Osmosis has been the primary liquidity venue of the Cosmos ecosystem since 2021. It has built a strong product, a recognizable brand, and a deeply engaged user base.
At the same time, the broader ecosystem has entered a more challenging phase. Recent ecosystem contraction highlights the need to strengthen alignment across the remaining parts of the ecosystem. In this environment, the long-term trajectory of application-specific tokens like OSMO is increasingly tied to the success and coordination of the ecosystem as a whole.
This proposal defines a path forward in that context.
Rather than continuing with separate economic domains, this proposal integrates Osmosis into the Cosmos Hub as its native liquidity layer. It consolidates liquidity, removes redundant infrastructure, and aligns economic activity into a single system where value accrues more coherently.
For OSMO holders, this provides a structured, time-bound path to transition into a broader economic domain, while preserving the infrastructure, product, and liquidity that Osmosis has built. The Osmosis experience continues through the same frontend and migration tooling, and users retain full control over their assets throughout the process.
Importantly, this transition is not required. Osmosis remains a viable standalone system with an active product and user base. This proposal instead offers an alternative path - one that aligns Osmosis with the broader ecosystem it already depends on.
Background and Rationale
Strategic Rationale
Osmosis has grown alongside the Cosmos ecosystem. Its role as the primary liquidity venue is directly tied to the activity, assets, and users that originate across Cosmos.
As the ecosystem has matured, this relationship has become more pronounced. Osmosis does not operate in isolation; its growth is inherently linked to the broader ecosystem.
Over the past year, the Cosmos ecosystem has changed radically. Activity across the ecosystem has slowed or shifted direction. Many parts of the ecosystem have slowed or shifted strategic direction. This contraction includes projects such as Noble, Mars, Wormhole, Axelar, Milkyway, and Sei, among many others.
Across multiple market cycles, asset exchange has demonstrated structurally recurring fee generation driven by trading activity. Value accrues most reliably where liquidity is concentrated and coordinated.
Osmosis already performs this role within Cosmos. However, it does so as a fragmented economic system from the “schelling point” asset of the ecosystem. This proposal aligns these two realities.
Why Osmosis
Osmosis has operated as the primary liquidity venue for Cosmos-based assets since 2021. Over multiple market cycles, it has maintained continuous operation and has evolved into a mature, production-hardened exchange stack.
The Osmosis modules represent battle-tested DeFi infrastructure, including routing logic, pool management, concentrated liquidity, and integrated revenue capture mechanisms. These modules have been extended and refined over several years in live production environments.
Osmosis has long been one of the core pillars of the Cosmos ecosystem since its inception, and remains so today. Although many exchanges have attempted to overtake Osmosis as the central liquidity venue of Cosmos, none have succeeded. Osmosis is the only one to have demonstrated longevity and maintained its market dominance in Cosmos, reflecting strong user trust.
The Osmosis brand and frontend are well known across the crypto space. By integrating its modules and liquidity into the Cosmos Hub, that central role becomes directly embedded within the Hub itself.
In 2025, Osmosis generated approximately $5.5M in revenue. With its projected core maintenance costs being low (~$550k per year), Osmosis operates at a multiple-fold net profit. This profit can be used as a real revenue stream for ATOM holders or to reinvest into further growth initiatives of the Cosmos Hub.
There is clear alignment and overlap between the communities of these two chains. Cosmos Hub validators represent approximately 66% of voting power on Osmosis, and those same validators comprise approximately 30% of voting power on the Cosmos Hub. Maintaining separate security domains duplicates operational overhead. Consolidation reduces fragmentation and increases net capital efficiency under a unified ATOM-governed framework.
Cosmos was designed for sovereign experimentation, and that experimentation produced Osmosis. Cosmos architecture also supports modular recomposition when independent systems mature. Osmosis has reached that stage of maturity and presents a structural opportunity for consolidation within the Hub.
What This Means for OSMO Holders
This proposal provides a clear and structured path forward at a time when the long-term trajectory of standalone application-specific tokens is increasingly uncertain.
Today, OSMO’s value is tied to a single execution environment. As liquidity and activity fragment across venues, this creates increasing reliance on Osmosis-specific dynamics for long-term value.
This proposal offers an alternative.
Rather than remaining dependent on a single economic surface, OSMO holders are given the option to transition into a broader system where value accrues across the ecosystem, while bringing Osmosis’s infrastructure, product, and liquidity into that larger economic domain.
Specifically, this provides:
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A one-year, structured conversion path into ATOM
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Exposure to a larger and more diversified economic base
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Alignment with ecosystem-wide growth, rather than dependence on Osmosis-only token dynamics
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Continuity of product experience through the existing Osmosis frontend and migration tooling
Importantly:
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Conversion is optional
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No forced migration occurs
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Users retain full control over their assets and positions
Rather than leaving OSMO as an increasingly isolated economic unit over time, this proposal offers a path to integrate Osmosis’s success into a broader and more durable economic framework.
