Cosmos Exchange Osmosis Expands to Ethereum Assets With Gravity Bridge

Connecting Osmosis with the leading smart-contract chain could give the Cosmos automatic market marker another boost in total value locked.

AccessTimeIconJan 19, 2022 at 2:00 p.m. UTC
Updated Jan 19, 2022 at 2:51 p.m. UTC

Andrew Thurman was a tech reporter at CoinDesk with a focus on DeFi.

Cross-chain decentralized exchange Osmosis is expanding its horizons with the launch of a new bridge that will enable trading for Ethereum-based assets.

In a press release on Wednesday, Osmosis announced the Gravity Bridge, an inter-blockchain protocol (IBC) to Ethereum “translator” built by internet services provider Althea.

To date, decentralized exchanges have largely expanded by deploying implementations of their contracts on alternative chains, with only a handful of projects – such as Thorchain and Ren – attempting to enable cross-chain asset swaps and unified liquidity pools.

According to Osmosis labs co-founder Sunny Aggarwal, that expansion-by-redeployment has a number of clear drawbacks.

“There’s two views of how the multichain system will work. There’s one where you have all these layer 1 blockchains, and you have apps that redeploy on all of these chains,” Aggarwal said in an interview with CoinDesk. “In our opinion, this ends up fragmenting the liquidity, the user experience, everything.”

Enabling asset swaps between Ethereum and Cosmos IBC required a number of innovations.

According to Aggarwal, the Althea team has been working on the Gravity Bridge for a number of years, and boasts a sophisticated slashing system for validators who underperform. Additionally, Osmosis is an app-specific chain, meaning that Osmosis Labs could take drastic steps to improve user experience, including allowing for MetaMask signatures, which usually isn’t compatible with Cosmos.

The MetaMask integration in particular is a key cog in the team’s expansion plans.

“There’s two big markets you need to think about. One is the cross-ecosystem trading market, and the other is the intra-ecosystem market. In a way, Osmosis has a heavy focus on the intra-Cosmos market for sure, but our focus when the Gravity Bridge goes live will be getting into the market of cross-ecosystem trades,” Aggarwal said.

One area of focus for that will be swaps between stablecoins.

Aiming for UST

Aggarwal said that Osmosis is aiming to capture volume for the Terra stablecoin, UST, in particular. He noted that there is only $24 million in liquidity for the Curve Finance UST-3pool, while there is $160 million in liquidity on the OSMO/UST pool on Osmosis alone.

“I think this is a market we’re well positioned to capture, and there are new stablecoins coming on to Cosmos as well,” Aggarwal said. “Really getting that stablecoin market between Cosmos and Ethereum, that will be important for TVL.”

Osmosis has been growing rapidly as of late, nearly doubling its total value locked (TVL) over the course of a month to $1.6 billion.

Integrations with other Ethereum Virtual Machine-enabled chains are on the horizon as well, and the team hopes to enable cross-chain trading for non-fungible tokens (NFTs) in the near future.

Osmosis’ OSMO token is up 1.3% on the day to $9.56.

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Andrew Thurman was a tech reporter at CoinDesk with a focus on DeFi.

CoinDesk - Unknown

Andrew Thurman was a tech reporter at CoinDesk with a focus on DeFi.