Merger Between Osmosis and Umee

Dear Osmosis Community,

When looking through the Cosmos, it is clear that Osmosis has shown a dominant presence as the most successful DEX in the ecosystem. Concurrently when looking at lending platforms in Cosmos it is quite apparent that the Umee UX Chain is the dominant lending platform in Cosmos with more special features than any other lending platform in crypto. Considering the potential synergies, we’re proposing a merger of these blockchain protocols into one of the most powerful DeFi ecosystems possible.

  1. Code Development Integration:

In this proposal, we will recommend that the UX Chain will transition its code development to be built on top of the Osmosis blockchain. This means reimplementing the code base on the Osmosis chain in order to benefit from the pre-existing liquidity, TVL, and functionality. This strategic move will foster greater collaboration, code optimization, and superior product design in DeFi. This means implementing all of the most advanced lending features onto Osmosis and ensuring that these features can be blended with the Osmosis codebase.

Concurrently this would benefit from shared TVL between the two networks. By combining the TVL between protocols, the goal will be to onboard larger portions of market share within this synergistic ecosystem. By consolidating development efforts, we aim to enhance the technical capabilities of both chains and unlock new possibilities for DeFi.

  1. Mesh Security Collaboration:

Mesh Security research is one of the most important aspects of the evolution of chain development. The UX chain will actively collaborate with the Osmosis chain to bolster mesh security. The combined expertise of both projects will contribute to creating a more secure and resilient network, ensuring the safety of user assets and the overall stability of the ecosystem.

This collaboration will involve a deep integration of security protocols and a joint effort to address potential vulnerabilities.

  1. Potential Token Swap/Migration:

As part of the merger, this proposal opens up the possibility of discussing a token swap or migration mechanism. This process will ensure a seamless transition for the community, aligning token values and functionalities. The goal is to maintain fairness and transparency throughout the tokenomics, providing a mechanism towards ensuring proper value is ensured between both networks.

Tokenomics is one of the most important aspects of a decentralized network, so further analysis and due diligence will be put in place around discussing the most efficient mechanism for ensuring proper alignment. Feedback and direction will be requested from the community on how best to execute this process and the exact execution will be discussed and decided on at a later date in the future.

Benefits of the Merger:

Margin Trading
UX codebase can be used as a leverage feature for Osmosis Spot Margin Trading.

Shorting
A lending protocol alongside a dex protocol allows a market for shorting crypto assets.

Liquidations
By combining the features of a lending protocol and dex, you can instantiate more streamlined liquidations for the lending protocol.

Stablecoins
The UX chain deploys a stablecoin aggregation system called the meToken. This acts as an index for stablecoins. By combining this stablecoin index token with Osmosis, you have the potential for a powerful stableswap combination.

Interchain Flash Loans
By combining the architectures of a Lending protocol and a DEX, the first interchain flash loans can be developed.

MEV Markets
Multiple MEV markets can be developed from both a dex and lending platform.

What can we expect from this:

Enhanced Technical Capabilities: The integration of the UX Chain’s code on Osmosis will result in a more powerful and versatile blockchain platform.
Improved Security: The collaboration on mesh security will create a more robust network, minimizing potential vulnerabilities and attacks, while enhancing overall user confidence.
Unified Token Ecosystem: The potential of a token swap/migration would simplify the user experience and align the community towards a common goal, fostering unity within the ecosystem. More discussion would be needed if this were a path in the future.

Initial Phase

In this initial phase of the merger between Osmosis and the Umee UX Chain, the focus will be on product design and a merging of the code bases. This product-centric approach of implementing the UX Chain leverage module onto the Osmosis chain is to ensure that the most advanced DeFi product is developed towards offering the best functionality in crypto.

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.

Community Feedback:

This Forum Discussion has been adapted from the original Forum post on the Umee UX governance forum linked here:

Merger Between UX Chain(Umee) and Osmosis

This forum post to Osmosis governance is the first step towards pursuing the merging of joint codebases between these protocols. Your feedback is crucial in shaping the future of this proposed merger. We encourage the community to share thoughts, concerns, and suggestions to ensure a well-informed decision-making process.

We are excited to explore this new development in our long term roadmap. Let’s work together to make this merger a reality and unlock new possibilities for the Cosmos ecosystem!

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This is a VERY interesting proposal. I like the idea to merge codebases and talk about token buyouts (the more controversial part of all this for sure) at a later date. Keeping those two discussions separate will help make a transition easier, imo.

One clarifying question. The merger would have the UX codebase added to the Osmosis chain, but the UX chain would still exist under this initial phase. What would the purpose be for the chain to still exist?

Would the UX protocol still run on the UX chain as normal (while simultaneously running on Osmosis)? Or would it just be to house the token transaction events until it’s decided what will happen with the token?

Altogether a very exciting thought. Interested to hear more in the coming weeks!

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Great questions!

Our first mission is to seamlessly merge the product and codebase first. Once that’s a win, it’s community brainstorm time!

Think shared security across chains, mesh security, other interoperability protocols, plasma, or some protocols that have not been on the stage yet.

These will be for the community to decide, we want to truly emphasize the idea of community driven here :smiley: !

Product & security comes first… tokenomics and everything later!

Can not add anything on the token buyouts part…yet!

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Interesting take. My question would be, why would the Umee community agree to that?

