What is Osmosis?

Osmosis is a DeFi-focused appchain (application-specific blockchain) and decentralized exchange (DEX). The Osmosis DEX is built on the Osmosis chain and serves as a DeFi Hub for the Cosmos ecosystem and beyond.

Co-founded by Sunny Aggarwal, Dev Ohja, and Josh Lee, Osmosis launched shortly after IBC in 2021. It quickly became the first IBC-enabled app to achieve product-market fit as the DeFi center of the interchain ecosystem. 

As an appchain, Osmosis has greater control over the full blockchain stack than traditional DEXes. This fine-grained control has enabled the development of unique features that provide an intuitive user experience, like 1-Click Trading, asset standardization via Alloyed Assets, and on-chain orderbooks.

Beyond its native DEX, Osmosis hosts a growing ecosystem of DeFi protocols and third-party integrations, offering comprehensive services that range from managed yield vaults to perpetual derivatives markets, and more.

Osmosis has seen significant success as a cross-ecosystem trading hub, especially for assets from other appchains without their own native DEX (e.g., Akash, Celestia). This is one of the largest untapped markets in crypto, with Bitcoin itself being an appchain without a native DEX.

OSMO Token

OSMO is the native token of Osmosis. It plays a central role in securing the network through staking and is used for voting on governance proposals that shape the protocol’s future. OSMO holders can delegate their tokens to validators to earn staking rewards and participate in community governance decisions. 

Osmosis and Babylon Genesis

In an upcoming network upgrade, Osmosis will integrate with Babylon Genesis at the chain level to become a Bitcoin Supercharged Network (BSN). This aligns with Osmosis’s broader Bitmosis initiatives, shifting toward leveraging the Bitcoin Network’s security and expanding Bitcoin-related liquidity on the DEX.

How Osmosis Works

Most users interact with Osmosis in a few core ways:

• Swaps: Trade tokens using classic AMM-style pools, or place limit orders via on-chain orderbooks.
• Liquidity Provision (LPing): Deposit assets into liquidity pools to earn a portion of trading fees. 
• Staking: Stake OSMO to secure the network and earn staking rewards.
• Governance: Stake OSMO tokens to vote on governance proposals and help shape the future of Osmosis.. 

Protocol Basics

Under the hood, Osmosis uses a combination of:

• Classic AMM Pools (xy=k): Simple, passive liquidity
• Concentrated Liquidity Pools: Modeled after Uniswap v3, LPs can define active price ranges
• On-chain Orderbooks: Powered by CosmWasm smart contracts to enable limit orders

Your trades are routed through the best available path to ensure competitive price execution. And all swaps and other transactions are on-chain, so you maintain custody of your assets at all times. 

Enhancing Security by Becoming a BSN

• Osmosis will leverage Bitcoin timestamps to secure consensus data against long-range attacks.
• By anchoring Osmosis blocks to the Bitcoin blockchain, any attacker would need to compromise both networks to succeed, making chain reorgs and fork-based attacks far more difficult.
• These timestamps may also result in a shorter unbonding period for OSMO staking being required, as this is a current preventative measure for this kind of attack.

How to Use Osmosis

1] Accessing Osmosis:

• Visit app.osmosis.zone via desktop only

2] Connecting a wallet:

• At the top-right of the screen, click “Connect wallet”
  
  • Then select your preferred wallet from the menu
  • Once connected, you’re ready to start exploring!
• Supported Wallets:
  
  • Keplr (most popular choice for Osmosis users)
  • Leap
  • OKX
  • Ctrl (fka XDEFI)
  • Cosmostation

3] Depositing Crypto or Fiat for Trading

• Osmosis lets you pay gas fees in 140+ different tokens, though OSMO is most commonly used for transaction fees
• There are several ways to deposit funds and start trading on Osmosis:
  
  • Integrated on-ramp providers like Kado, Transak, and Onramp.money.
  • Deposit tokens directly from other networks like Ethereum, Bitcoin, Solana, and more. 
  • Use a centralized exchange to purchase tokens and send them to your DeFi wallet of choice.

How to Trade on Osmosis

Once you’ve connected and funded your wallet, select the tokens you’d like to swap in the trading module, hit the ‘Swap’ button, and you’re off to the races!

How to Stake

Navigate to the ‘Stake’ tab on the left-hand side of the screen.

Determine how many tokens you’d like to stake, select which validator you’d like to delegate to, and check back daily to claim your staking rewards. 

How to Vote on Governance Proposals

On the left-hand side of your screen, click ‘More’, and then navigate to ‘Vote.’ 

Portfolio and Transactions

For an overview of your balances and transactions, navigate to the ‘Portfolio’ tab.

Within this screen, you can review important info like: 

• Your portfolio (historical performance and allocations)
• Recent transactions
• LP positions and rewards

Tips and Best Practices

• Try the 1-click trading feature for an improved trading experience, without repeated pop-up notifications.
• Be mindful and double-check everything before initiating a swap, like your slippage settings, price impact, output amounts, etc.
• If you plan to provide liquidity, familiarize yourself with the different types of liquidity pools (classic AMM vs. concentrated) and the concept of impermanent loss. Supercharged (concentrated) liquidity positions require more active management. 
• Use the on-chain orderbook to set limit orders when targeting specific entry or exit prices.

Resources and Useful Links

• Osmosis DEX
• X
• Community Forum
• Telegram
• Blog
• Learn more about Osmosis becoming a BSN

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