Post-Merge Identity
Following integration, Osmosis evolves from being the ecosystem’s exchange venue into the native liquidity layer of the Cosmos Hub, while its infrastructure, product, and user experience continue under a broader economic framework.
Security, liquidity, asset issuance, and governance would operate within a unified economic domain under ATOM governance.
Recent governance proposals on the Cosmos Hub have indicated that the Hub is consolidating mature infrastructure when strategically advantageous:
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Enabling Permissionless CosmWasm (#1007)
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Enabling TokenFactory (#1010)
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Migrating Stargaze to the Cosmos Hub (#1017)
These decisions demonstrate a pattern of integrating execution capabilities directly into the Hub when strategically advantageous. The integration of Osmosis follows this same principle: consolidating mature infrastructure rather than introducing speculative new functionality.
The result is a new Cosmos Hub that:
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Secures infrastructure.
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Hosts liquidity.
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Supports asset issuance.
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Facilitates capital formation.
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Maintains interoperability across external ecosystems via IBC Eureka
This Cosmos Hub will stand alongside chains such as Ethereum and Solana as an L1 that is central to its own ecosystem, while uniquely serving as the connective tissue between ecosystems via IBC.
Migration Details
Tokenomics
All circulating OSMO (excluding undeployed Osmosis Community Pool OSMO) will be eligible to convert to ATOM during a defined one-year conversion window. This currently represents approximately 665.1M OSMO.
The conversion rate will be 0.0355 ATOM = 1.998 OSMO. This is based on the 30-day TWAP of the ATOM:OSMO price on March 11, 2026 (the time of public forum proposal).
At current reference pricing, the maximum theoretical ATOM required for full participation is approximately 11.82M ATOM. This is less than 2.5% of the ATOM supply.
To avoid introducing new ATOM supply, the conversion is structured in two phases:
Phase 1 — Community Pool Allocation
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The Cosmos Hub Community Pool (~10.18M ATOM) will fund approximately 85% of the maximum conversion amount
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These funds will be deposited into a conversion contract at the defined rate
Phase 2: Revenue-Backed Completion
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The remaining conversion will be funded over time using protocol revenue
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Revenue sources include:
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Cosmos Hub DEX deployment
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Legacy Osmosis chain during migration
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Revenue will be used to purchase ATOM on the open market and add it to the conversion pool
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If revenue does not fully close the gap within the one-year window, remaining OSMO will not be converted.
At the conclusion of the one-year migration window, any ATOM remaining in the conversion reserve and continuing to accumulate from revenue streams will be released from the migration mandate and returned to the Cosmos Hub community pool. This capital will then be available for alternative usage as determined by future Cosmos Hub governance votes.
No emission or structural inflation changes to ATOM are introduced by this proposal.
OSMO inflation will cease with the software upgrade implementing the changes approved in this proposal, ensuring that the OSMO circulating supply acquired does not increase over the one-year period.
This structure is designed to:
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Avoid introducing new ATOM supply
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Link acquisition cost to real protocol performance
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Allow gradual, market-driven conversion
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Ensure legacy Osmosis activity contributes to ATOM value accrual
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Provide a clear and transparent path for OSMO holders into the broader ATOM economic domain, rather than leaving OSMO dependent on the long-term value of a shrinking standalone execution environment.
DEX Migration
The merger follows a single-chain architecture where Osmosis DEX functionality is redeployed into the Cosmos Hub. In the end state, the Hub becomes the sole execution environment for the DEX. All modules run natively on Hub validators, controlled by Hub governance.
This approach does not involve a state-level chain merge. Instead, Osmosis modules are cleanly redeployed onto the Hub through a standard Cosmos upgrade process.
Modules that will be migrated include:
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poolmanager - Central pool management and taker fees
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concentratedliquidity - CL pools and positions
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gamm - Legacy AMM pools
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cosmwasmpool (including orderbooks) - Allows custom pool implementations
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protorev - Revenue source that arbitrages pools automatically
Once the Osmosis core modules are deployed on the Cosmos Hub, the app.osmosis.zone frontend will be repointed at the Cosmos Hub deployment. The Osmosis deployment will be accessible via legacy.osmosis.zone.
On the frontend, existing users will have a wizard that enables them to easily:
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Transfer their assets on Osmosis to the Cosmos Hub
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Withdraw liquidity positions from Osmosis pools and redeploy them on the Cosmos Hub
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Convert their OSMO to ATOM (during the 1 year window)
Migration is user-driven and not automatic. This minimizes systemic risk and preserves user control.
The Osmosis Foundation team will lead technical implementation and delivery, including:
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Module deployment preparation
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Frontend migration tooling
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Validator support during upgrade
Liquidity Migration
The Top 50 Osmosis pools (based on volume and liquidity) will be recreated on the Cosmos Hub deployment with equivalent parameters at launch. These pools represent the majority of ecosystem liquidity and trading activity.
