Cosmos Exchange Osmosis and UX Chain Announce Merger

By Jody McDonald December 05, 2023 In Cosmos
Source: Adobe Stock
  • New proposal would see two Cosmos ecosystem apps merge codebases: lending protocol UX Chain would transition to being built on top of the DEX Osmosis.
  • Merger would enable new functionality like leverage trading, but initially both chains/tokens will continue to exist.
  • Feedback on the proposal is now being sought from the platform’s communities.

Two of the largest DeFi platforms in the Cosmos ecosystem, the decentralised exchange (DEX) Osmosis and the lending protocol UX Chain (formerly known as Umee), have proposed a plan to merge their code bases. 

If the proposal goes ahead it would see UX Chain’s codebase re-implemented on the Osmosis chain. The proposal claims the merger would allow for enhanced security and the implementation of advanced features on Osmosis, such as flash loans, margin trading and short selling. 

No timeline has been set for when the merge will happen, with the proposal from the Osmosis and UX Chain teams simply saying: “We are excited to explore this new development in our long term roadmap.”

Merger Multi-step Process

The proposal outlined a multi-step process which would begin with the integration of UX Chain’s code into the Osmosis codebase to create synergies between the two platforms, allowing them to:

  • Combine their total value locked (TVL);
  • Grow their market share; and
  • Create functionality, such as leverage trading, that can’t exist on a DEX lacking lending capabilities.

In this first phase of the merger it’s proposed that both the Osmosis Chain and UX Chain would continue to exist, as would their respective tokens:

For this initial proposal, the Osmosis chain and the UX chain will both remain in existence. Additionally, the Osmosis token and the UX token will both remain as independent tokens for this initial phase. Future iterations and ideas on chain and token configuration would be dependent upon the community governance to decide.

Merger Proposal From Osmosis and UX Chain Teams

The remaining steps in the merger will include:

  • “Mesh security collaboration”, which would involve a “deep integration of security protocols and a joint effort to address potential vulnerabilities.”
  • Potential token swap or integration, the aim of which will be to “maintain fairness and transparency throughout the tokenomics, providing a mechanism towards ensuring proper value is ensured between both networks.”

Both Platforms Currently DeFi Leaders In Cosmos Ecosystem

Osmosis is currently one of the largest DEXs in the Cosmos ecosystem. At the time of writing DeFi Llama showed that it currently has almost US$146 million (AU$221 million) TVL. 

Current TVL of Osmosis. Image source: DeFi Llama

Likewise UX Chain is one of Cosmos’ largest lending protocols, with a TVL of just under US$13 million (AU$19.7 million) and is described in the proposal as, “the dominant lending platform in Cosmos with more special features than any other lending platform in crypto.”

According to the proposal, the merger of these two leading Cosmos-based DeFi platforms could lead to the creation of “one of the most powerful DeFi ecosystems possible.”

The development teams are currently seeking community feedback before moving forward on the plan saying that, “feedback is crucial in shaping the future of this proposed merger.”

Jody McDonald

Jody McDonald

Jody is a Brisbane-based freelance writer who specialises in writing about business, technology, and the future of work.

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