The global Forex industry regulates the trading of worldwide currencies and is the largest and most liquid market. With such a vast infrastructure, it scales the daily volume of 6.6 trillion USD(according to the 2019 Triennial Central Bank Survey of FX and OTC derivatives markets).
Every time we exchange one currency for another, we invest in the Forex market. Being the largest financial market and the pillar of the global economy, the Forex exchange market supports trade, import, and export settlement for various countries.
Although the Forex market is the most active and powerful, it has its disadvantages, including low feasibility, difficulty in keeping ledger records, and high cross-border exchange costs. Blockchain can resolve these challenges and empower the mass adoption of fiat currencies by automating most of their operations.
Blockchain also ends centralization, which requires intermediaries and brokers for maintaining funds and is outdated. It further revolutionizes the currency markets with digital assets and blockchain-based infrastructures.
Even those not associated with Defi anyway are now aware of the benefits that decentralized infrastructure brings to the industries like the Forex market. People don’t want intermediaries to participate in the exchange process. Instead, they have more trust in the blockchain network and validators.
This shift in user interest has encouraged the Forex market to develop a public and transparent trading platform rather than an institutional market. Another significant force of change in the Forex market is the rapid adoption of decentralized technology across major industries and the existing users’ overwhelming response towards decentralization.
Now that we are talking about decentralization, the next question is how to enforce decentralization to the infrastructure of the Forex market. Certainly, a blockchain protocol is needed to regulate the Forex market, and here, Onomy comes as a solution.
Onomy drives changes in the fragmented and outmoded Forex market, providing it with a robust blockchain-powered infrastructure where all transactions of this vast market can exist and be managed on-chain. Onomy identified the challenges that fiat exchanges create that digital currencies with stable value (i.e., Stablecoins) can address. However, Stablecoins are not directly accessible to fiat holders; Onomy has to bridge the gap.
- What is Onomy protocol?
- Who is behind Onomy protocol?
- What are the core pillars of Onomy??
- How does Onomy protocol define Denominations (Denoms)?
- How do users benefit from Onomy protocol’s Bonding Curve Offering?
- What makes Onomy protocol unique?
- How does the Onomy protocol work?
- How does Onomy solve the challenges of the Forex Market?
- Onomy protocol’s Product Roadmap
What is Onomy protocol
Onomy protocol is a layer 1 blockchain network designed to work as a multichain decentralized exchange. It aims to converge the decentralized finance and Forex market through cross-chain bridges that support a variety of crypto assets and Stablecoin representation of fiat currencies.
With the ability to be open, permissionless, and highly interoperable, Onomy supports cross-chain minting, trading, and lending of stable coins. To enable this cross-chain trading of Stablecoins, Onomy employs a bridge called EntangleMint that acts as a decentralized exchange, helping users get liquidity from chains through bridging.
The Onomy network, in a way, replicates the existing financial infrastructures in a more decentralized and transparent manner. The protocol’s native token, $NOM, plays a significant role in the Onomy ecosystem development. From being utilized for governance purposes, to securing the network, to allowing minting of Stablecoins, $NOM serves various purposes, including collecting revenue from exchange fees.
As a result, Onomy’s architecture serves as a reliable and immutable system with complete openness, fair distribution of access rights, and interoperability. There is no need for any middlemen, clearing house, or escrow since most functions are executed through the code written on “smart contracts.”
Who is behind Onomy protocol?
The Onomy protocol is relatively new in the blockchain space. Lalo Bazzi and Charles Dusek co founded it in December 2020.
Bazzi is an ex-associate at Fidelity Investments and a former Microsoft cloud solution strategist with approximately four years of experience in the blockchain space.
Dusek is a seasoned engineer with 10+ years of experience working in finance, energy, machine learning, private equity, and consensus systems.
Both of them turned various innovative ideas into reality, developing mining hardware, utilizing ASIC chips, and building the global network that is the Onomy protocol
What are the core pillars of Onomy?
The layer 1 blockchain network runs on the Cosmos ecosystem and leverages the Tendermint NFT consensus algorithm and inter-blockchain communication (IBC) protocol. Utilizing the benefits from these top platforms, the Onomy Network works as a true P2P protocol that validates and stamps transactions and rewards validators in NOM (the native currency of Onomy Protocol) for their contribution.
