Crypto assets in the Cosmos ecosystem have continued to boom since early 2022, thanks to an increased focus on conveying cross-chain compatibility with other blockchains. One DeFi protocol that has benefited from current scaling plans is Osmosis (OSMO).
Osmosis is the first decentralized exchange (DEX) connected via the Inter-Blockchain Communication Protocol (IBC), and data from CoinGecko shows the OSMO price rose 123% to a new from $ 4.05 on December 17th All Time High (ATH) has risen. at $ 9.24 on January 7th.
OSMO / USD daily frame price chart | Source: TradingView
Three reasons for the OSMO rally are an increase in transaction volume on DEXs, a record high Total Value Locked (TVL) in the log and the publication of cross-chain bridges connecting the Cosmos Ecosystem (ATOM) with other Ethereum virtual machines ( EVM) connect) compatible networks.
Trading volume increases
One of the biggest factors driving the OSMO price is the dramatic increase in the volume of trading on the exchange. According to data from Token Terminal, trading volume hit a record high of $ 186.8 million on Jan. 7, and a new ATH was set up on the same day.
OSMO price vs. DEX trading volume | Source token terminal
The surge in trading volume and price has quickly made Osmosis the third-placed DEX by market capitalization, as highlighted in the following tweet from “Jimmy Yang”.
The third largest DEX token is a @Cosmos DEX$ OSMO $ ATOM pic.twitter.com/UbBNur2Dsr
– Jim Yang is hiring (@proofstake) January 6, 2022
“The third largest DEX is the cosmos osmosis.”
Other factors that have supported the price as trading volume has increased is the fact that there are currently more than 81 million OSMOs staked on the network, according to data from SmartStake. In addition, a large part of the offer is also used to provide liquidity in the various liquidity pools offered on Osmosis.
Total locked value increases
The second trigger for the price rally for OSMO is the steady rise in the protocol’s Total Value Locked (TVL), which currently hits a record $ 1.22 billion, according to data from Defi Llama.
Total value locked on osmosis | Source: Defi Lama
TVL soared as more tokens hit new highs in the Cosmos ecosystem. In particular, ATOM, Cosmos’ best-known asset, hit a daily high of $ 43.64 on Jan. 7, one dollar below the ATH level set on Jan. 20. 9. Osmosis’ second native token, ION, also hit a new ATH of $ 18,441 yesterday (Jan. 12).
Cross-chain relieves dealers
The third reason for OSMO’s bullish bias is Cosmos’s growing focus on EVM compatibility and cross-chain bridges.
Evmos is a project currently being worked on to evolve into the first IBC-compatible EVM chain and is currently supporting ERC-20 tokens in its test network.
Injective, a Layer 1 protocol, has also announced that it is developing cross-chain bridges for projects on Cosmos and is currently working on supporting OSMO.
Take a look at the latest Injective Bridge IBC integration@osmosezone ️ @InjectiveLabs
the @Cosmos The IBC ecosystem is getting stronger every day! pic.twitter.com/rVoRdQxjh0
– Injective (@InjectiveLabs) January 4, 2022
“A quick look at the latest IBC cross-chain bridge integration from Injective. The Cosmos ecosystem is getting stronger every day! “
With cross-chain bridges going live and allowing tokens from other EVM-compatible networks to connect to the Cosmos Hub, Osmosis has the potential to increase transaction volume and TVL simply because it is the primary DEX for the system. In this case, there is also the possibility that the OSMO price will move up.
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