Osmosis DEX cuts token inflation by 50%

The Osmosis community, the largest decentralized exchange in the Cosmos ecosystem, approved a proposal to change the project’s tokenomics, reducing inflation by 50%. This was reported by The Block.

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The OSMO 2.0 initiative marks a shift from an early coin distribution phase to the long-term sustainability of the asset. After the cut, the inflation rate of the platform’s native token sits at around 11%.

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“This adjustment allows Osmosis to find a balance between growth and stability, delivering a more gradual distribution of assets over time,” the protocol team said.

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Representatives of the DEX also spoke about the possible implementation of a mechanism to burn platform revenues, which would lay the foundations for a deflationary model.

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The Osmosis leadership is currently is discussing changes to the fees for liquidity pools. The proposal also expands opportunities for OSMO stakers, allowing them to receive rewards for token conversions within the protocol.

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Developers are also implementing the concept of concentrated liquidity.

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Concentrated Liquidity is coming to Osmosis!

What is Supercharged Liquidity?
Proposals #432 & #433 (implementing CL & incentives)

READ this to get up to speed!?? pic.twitter.com/6RITR3EOpK

— Stakecito (@stakecito) June 19, 2023

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According to data from DeFi Llama, at the time of writing the total value locked on the decentralized exchange stands at $126.6 million.

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In June 2022, the Moonbeam and Osmosis created a cross-chain bridge between Polkadot and Cosmos.

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In April 2023, the PancakeSwap DeFi protocol team proposed changing the project’s tokenomics. The initiative envisages a shift from the current high-inflation CAKE token model to neutral issuance or deflation with real yield and utility.