the expense of traders and worsening of the UX.”

“Traders will eventually move to places where they face lowest swap fees and best price execution,” they said. “Should traders have to pay up to 0.45% on a swap on Osmosis, it won’t take much time and folks will migrate to alternative DEXes.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Templates.png

Research

ZKPs enable efficient offchain transaction processing and validation, resulting in increased throughput and reduced fees. Solana's ZK Compression leverages ZKPs to minimize onchain storage costs, while Sui's zkLogin streamlines user onboarding by replacing complex key management with familiar OAuth credentials.

article-image

North Korea suspected in breach of Indian exchange’s multisig wallet

article-image

Plus, Sanctum’s CLOUD token has officially launched — but not without problems

article-image

It’s not yet clear whether Donald Trump is pumping bitcoin. But an unofficial memecoin is still seeing benefit.

article-image

StarkWare takes a step towards making StarkNet for Bitcoin

article-image

The numbers point to one conclusion: Risk is back, or at least it was during the first half of the year