Osmosis tokens (OSMO) surged 13% to $7.78 in the last 24 hours, reaching new highs and crossing the November high of $6.80, according to data from CoinGecko. OSMO holders can stake their tokens to receive yields and rewards, and participate in platform governance to suggest measures for expanding the protocol.
Osmosis has caught on recently amid revived interest in blockchains apart from Ethereum, which is expensive to use and has relatively slower transaction times. Daily average trading volume on Osmosis rose from $4.1 million in July to $46.6 million in December, data from analytics tool Token Terminal show.
How Osmosis works and what drives its value
Osmosis relies on smart contracts instead of middlemen to execute trades between users. Much of its value proposition, however, arises from its future plans. The DEX aims to expand to other blockchains, such as Ethereum, as well as blockchains compliant with the Inter-Blockchain Communication (IBC) protocol.
IBC is a protocol that relays messages between blockchains, allowing them to transfer and share data with each other. It was initially created to connect blockchains based on Tendermint, a software that allows developers to replicate applications on networks built atop its platform.
Cosmos is the first Tendermint network and a self-styled “internet of blockchains.” Its developers aim to create an ecosystem where applications exist on separate blockchains but can communicate with each other. Such an arrangement helps blockchains and cryptocurrencies go mainstream as users would ideally interact with several blockchains without having to manually change them each time and log into a separate application.
Osmosis has also helped kickstart activity on IBC. In June, IBC developers tweeted that the protocol processed more than 19,500 transactions per day after its launch, up from a mere 236 transactions per day before the launch.
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