ONEX is a robust, cross-chain DEX that supports the trading of various cryptocurrencies. The ONEX integrates the automated market maker (AMM) and order book method for more efficient and liquid trading of Stablecoins pegged to the value of even the major national currencies.
Onomy Access is a noncustodial multicurrency wallet integrated with token-specific features such as staking and governance. To access the wallet and access the exciting opportunities of the DeFi world, users sign in with a single QR code, so there is no need to manage multiple wallets or browser extensions.
ORES is like the reserve bank for the Onomy protocol. It governs Denoms through collaterals, playing a vital role in raising the total currency flow on the platform. The reserve further provides tokens to the Bonding Curve Offering, allowing it to function as expected in a self-stabilizing way.
How does Onomy protocol define Denominations (Denoms)?
The Onomy protocol acts as a bridge to allow the fiat currency market to plug into the DeFi ecosystem using crypto-collateralized stable coins known as Denominations (Denoms).
These Denoms reside in the Onomy Reserve (ORES). They enable users to trade, lend, and mint Stablecoins on the Onomy ecosystem, thereby offering exciting new opportunities that are not yet available in the world of traditional finance.
Denoms can be pegged to represent the value of different major currencies, including the US dollar (USD), Euro (EUR), British pound sterling (GBP), and Japanese yen (YEN), expanding the existing Stablecoin economy beyond just the USD variants.
The Onomy Network is dedicated to maintaining the stability of Stablecoins’ value. It adopts many control mechanisms such as using reserve rates and preserving minimum collateralization ratios to ensure Stablecoins achieve parity with their respective fiat currency.
Users can trade Denoms and other crypto assets on the Onomy exchange (ONEX). These utilities can also be traded across numerous chains using the Onomy bridge, connecting popular blockchain networks, including Cosmos, Ethereum, Avalanche, and Cardano.
How do users benefit from Onomy protocol’s Bonding Curve Offering?
The Onomy protocol provides users with great convenience, helping them gain prompt access to $NOM through an instant market with deterministic pricing and adequate liquidity. The protocol adopts the Bonding Curve Offering model, providing significant benefits to the token holders.
The bonding curve is essentially a crypto-economic parameter that acts as an AMM to streamline the supply-and-demand relationship. This token model is also called a Continuous Token Model since its price is continuously calculated according to the changes in supply and demand.
It replaces the conventional method of token pre-selling with an automated market maker contract that continuously mints new tokens and makes them available for traders.
The bonding curve works without any centralized authority, allowing users to buy tokens via smart contracts where the price of the tokens is determined through pre existing algorithms and supply and demand.
However, its mechanism is the opposite of the traditional supply-and-demand phenomenon, with the price of the token increasing as the supply increases and vice versa.
Built and deployed on the Ethereum blockchain, the Ethereum Network regulates the bonding curve and issues wrapped tokens (wNOM). The Onomy protocol’s AMM (bonding curve) has a load up to 100M wrapped NOM, and the tokens are exchanged according to a 1:1 ratio.
The interface provided for this exchange is commonly known as the “bridging” of wrapped NOM tokens between Ethereum and the Onomy ecosystem. Through bridging, wNOM is first burned on the bonding curve, and an equivalent number of tokens is issued on the Onomy protocol.
Benefits of Bonding Curve Offering in a nutshell:
- Deterministic price
- Continuous price
- Instant liquidity
What makes Onomy protocol unique?
Onomy continues to grow with its motivation to expand the Forex market, raise the prevalence of Forex exchange beyond USD, and bring its infrastructure on-chain through blockchain technology. To achieve these goals, the network features various unique attributes, which are outlined below.
Onomy offers a unique form of Stablecoins called Denoms. These denominations present a more efficient means to trade Stablecoins and combine fiat’s best qualities (such as value and utility) and the revolutionary features of cryptos (such as security, tamper-proof technology, and permissionless quality).
The Onomy protocol integrates DAO to transfer the regulatory authority to members or the token holders. Based on the number of tokens they hold, members can propose resolutions surrounding the growth of Onomy via voting and initiations.
The Onomy protocol’s mechanism is not limited to a specific technology; rather, it utilizes many technologies to offer users a consistent decentralized experience. For instance, users can mint and trade Denoms on the Onomy Network while funneling liquidity from multiple blockchain protocols.