Because the Umee chain would basically be obsolete after the merge into Osmosis which means the biggest looser are the Umee validators and the token holders. You mentioned a Token Swap/Migration mechanism.

Is there anything concrete regarding that? Because that point was also a big one when talking about the stride & atom merger idea.

Edit: I just saw your answer that you can’t add infos on the token buyouts.

So my question remains, what advantage is the Umee community having?

Very excited about the possibilities ahead here. Consolidating DeFi is going to make this ecosystem flourish.

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As a member of both Osmosis & Umee community, I strongly support this. This merger is mutually beneficial and will significantly bolster the value proposition of both protocols.

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As a featured app maybe but not combined treasuries…osmosis already has real yield with concentrated liquidity already there why mess with its tokenomics…cosmo ecosystem coins are thriving in broader crypto, native usdc coming, and nomic bringing btc…it only gets better

CONTEXT:

We extend our gratitude for presenting this merger proposal between Umee UX Chain and Osmosis. This strategic move, combining Umee’s lending prowess with Osmosis’ position as a leading DEX, holds promising potential for the DeFi landscape.

ANALYSIS:

  1. Endorsement of the Merger: We commend the proposal for its foresight in blending Umee’s lending features with Osmosis’ robust ecosystem. The envisaged benefits – margin trading, shorting, liquidations, stablecoins, interchain flash loans, and MEV markets – promise a synergetic and innovative DeFi platform.
  2. Financial Considerations: In terms of financial structuring, we propose exploring convertible bonds. This financial instrument could facilitate a smoother transition, aligning both networks economically. Our post in the Cosmos Hub’s Forum elaborates on the strategic advantages of employing this against a token swap or a buyout strategy. In the context of this merger, we would recommend a duration of approximately 24 months for an effective integration period.
  3. Community Engagement: Emphasizing community involvement is commendable. The diverse Cosmos community holds valuable insights, and engaging them in the decision-making process ensures a well-rounded perspective. Despite the early positive comments we see, a much broader consensus would be required before proceeding.

CONCLUSION:

Anticipating an exciting phase in the potential merger, we look forward to witnessing the positive outcomes and contributions from the whole Cosmos ecosystem. Sustaining collaborative and transparent practices will undoubtedly fortify the success of this endeavor. At Govmos, the governance arm of the PRO Delegators’ Validator, we wanted to express our support to this idea while also recommending the teams to study the use of a convertible bond system.

Best Regards,

Super excited about this prop! Perfect timing too.

There’s questions around: what happens to the UMEE chain, its validators, the token etc. Also seeing concerns as well about how this may impact Mars Protocol on X and questions around Osmosis alignment with the projects it partners with.

I’m all for this if the net impact is positive and (from my not very informed-about-the-raised-concerns POV) me thinks it is!

LFG

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I love everything about this proposal.

It makes Osmosis the real hub of the Interchain. (I don’t consider cosmoshub-4 to be the hub of Cosmos)
It highlights mesh security’s importance (vs AEZ) and catapults both communities forward.

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excited for this project.

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It’s a very appeal proposal specially to UMEE holders, OSMO is a consolidated platform in the HUB, and the idea of Mesh-security just make this better, unfortunately ICS has no traction and not many chains meet the requirements except for OSMOSIS, that’s why ATOM will be deligthted to merge with it. The problem i see is that many people think about ICS like a private club, and refuse to support projects in AEZ equally, that’s why mesh security could be so atractive, secure chains without lose sovereignty, and most important fair support and competition between chains, competition is required in any field to foster innovation and iterate products, if ICS keeps acting like private club trying to create monopoly as example LST then will perish from innovation starving soon or later. On the other hand if OSMO and UMME can provide the basis to mesh security i’m highly convinced other dapps will follow, it sounds good to me, and i’m exited to see how this would evolve.

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We like the idea of merging into Osmosis. But what about validators validating only in UX and Ojo networks? will all join Osmosis or will they be just kicked out of the project after these years supporting the project?

Got an answer to one of the questions: Mars Protocol seems to be merging? with Neutron as well.

Aah it’s not a “merger” just a migration.

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Hey Feida!

As already answered in discord, the current merger is focused on code base integration and merging the actual DeFi Products.

Existing UX validators should expect to continue operating as usual. No changes are being made in terms of validators as it relates to this merger.

Mesh security will require time and research and we are continuing along this process to design how to best implement this.

In the case something changes, it will be brought up to the communities, and discussed, and we will choose the best path…

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Being a long term Cosmos core contributor, and lead engineer at UX / Umee, I’m really excited about this move.

Osmosis has a great community, is known for both welcoming big and small project, and is one of the most important players in the Cosmos ecosystem. Real OGs. Huge believers of the Interchain with the true DeFi spirit.

UX (Umee) is the leading, IBC first, most secure money market. WE put lot of efforts to monitor the markets and introduced pioneering mechanisms into the lending system.

Together, Osmosis and UX can create potential to move the Cosmos ecosystem to the next level, disrupt Ethereum blue chips and traditional incumbents. The merge will create the DeFi Zone.

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I’m not an user of Umee, so can’t talk on that field.

However, building projects on top of Osmosis was always the purpose of the Osmosis ecosystem. What gets me wondering, what would it mean in terms of development? Would it be hard to do? Doable? Or easy?
What would it mean for the current load on the chain? Would that differ when we build more functionality in?
What would it mean for the current load on the validators? Will that change?

This is great news and excited to see Umee integrate with Osmosis.