Osmosis (OSMO), the largest decentralized exchange (DEX) in the Cosmos ecosystem, has announced OSMO 2.0, a major update to its tokenomic model that will reduce the inflation rate by 50%.
The update also brings market taker fees to the platform, a feature that aims to capture more volume relative to the total value (TVL) locked in liquidity pools.
Market taker fees are the fees that users incur when they make an exchange on the DEX. These are different from maker fees, which are fees charged to liquidity providers (LPs) for supplying tokens to pools. Buyer fees are reflected in trade fees displayed in the Osmosis interface.
According to Osmosis, buyer fees are required to secure the network and fund the community pool, especially as the platform prepares for the transition to supercharged liquidity, a feature that will bring unprecedented efficiency to LPs by allowing them to create custom liquidity curves and order books.
In the past, spot exchanges have utilized two types of fees: maker and taker fees.
This has allowed them to benefit from the activity on the platform.
Osmosis will be introducing taker fees to the Osmosis DEX, emphasizing the importance of capturing volume relative to TVL. 🧵 pic.twitter.com/c9GWKLELbl
— Osmosis 🧪 (@osmosiszone) June 19, 2023
Decentralized cryptocurrency exchange Osmosis claims that if exchange fees had been implemented earlier, they would have generated $7.13 million in revenue over the past 12 months, based on the $4.7 billion volume Osmosis has seen since Terra joined the Cosmos ecosystem.
DEX also expects buyer fees to increase overall clearing fees for existing pools, while predicting that most pools will have lower swap fees after the launch of supercharged liquidity.
The platform also plans to introduce more flexibility and incentives in the future, such as VIP programs, discounts based on OSMO stakes, referral systems, and fee refunds.
After the vote in the community management, the platform announced that it would reduce the inflation level by 50%. “This arrangement allows Osmosis to strike a balance between growth and stability, ensuring a more uniform distribution of tokens over time,” the team commented.
The team said that after the reduction, OSMO's inflation rate will be around 11%.
*Not investment advice.
