What is Osmosis
Osmosis is a DEX based on the AMM mechanism and a standalone Layer1 appchain built using the Cosmos SDK. It is the first DEX appchain in the Cosmos ecosystem integrated Inter-Blockchain Communication Protocol. Osmosis operates in a similar way to other AMM DEXs, where liquidity providers deposit liquidity into a liquidity pool and traders interact directly with the liquidity pool. $OSMO is a native token of Osmosis and is used to maintain the security of the PoS blockchain network, as well as Gas.
What Are the Features of Osmosis?
Since the Osmosis application is built on an appchain, it is a DEX application as well as a standalone blockchain, resulting in Osmosis being generally less secure as a blockchain than other public blockchains. For this reason, Osmosis has designed the Superfluid staking mechanism, which allows LP tokens obtained by adding native token $OSMO to the Osmosis AMM liquidity pool to be used as staking tokens to maintain the security of the Osmosis PoS blockchain network. LPs receive an additional staking reward in addition to transaction fees, and the Osmosis network also benefits from additional security.
Osmosis is also working on solving the MEV problem and has developed a threshold encryption scheme called Ferveo in conjunction with Anoma. In simple terms, in blockchain architecture, since all transactions are public in Mempool, validators can profit by arranging the order of transactions within the block they generated. The Ferveo encryption scheme enables transactions to be hidden from validators when entering the Mempool, preventing validators from viewing the transaction contents and arranging the transaction order by viewing the transactions in advance. The Ferveo encryption scheme is not yet live, and the Osmosis team plans to introduce the model through multiple updates in the coming months.
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