The Osmosis Foundation has closed a $21 million token sale from its treasury to help expand the Osmosis automated market maker (AMM) protocol. Paradigm led the foundation’s first fundraising with participation from Robot Ventures, Nascent, Ethereal, Figment and Do Kwon, Terraform Labs’ CEO.
An AMM is a decentralized exchange (DEX) protocol that relies on a mathematical formula or algorithms to price crypto assets in liquidity pools. Osmosis users can compound yield through a technology called Superfluid Staking.
Token holders typically have to choose between staking yield, which helps provide protocol security, or liquidity yield. Superfluid Staking allows holders of OSMO, the governance token of Osmosis, to use their tokens for staking and liquidity at the same time, maximizing the potential rewards without compromising network security.
Osmosis is on the Cosmos ecosystem, the so-called “internet of blockchains” that connects other cryptocurrency networks and helps them work together. Since its launch in June, Osmosis says the total value locked (TVL) on its DEX has reached $500 million. TVL is the U.S. dollar value of the cryptocurrency committed to DeFi protocols that are built on a layer 1 blockchain.
“Osmosis is our first AMM investment outside of the Ethereum ecosystem,” said Charlie Noyes, investment partner at Paradigm, in the press release. “The launch of IBC, Cosmos’ cross-chain interoperability protocol, kicked off a Cambrian explosion of developer activity and experimentation. Osmosis is the natural center of gravity for liquidity in Cosmos’ emerging DeFi ecosystem.”