Research Summary
The research report discusses the performance of Osmosis, a decentralized exchange (DEX) that has grown into a DeFi hub. Despite a bear market and low OSMO prices, Osmosis has expanded its services to include lending markets, yield farming vaults, fiat on/off ramps, and more. However, the platform has experienced a decrease in on-chain activity and trade volume due to deteriorating market conditions. To combat this, Osmosis has introduced several new features and changes, including ProtoRev Module, Prop 530, OSMO 2.0, and concentrated liquidity.
Actionable Insights
- ProtoRev Module: This feature optimizes MEV internalization, generating revenue for the protocol. It has captured over $120k in arbitrage profits across nearly 128k trades.
- Prop 530: This proposal introduces a 0.15% taker fee, which is added to the swap fee going to LPs and given directly to OSMO stakers and the community pool. This could generate ~$4M in additional protocol revenue.
- OSMO 2.0: This update drastically reduces OSMO emissions and redirects a higher allocation of emissions to OSMO stakers. This has resulted in a 67% drop in OSMO’s daily emissions.
- Concentrated Liquidity: This feature makes AMMs much more capital efficient while offering improved price execution for larger swaps. It allows Osmosis to spend less on liquidity incentives by only providing incentives to a subset of LPs within an active range.
