From its unique features, Osmosis is one of the most intriguing projects in decentralized finance (Defi). For starters, Osmosis is not hard-coded; the protocol allows market participants to self-identify opportunities and react by adjusting various parameters. The adjustable inputs enable the creation of DeFi asset types like options and dynamic fee markets to adapt to market volatility and mitigate impermanent loss. Osmo is the native token of the platform used for governance and securing the ecosystem.
Some might wonder how to stake Osmosis and yet know too little of the network’s potential, so let’s start with the basics.
Today’s live Osmosis price is $1.13, with a 24-hour trading volume of $15,041,956. Osmosis has been down 6.40% in the last 24 hours. The current CoinMarketCap ranking is #218, with a live market cap of $320,515,980. It has a circulating supply of 282,464,369 OSMO coins and a max. supply of 1,000,000,000 OSMO coins.
Also Read: Osmosis LP breached in a $5 million hack
What is Osmosis?
Osmosis is the native currency of the Osmosis ecosystem and is abbreviated Osmo. The Osmo tokens are governance tokens that enable users with staked tokens to vote on proposals made for the system. The tokens were initially used for voting protocol upgrades, liquidity mining rewards, and setting the base network swap fee.
The token is also staked through validators who verify blockchain transactions. The token is minted and burnt through Superfluid staking. Superfluid staking provides the consensus layer higher security with a sort of “Proof of Useful Stake.”
What is Osmosis Exchange?
Osmosis is an advanced automated market maker protocol built on the Cosmos SDK that allows developers to build their customized AMMs with sovereign liquidity pools. Osmosis uses inter-blockchain communication to enable cross-chain transactions.
The feature allows users to swap assets across the Cosmos ecosystem seamlessly.
At the time of writing, the platform had a total value of $167M locked in the ecosystem.
How does staking on Osmosis work?
The Cosmos SDK blockchains run on a proof of stake (POS) consensus mechanism. Validators verify the blockchain by committing or staking their tokens to the network. When the network detects bad validators, their tokens are slashed. Validators are incentivized to validate the blockchain.
Validation requires a lot of commitment from validators. Users can delegate their tokens to validators and share the staking rewards.
A high staked amount leverages higher incentives.
How to stake Osmosis
Keplr wallet extension is an interchain wallet recommended for the Cosmos ecosystem. The following section will discuss how to stake Osmo using the Keplr wallet.
Step 1: Set up Keplr wallet
The Keplr wallet is available on Android and iOS for mobile devices and the Keplr extension for web browsers like Chrome.
- Visit the Keplr wallet webpage.
- Click Connect wallet
- The link will redirect you to download the Keplr browser extension for chrome. Click “add to chrome.”
- In the next pop-up window, click “Add extension.”
- For easy access to the wallet, pin it on the browser bar by clicking the puzzle icon at the top right of the Chrome browser. Select “Keplr pin.”
- Create a new account. You can sign in with google or import an existing account. Keep your seed phrase safe.
- Fund your account with Osmo tokens.
Step 2: Stake Osmo
- Visit the Osmosis app
- Click “Connect Wallet.”
- Select “Keplr wallet,” and the Kepler pop-up will open, then authorize the request.
- Click “Stake”; it’s on the left-hand side of the Osmo app. The tab will direct you to the Keplr wallet.
- You will then be required to select a Validator. Pick one and click “Manage.”
- Enter the number of Osmo tokens to stake. Click “Delegate.”
- Cryptocurrency holders can claim the principle and staking rewards from the Keplr wallet.
How much can you earn from staking Osmo?
According to the Cosmostation delegate, stakers earn 25.42% APR from staking Osmo. The interest, however, is not fixed due to the changing percentage of staked tokens under delegates. Delegates get a commission from stakers which might bring the staking rewards down.
Benefits of Staking Osmo
- Anyone can participate in the staking Osmo, provided they own the tokens.
- The Osmo Token rewards are compounded, so holders earn higher rewards.
- The Cosmo platform has an advanced AMM protocol that creates many defi opportunities.
- The customized AMM products offered to users provide additional flexibility to portfolio management with quick and efficient compounding without a lock-up period.
- The Osmosis platform stands out because it allows users to earn by providing liquidity to liquidity pools while staking concurrently.
- The multiple IBC compatible blockchains allow users to leverage different blockchains for low gas fees, security, and strength.
- The staking pools and staking rewards are updated from the mainnet and are not dictated.
- The short lock-up period provides flexibility for short-term holders.
- Low maintenance and transaction fees on staking products
- Through super fluid staking, users don’t have to trade between providing liquidity and staking since users can conduct the actions concurrently.
Risks of staking on Osmosis
- Staking Osmo tokens on Osmosis has its risks, just as with all forms of investing. The risk of staking any crypto is the token’s value dropping over time.
- Volatile crypto interest rates from slippage due to high redemptions and subscriptions are another example of a specific danger.
- The Staking process on decentralized platforms is not beginner friendly; there is the risk of making mistakes. Newbies should have basic knowledge of crypto wallets and blockchain bridges.
- The platform operates on smart contracts; smart contracts have recently fallen prey to bad actors resulting in Defi platforms losing millions of investors’ money.
- Osmo is listed in a few crypto exchanges.
- The staking reward is not constant; this makes it difficult to predict revenue growth.
- The Osmo price is highly volatile, and its low market capitalization makes it prone to market manipulation.
Should you stake on Osmosis?
Yes, Osmo tokens offer lots of arbitrage opportunities for crypto traders. Staked Osmo tokens can provide liquidity to a liquidity pool for extra income. However, Osmo is at risk of dropping in value and from high slippage of interest rates.