Hybrid DEX model
Onomy DEX is different from traditional DEXs in that it adopts a hybrid structure, implementing the order book method and AMM. Onomy provides more powerful token and liquidity management functionalities, unlocking the full benefits of centralized and decentralized exchanges.
Onomy brings convenience to users, alleviating the pain of managing multiple private keys and separate wallets for each crypto platform. Instead, the network offers a single login with its unique noncustodial private key management solution, Natural Rights, which allows QR login on multiple blockchains.
The Onomy protocol relies on a core group of validators to maintain the integrity of its Cosmos-based proof-of-stake (PoS) network. These validators receive an incentive through a unique reward system to meet the required obligations. Individuals can stake their tokens on their favorite validators and earn incentives if their validators perform as expected.
How does the Onomy protocol work?
With its aim to seamlessly migrate the finance industry to the blockchain, the Onomy protocol acts as an infrastructure that supports the minting of digital representations of traditional currencies or fiat. The network bridges the gap between centralized finance (CeFi) and decentralized finance (DeFi).
The Onomy protocol is built on the Cosmos ecosystem. It is widely recognized as the most advanced blockchain on the blockchain horizon and is 100x more efficient than Ethereum, offering greater throughput capability and enhanced features. Furthermore, the Onomy protocol has also developed a new consensus algorithm—Equity, that powers the existing throughput capabilities of Cosmos and provides more decentralized infrastructure.
Cosmos is further powered by the Tendermint protocol, a network based on the IBC framework. Tendermint functions as a robust PoS consensus protocol, while IBC offers cross-chain functionality between Cosmos networks. By leveraging the benefits from the Cosmos ecosystem, the Onomy protocol offers a multichain infrastructure.
Interoperability is further enhanced with bidirectional bridges to prominent blockchain networks outside the Cosmos ecosystem. The Onomy bridge network, named EntangleMint, enables cross-chain spatial arbitrage between DEXs by providing liquidity pools on major chains to efficiently bridge assets between chains.
How does Onomy solve the challenges of the Forex Market?
The Forex market currently works with a more centralized infrastructure, providing intermediaries like banks, traders, and brokers potential opportunities to manipulate their ability to access the trading channels and utilities that individuals cannot completely access. At the same time, retail traders complain about the lack of visibility on these channels, which allows intermediaries on both sides to increase charges, withhold accurate pricing information, and trick customers. Such practices cause retail traders to bear unnecessary costs and delay transaction processing.
To solve the prevailing challenges of the Forex market, Onomy’s blockchain protocol decentralizes its infrastructure and removes the entry barriers for retail customers, providing them with a more transparent, open, and composable platform for trading and exchange. Stablecoin integration for the Forex market leverages the fiat interfaces to offer consistent liquidity with no hindrances, an idea the Onomy team introduced and implemented. Retail customers can access all the data related to price and other factors that determine cost with no intermediaries.
Onomy protocol’s Product Roadmap
Onomy wallet is a highly interactive and secure wallet for holding and managing NOM and Denom. The wallet further supports trade on multiple blockchains, including Polkadot, Cardano, and Ethereum.
Onomy bridge hub
Bidirectional bridges for bridging assets across multiple chains and performing liquidity aggregation allow users to obtain liquidity by staking their tokens.
Onomy Mint is a dApp that supports the minting of Denoms by using $NOM as collateral.
Onomy bonding curve platform
The platform facilitates users with a Bonding Curve Offering.
The interface allows people to become mainnet validators and monitors.
Onomy exchange is a multichain decentralized bridge that enables the trading of Denoms, which corresponds to the attributes of a bridge hub. Moreover, it allows users to earn yield against their staking of Denoms and $NOM.
Onomy liquid stake
The platform is designed to provide tokenized liquidity and incentives to users contributing to the protocol’s development.
The Onomy protocol is evolving continually, becoming a stronger ecosystem that thrives and prospers. The protocol has lined up product launches and strategies on its publicly accessible roadmap. With its comprehensive approach to facilitating a more profound and decentralized structure on the Forex market, the network has encouraged major Forex markets to migrate on-chain and improve networking, collateral and monetary management, and other aspects.
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