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The expanding Cosmos: Here’s why Osmosis (OSMO) hit a new all-time high

January 12, 2022No Comments

Crypto assets within the Cosmos ecosystem have been going live since early 2022, thanks to an intensified focus on brokering cross-chain compatibility with other blockchains. One decentralized finance (DeFi) protocol that has benefited from current expansion plans is Osmosis (OSMO).

Osmosis is the first decentralized exchange (DEX) that services projects connected through the Interblockchain Communication Protocol (IBC) and data from Markets Cointelegraph Pro shows that the price of OSMO increased by 123% from a low of $4.05 on December 17 to a new all-time high of $9.24 on January 7.

OSMO/USD 1-day chart. Source: CoinGecko

Three reasons for the price growth seen on OSMO include an increase in DEX trading volume, a record in total value locked on the protocol, and the launch of cross-chain bridges connecting the Cosmos (ATOM) ecosystem with another Ethereum (ETH) Networks compatible with virtual machines (EVM).

Trading volume increases

One of the biggest factors that helped drive the price of OSMO has been the significant increase in trading volume 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 all-time high was set on the same day.

OSMO price vs DEX trading volume. source token terminal

The increase in trading volume and price of the token briefly resulted in Osmosis becoming the third ranked DEX by market capitalization, as highlighted in the following tweet by Twitter user Jimmy Yang.

Other factors that have helped push the price of OSMO up as trading volume has increased include the fact that over 81 million OSMOs are currently staked on the network, according to SmartStake data. Furthermore, a large part of the supply is also being used to provide liquidity in the various liquidity pools offered on Osmosis.

Total Value Locked Increasing

A second development presenting the bullish case for OSMO has been the steady rise in the total value locked in the protocol, which reached a record high of $1.21 billion on January 11. according to Defi Llama data.

Total value locked in Osmosis. Source: Defi Llama

TVL escalation comes as multiple tokens in the Cosmos ecosystem hit new highs. Notably, ATOM, which is the most recognizable asset on Cosmos, hit a daily high of $43.64 on Jan 7, which is just a dollar short of its all-time high. Osmosis' second native token, ION, also hit a new high of $16,500 on Jan. 11.

Related: 3 Reasons Why Cosmos (ATOM) Price Is Close To A New All-Time High

Cross-chain eases burden for merchants

A third reason for the bullish turn on OSMO is the increased attention Cosmos has directed towards EVM support and cross-chain bridging.

Evmos is a current development project that is working to become the first IBC-compliant EVM-based chain and currently supports ERC-20 tokens on its testnet.

Injective, an L1 protocol, has also revealed that it is developing cross-chain bridges for Cosmos-based projects and is currently working on support for OSMO.

As cross-chain bridges connect and allow tokens from other EVM-compatible networks to connect to the Cosmos Hub, Osmosis has the potential to see further increases in trade volume and TVL simply because it is the primary DEX for the ecosystem. cosmos right now. . If this were to happen, there is also a chance that the price of OSMO could appreciate further.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.