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.
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.
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 – 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.
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.
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.