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In the Cosmos ecosystem, a significant consolidation event is on the horizon as Osmosis and UX Chain (formerly known as Umee) have put forward a merger proposal. Osmosis stands as the largest decentralized exchange within Cosmos, while UX Chain is a notable lending protocol. The proposed merger, if approved, promises to integrate UX Chain’s lending algorithms and logic seamlessly with the decentralized exchange (DEX) services of Osmosis, paving the way for a robust DeFi hub.
The merger plans, which represent a concerted effort between the teams of Osmosis and UX Chain, have been meticulously detailed. The strategy involves a phased approach, starting with the integration of UX Chain’s codebase into the Osmosis Chain. This initial phase is designed to meld the strengths of both entities and is expected to result in a combined total value locked across the two networks. Despite this integration, both platforms’ native tokens – the Osmosis token and the UX token – will continue to trade independently for the time being.
What is Cosmos?
Cosmos represents a blockchain ecosystem that is often described as the “Internet of Blockchains.” Within this ecosystem, there exist numerous distinct blockchains that possess the capability to interconnect and seamlessly exchange tokens with one another.
All of these blockchains are constructed using the open-source Cosmos technology, which is accessible through a software development kit (SDK). This approach simplifies complexity and grants developers the freedom to incorporate desired features. The SDK includes essential functionalities like staking and governance.
Moreover, many of these blockchains implement the Inter-Blockchain Communication protocol, ensuring secure communication among them. This protocol facilitates the transmission of messages and tokens across different chains.
The THORChain project, which has become very popular recently due to the meteoric rise in its network’s utility token, RUNE, is based on Cosmos. It is a resounding success story for the Cosmos ecosystem, one that THORChain’s founder, Chad Barraford, would like to see more often acknowledged.
The cosmos community has always been resistant to $RUNE, not seeing it as part of the cosmos ecosystem. And as it performs better, it makes more and more sense that the cosmos community should get behind it.
Its mcap is not too far from surpassing $ATOM, and its now the 3rd…
— Chad Barraford (@CBarraford) December 2, 2023
The Merger Between UX Chain and Osmosis
A future phase might include a strategy to unify these tokens, potentially involving a token swap or migration scheme. This ambitious step aims to create a singular token that would symbolically and functionally represent both networks. The specifics of this token swap will be subject to the governance decisions made by each community.
Brent Xu, co-founder of UX Chain, emphasized the importance of community governance in this process. He noted in a statement that each chain’s community would separately vote and manage the processes to reach a consensus on the final objective of establishing a comprehensive DeFi hub.
When looking through the Cosmos, it is clear that Osmosis has shown a dominant presence as the most successful DEX in the ecosystem. Concurrently when looking at lending platforms in Cosmos it is quite apparent that the Umee UX Chain is the dominant lending platform in Cosmos with more special features than any other lending platform in crypto. Considering the potential synergies, we’re proposing a merger of these blockchain protocols into one of the most powerful DeFi ecosystems possible.
The merger also intends to enhance Osmosis’ mesh security capabilities, an aspect vital for securing other blockchain projects. This enhancement could be achieved through the combined expertise or amalgamation of validator sets from both networks. With this merger, UX Chain and Osmosis are poised to explore new frontiers in DeFi functionalities, including advanced liquidations, native margin trading, and MEV markets.
BIG DAY IN COSMOS
›› Umee set to merge with Osmosis
›› Mars protocol set to merge with Neutron
›› Osmosis set to realign with Cosmos Hub's ATOM
Video Link: https://t.co/GRscpr6M8P pic.twitter.com/Zt4IWLkN5a
— Cryptocito | Cosmos ⚛️ (@Cryptocito) December 4, 2023
Sunny Aggarwal, a co-founder of Osmosis, expressed enthusiasm about the potential of merging Umee’s UX DeFi experience into the Osmosis chain. He highlighted the exciting new features and functionalities that this merger could bring to users and the anticipation surrounding the community’s decision.
Both Osmosis and UX Chain have a history of substantial funding achievements. In 2021, UX Chain raised $32 million through a CoinList coin offering, following a $6.3 million seed round spearheaded by Polychain Capital. In the same year, Osmosis garnered $21 million in a token sale round, with Paradigm leading the investment, underscoring the financial solidity and market confidence in both projects.
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