Users of app.osmosis.zone will be prompted to migrate via a frontend process which walks through each migration step to migrate liquidity to the Cosmos Hub.
Following governance approval, the Osmosis Grants Program (OGP) will coordinate with known liquidity providers and market makers to seed initial liquidity on the Hub deployment.
Identified liquidity sources include:
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~$2.5M controlled by the Osmosis Community Pool
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~$6.3M currently held by known partner teams
Participation from these parties will be voluntary and structured under new ATOM-based incentive agreements as needed
No assumptions are made that all existing liquidity will migrate. But the integration is designed to maximally preserve active liquidity, provide clear migration pathways, and minimize fragmentation during transition.
Historical activity data indicates that a majority of user-owned liquidity remains active:
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61% has interacted within the last 90 days
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79.25% within 365 days
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94.15% within 730 days
These figures exclude protocol-owned liquidity and contract-owned positions and apply across both Concentrated Liquidity and legacy pools. While past activity does not guarantee migration, it demonstrates sustained user engagement and reduces the risk of immediate liquidity abandonment.
To eliminate economic competition between the two environments, liquidity that remains on the legacy Osmosis chain will continue to contribute directly to ATOM value accrual.
Protocol revenue, which previously purchased and burned OSMO or accumulated assets in the Osmosis Community Pool, will instead be redirected to purchase ATOM on the open market to fund Phase 2 of the conversion.
As a result, even if liquidity migration is gradual, trading activity across both the Cosmos Hub deployment and the legacy Osmosis chain accrues value to ATOM holders during the conversion period.
Following the completion of the conversion, this alignment persists, as all remaining Osmosis infrastructure and its associated revenue streams operate under ATOM governance.
Osmosis Growth
The Osmosis Grants Program (OGP) will be re-mandated under Cosmos Hub Governance and will take full stewardship in operating Osmosis. Responsibility for all maintenance, development, and growth will transfer accordingly.
The OGP currently holds approximately $1.2M in assets. Additionally, the Osmosis Community Pool holds approximately $3.8M in non-OSMO assets. These non-OSMO assets will be transferred to the OGP to fund post-merge operations. With this funding, the OGP will have the resources to fund maintenance, development, and growth of Osmosis on the Cosmos Hub for at least 6 years.
Assets such as the Osmosis IP and the Osmosis Frontend will transfer ownership to the OGP, which will continue to operate, develop, and maintain it in perpetuity under Hub mandate.
As they have done under their mandate for Osmosis, the OGP will produce regular transparency reports to its holdings and activities. Because the OGP will be under the mandate of Cosmos Hub Governance, its assets can be clawed back to the Cosmos Hub Community Pool by governance vote.
Applications
Third-party Osmosis contracts and applications will not be automatically migrated. Individual development teams can choose to redeploy on the Hub.
The Cosmos Hub has permissionless CosmWasm deployment as of Proposal 1007 and the addition of Osmosis liquidity and modules to Cosmos will improve the environment in which developers can develop contracts. Permissionless CosmWasm on the same chain as a DEX means atomic DeFi apps will be possible on the Hub.
The CosmWasmPool module will be redeployed on the Cosmos Hub, enabling additional pool types to be deployed fully integrated into the Osmosis poolmanager once whitelisted by governance, and benefit from integrated routing in exchange for additional revenue collection by the Cosmos Hub.
Osmosis Chain
Following module migration, the Osmosis chain will no longer serve as the primary execution environment for the DEX.
During the one-year conversion window, the chain will remain operational to support asset withdrawals and bridging.
OSMO inflation will be disabled upon migration of core DEX functionality.
Validator security will remain active during the transition period to ensure orderly withdrawal and asset safety. New validators will be unable to join the set, and the set size will gradually shrink via governance
After the migration period, the long-term future of the Osmosis chain (sunset, minimal maintenance, or alternative use) and the treatment of any unmigrated OSMO will be determined by ATOM governance.
OSMO holders who choose not to convert will retain full control of their assets, though long-term value will depend on the future direction chosen by ATOM governance for the chain.
Conclusion
Osmosis was one of the clearest successes of Cosmos’s sovereign experimentation. This proposal ensures that its success is not lost to fragmentation, but instead becomes foundational to the next phase of the ecosystem.
The ecosystem is changing. Liquidity, activity, and value are increasingly distributed, and the long-term trajectory of isolated systems has become less certain, as the ecosystem as whole navigates dire straits.
This proposal offers a path to adapt to that reality.
Rather than remaining dependent on a single execution environment, Osmosis can evolve into part of a broader system. Rather than maintaining parallel centers of gravity, this proposal concentrates proven infrastructure where it can most effectively strengthen the Cosmos ecosystem’s chances of survival.
OSMO holders and the Osmosis community are asked to evaluate whether this proposal represents the strongest path forward for Osmosis. Preserving its infrastructure, user experience, and liquidity while integrating it into a broader and more durable economic framework.
To keep the discussion focused, please leave comments on the Cosmos Hub forum post rather than in this thread.