Revolutionizing DeFi: An Introduction to the Onomy Protocol

The global forex industry regulates the trading of world currencies and is the largest and most liquid market. Such a massive infrastructure drives a daily trading volume of $6.6 trillion (2019 Central Bank Triennial Survey of FX and OTC Derivatives Markets).

You invest in the forex market every time you exchange one currency for another. As the largest financial market and a pillar of the global economy, the foreign exchange market supports transactions, imports and exports settlements of various countries.

The foreign exchange market is the most active and powerful but has drawbacks such as low viability, difficult to maintain ledger records and high cross-border exchange costs. Blockchain solves these challenges and enables the mass adoption of fiat currencies by automating most operations.

Blockchain also ends the outdated centralization that requires intermediaries and brokers to manage funds. It continues to revolutionize the forex market with digital assets and blockchain-based infrastructure.

Even those who aren't affiliated with DeFi anyway recognize the benefits decentralized infrastructure brings to industries like the forex market. People don't want intermediaries to participate in the exchange process. Instead, they rely more on blockchain networks and validators.

This change in user interest has prompted the forex market to develop open and transparent trading platforms rather than institutional markets. Another key transformative force in the forex market is the rapid adoption of decentralized technology in major industries and the overwhelming reaction of existing users to decentralization.

Since we are talking about decentralization, the next question is how to implement the decentralization of the forex market infrastructure. Indeed, regulating the forex market requires a blockchain protocol and that is where Onomy comes in as a solution.

Onomy is transforming the fragmented and outdated Forex market by providing a robust blockchain-based infrastructure where all transactions in this vast market can reside and be managed on-chain. Onomy has identified the challenges posed by fiat currency exchanges that stable-value digital currencies (stablecoins) may face. However, fiat currency holders do not have direct access to stablecoins. Onomy needs to fill that gap.

What is Onomy protocol

The Onomy protocol is a layer 1 blockchain network designed as a decentralized multi-chain exchange. It aims to converge the decentralized finance and forex markets through a cross-chain bridge that supports stablecoin representations of various crypto-assets and fiat currencies. Open, permissionless, and highly interoperable, Onomy supports cross-chain minting, trading, and lending of stablecoins.

In a way, the Onomy network replicates existing financial infrastructure in a more decentralized and transparent way. The protocol's native token, $NOM, will play a key role in the development of the Onomy ecosystem. $NOM is used for a variety of purposes, from governance purposes to securing the network to issuing stablecoins, including collecting exchange fee income.

As a result, Onomy's architecture serves as a highly reliable and immutable system with complete openness, fair distribution of access rights, and interoperability. No intermediaries, clearinghouses, or trustees are required, as most functions are performed via code written in “smart contracts”.

Who Is Behind Onomy protocol?

The Onomy protocol is relatively new to the blockchain space.

Lalo Bazzi and Charles Dusek co-founded in his December 2020.

Bazzi is a former Fidelity Investments employee and former Microsoft Cloud Solution Strategist and has around 4 years of experience in the blockchain space.

Dusek is a seasoned engineer with over 10 years of experience in finance, energy, machine learning, private equity, and consensus systems.

Both have brought various innovative ideas to life, developed mining hardware, and used ASIC chips to build a global network, the Onomy protocol.

What are Onomy's fundamental tenets?

ONET—Onomy Network

The Layer 1 blockchain network runs on the Cosmos ecosystem and leverages the Tendermint NFT consensus algorithm and Inter-Blockchain Communication Protocol (IBC). Utilizing these top platforms, the Onomy network acts as a true P2P protocol to validate and stamp transactions, rewarding validators in NOM (the native currency of the Onomy protocol) for their contributions. increase.

ONEX—Onomy Exchange

ONEX is a robust cross-chain DEX that supports the trading of various cryptocurrencies. ONEX integrates the Automated Market Maker (AMM) and order book methodologies to enable more efficient and liquid trading of stablecoins that also track the value of major domestic currencies.

Onomy Access

Onomy Access is a multi-currency, administration-free wallet integrated with token-specific features such as staking and governance. To access the wallet and access exciting opportunities in the DeFi world, users log in with one QR code, eliminating the need to manage multiple wallets and browser extensions.

ORES—Onomy Reserve

ORES is like a reserve bank for the Onomy protocol. It will play a key role in managing Denom through collateral and increasing the overall currency flow on the platform. The reserve also provides tokens to bond curve offerings to enable them to function as expected in a self-stabilizing manner.

How does Onomy Protocol define Denominations (Denoms)?

The Onomy protocol acts as a bridge to allow fiat markets to connect to the DeFi ecosystem using cryptocurrency-backed stablecoins known as Denoms. These Denoms are found in Onomy Reserves (ORES). Users will be able to trade, lend and mint stablecoins in the Onomy ecosystem, offering exciting new opportunities not yet available in the traditional financial world.

Denoms can be pegged to represent the value of various major currencies, including US Dollars (USD), Euros (EUR), British Pounds (GBP), and Japanese Yen (YEN), transforming existing stablecoin economies into USD variants. expand beyond.

The Onomy network is dedicated to maintaining stability in the value of stablecoins. Use reserve ratios and maintain minimum collateral ratios to ensure stablecoins are parity with their respective fiat currencies.

