My DeFi experience #2: Osmosis Zone on Cosmos

My DeFi experience #2: Osmosis Zone on Cosmos

By Lucasgaio | Cryptoscience | 2 Aug 2021

Osmosis is an advanced AMM protocol built using Cosmos SDK that allows developers to design and release their own custom AMM. This Dex is very similar to the Dex we know, but it has a few small differences. First of all, to discourage short-term farming and the consequent volatility of LPs, Osmosis uses two mechanisms: Exit fees & Bonded Liquidity Gauges.

  • Exit fees are small commissions to be paid every time liquidity is withdrawn from an LP.
  • Bonded Liquidity Gauges are incentives for those who have locked their assets in a LP for a minimum amount of time.

Users will be able to decide the minimum bonding period among the available options (1, 7, 14 days) and receive single or multiple interests deriving from the choice of the pool-period combination. The bonding time also defines the unbonding time after which the LPs will be free again but, unlike staking, during this period the user will continue to receive rewards according to the examples above.
Furthermore, in order to use Osmosis, users will necessarily have to use a particular wallet with its browser extension: Keplr. This extension is currently only available for Google Chrome or Mozilla Firefox, which excludes Brave Browser, one of the most used in the crypto world.

Now let's see how the site is built and my personal experience.


The "how"

To get started, I had to create a new wallet on Keplr and deposit $Atom. By connecting Keplr to, I deposited the funds on the latter in the appropriate "Assets" section.



From here our coins will be available for swap or to give liquidity to a pool. I started with these two operations: first I swapped half of my $Atom into $Osmo, the Osmosis reward-token, by going to "Swap" and filling in the amount I wanted to convert. The taxes are really low and can be set. I chose the slowest fee, in order to pay as little as possible and it took me a few seconds anyway.



Then I gave 50% liquidity to the #1ATOM-OSMO pool. I went to "Pool" and then to "Add Liquidity". Once this is done, I got LP-Tokens that I paid for by clicking on "Start Earning", which allowed the LPs to be tied for the period we mentioned earlier. I chose the 7 days, to get about 238% APY in $Osmo.



At the end of the period that I had foreseen for my test, I had to repeat the operations just described in reverse. The first thing I had to do was then release my LPs and wait 7 days. This, in fact, was the period I had chosen at the beginning. Once the Lp-Tokens have been obtained, it is possible to redeem the liquidity from the pool and thus withdraw your funds.



In this platform it is also possible to stake $Atom or other cryptocurrencies obtaining discrete earnings. It was also possible to participate in an Airdrop at the launch of the platform, for those who held $Atom in a wallet in February 2021.


Final Thoughts

I must concede that the returns offered by osmosis are really interesting. This is an innovative project and I hope that it will soon open up to other blockchains in order to be able to use its services also with other cryptocurrencies that I hold. I think I will use it again in the future, especially because of the pool as CRO/OSMO which interests me particularly. I really appreciated the speed, simplicity and low fees it offers, but I consider the bonding period of the LP-Tokens to be necessary but uncomfortable.

I hope I have been useful to you and have made you discover a new source of income, bud don't forget: always DYOR.




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I am a pharmacist and a scientist.


A blog that speaks about science, a passion that has accompanied me since I was a child. My goal is to spread scientific culture all over the world, starting with cryptocurrencies.

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