Users can trade Denom and other crypto assets on the Onomy Exchange (ONEX). These utilities can also trade across numerous chains using the Onomy Bridge, which connects popular blockchain networks such as Cosmos, Ethereum, Avalanche, and Cardano.

What advantages does Onomy protocol's Bonding Curve Offering provide to users?

The Onomy protocol offers users great convenience, allowing instant access to $NOM through instant markets with deterministic pricing and reasonable liquidity. The protocol employs a bond-curve offering model, offering significant benefits to token holders.

A peg curve is essentially a crypto economic parameter that acts as an AMM that optimizes the relationship between demand and supply. This token model is also called a continuous token model because the price is calculated continuously as supply and demand change. It replaces the traditional method of pre-sale of tokens with an automated market maker contract that continually creates new tokens and makes them available to traders. Binding Curve works without a central authority and allows users to purchase tokens via smart contracts. Token prices are determined by existing algorithms and supply and demand.

However, the mechanism is the opposite of the traditional supply and demand phenomenon where an increase in supply causes the price of the token to rise and vice versa. Built and deployed on the Ethereum blockchain, the Ethereum network will regulate the binding curve and issue bNOM tokens. The Onomy protocol's AMM (Bonding Curve) has a load of up to 100M NOMs and tokens are exchanged at a 1:1 ratio.

The interface provided for this exchange is commonly known as “bridging” bNOM tokens between the Ethereum and Onomy ecosystems. With bridging, bNOM is first baked into the binding curve and a comparable number of $NOM tokens are issued in the Onomy protocol while burning the bNOMs.

Summary of benefits of Bonding Curve Offering:

• Deterministic price

• Continuous price

• Instant liquidity

• Collateralization

What makes Onomy protocol unique?

Onomy continues to grow with the motives of expanding the forex market, increasing the penetration of forex exchanges beyond the US dollar, and bringing the infrastructure on-chain through blockchain technology. Networks have several unique attributes to achieve these goals. These are described below.

Denominations

Onomy offers its own form of stablecoins called Denoms. These currency units trade stablecoins that combine the best attributes of fiat currencies (such as value and utility) with the innovative features of cryptocurrencies (such as security, tamper-proof technology, and authentication-free quality). Represents a more efficient means.

DAO governance

The Onomy protocol integrates DAOs to delegate regulatory authority to members or token holders. Based on the number of tokens they own, members can propose solutions for Onomy's growth through voting and initiation.

Chain agnostic

The mechanism of the Onomy protocol is not limited to any particular technology. Rather, it leverages a number of technologies to provide users with a consistent, decentralized experience. For example, users can create and trade Denoms on the Onomy network while channeling liquidity from multiple blockchain protocols.

Hybrid DEX model

Onomy DEX differs from conventional DEX in that it adopts a hybrid structure and implements the order book method and AMM. Onomy offers stronger token and liquidity management capabilities to maximize the benefits of centralized and decentralized exchanges.

Single login

Onomy provides convenience to users and reduces the hassle of managing multiple private keys and separate wallets for each crypto platform. Instead, the network offers a single login using Natural Rights, a proprietary non-administrative private key management solution. This enables QR login across multiple blockchains.

Staking

The Onomy protocol relies on a core group of validators to maintain the integrity of a Cosmos-based Proof of Stake (PoS) network. These validators are encouraged to make required commitments through a unique reward system. Individuals can stake their tokens on their favorite validators and receive incentives if the validators perform as expected.

How does the Onomy protocol work?

With the goal of seamlessly transitioning the financial industry to blockchain, the Onomy protocol will serve as the infrastructure that supports the minting of digital representations of traditional or fiat currencies.

The Onomy protocol is based on the Cosmos ecosystem. Widely recognized as the most advanced blockchain on the blockchain horizon, it is 100x more efficient than Ethereum, offering higher throughput performance and advanced features. This enhances Cosmos' existing throughput capabilities and provides a more distributed infrastructure. Tendermint serves as a robust PoS consensus protocol, while IBC provides cross-chain capabilities between Cosmos networks. By leveraging the Cosmos ecosystem, the Onomy protocol provides multi-chain infrastructure.

Interoperability is further enhanced by bi-directional bridges to prominent blockchain networks outside the Cosmos ecosystem. The Onomy Bridge Network, called EntangleMint, will enable cross-chain spatial arbitrage between DEXs by providing liquidity pools on major chains to efficiently bridge assets between chains.

Onomy protocol’s Product Roadmap

Onomy wallet

Onomy Wallet is a highly interactive and secure wallet for storing and managing NOM and Denom. The wallet also supports trading on multiple blockchains including Polkadot, Cardano and Ethereum.

Onomy bridge hub

A two-way bridge that bridges assets across multiple chains and performs liquidity aggregation, allowing users to receive liquidity by staking tokens.

Onomy Mint

Onomy Mint is a digital application that makes it possible to mint Denoms using $NOM as collateral.

Conclusion

The Onomy protocol is constantly evolving into a stronger ecosystem that thrives. On its publicly accessible roadmap, the protocol has arranged product launches and strategies. The network has encouraged major Forex markets to migrate on-chain and improved networking, collateral, and monetary management, among other aspects, with its comprehensive approach to facilitating a more profound and decentralized structure in the Forex market.

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