What is Onomy?

To put it simply, Onomy is an interactive DeFi project developed based on Cosmos. It is an ecosystem built on the Layer 1, fully known as the Onomy Protocol.

The Onomy Protocol encompasses a wide range of business types. It is dedicated to vertical integration in the DeFi sector, similar to many projects of this type. Onomy aims to combine traditional finance with DeFi, offering an ecosystem that includes multi-chain wallets, cross-chain bridge hubs, Dex, and decentralized stablecoins.

Viewing all these different business scenarios as a whole, what Onomy is doing aligns with what many DeFi projects have long advocated—building a comprehensive decentralized financial service system to provide users with a complete crypto experience.

Essentially, Onomy follows a centralized operational mindset but fundamentally belongs to the decentralized category of typical DeFi projects. Although it may lag behind top-tier DeFi projects like AAVE or Compound in terms of scale, its comprehensive vertical business ecosystem makes it a complete and exemplary DeFi project.

❺Topics (outline) heading 2:

Introduction

What is Onomy?

Business Types Covered by Onomy

How Does Onomy Operate?

Native Token $NOM

Current Development of the Onemy Project

Final Thoughts

❻Summary (Same as Meta Description)

To put it simply, Onomy is an interactive DeFi project developed based on Cosmos. It is an ecosystem built on top of Layer 1, fully known as the Onomy Protocol.

The Onomy Protocol encompasses a wide range of business types. It is dedicated to vertical integration in the DeFi sector, similar to many projects of this type. Onomy aims to combine traditional finance with DeFi, offering an ecosystem that includes multi-chain wallets, cross-chain bridge hubs, Dex, and decentralized stablecoins.

Viewing all these different business scenarios as a whole, what Onomy is doing aligns with what many DeFi projects have long advocated—building a comprehensive decentralized financial service system to provide users within the ecosystem with a complete crypto experience.

Essentially, Onomy follows a centralized operational mindset but fundamentally belongs to the decentralized category of typical DeFi projects. Although it may lag behind top-tier DeFi projects like AAVE or Compound in terms of scale, its comprehensive vertical business ecosystem makes it a complete and exemplary DeFi project.

❼Article: What is Onemy?

Projects in the DeFi (Decentralized Finance) space have always epitomized the application of blockchain technology within the financial industry. These projects initially sought to establish the investment utility of various cryptocurrencies and broaden their use cases. Currently, they are evolving toward creating robust financial ecosystems and generally demonstrate a comprehensive and self-sufficient nature.

This trend is conspicuously embodied in Onomy, which aligns with the trajectory of many DeFi projects that have emerged over the past two years. A well-rounded financial infrastructure is one of their key value propositions that attract users. However, it’s crucial to note that the competitive landscape in DeFi is extremely intense. The advantages of first-mover and network effects are quite pronounced. Often, a project’s core competitiveness doesn’t necessarily stem from having a wide array of services.

Onomy’s development over the past two years can be seen as a case in point, highlighting the challenges and opportunities within the fiercely competitive DeFi market.

What is Onomy?

Onomy is an interoperable DeFi project developed atop the Cosmos blockchain. It functions as an ecosystem built over Layer 1 technology, formally designated as the Onomy Protocol.

The Onomy Protocol boasts an extensive array of business offerings. Fundamentally, it serves as a vertically integrated ecosystem in the DeFi segment. Like numerous similar initiatives, Onomy aspires to synthesize traditional finance with decentralized mechanisms. The ecosystem is empowered with features such as multi-chain wallets, cross-chain bridge hubs, decentralized exchanges (DEX), and ecosystem-specific stablecoins.

Looking at these diverse business cases collectively, Onomy embodies many of the long-term aspirations prevalent among DeFi projects. These include the construction of a fully integrated, decentralized financial services framework that provides end users with a comprehensive crypto-centric experience.

In the context of stablecoins and decentralized financial systems, numerous DeFi projects in the industry have already set precedents and case studies. However, Onomy distinguishes itself by setting its long-term goals on catalyzing the transition of global currency markets towards the crypto space.

Based on this strategy, Onomy’s market positioning manifests as a multi-faceted and expansive blueprint. In many aspects, the project team’s approach shows centralized tendencies, including features like a DEX that mirrors the user experience of centralized exchanges (CEX), development kits for ecosystem contributors, and specialized wallet applications.

Fundamentally, Onomy follows a centralized operational philosophy but relies on decentralized architecture at its core. While it may not match the scale of leading DeFi projects like AAVE or Compound, its comprehensive vertical business ecosystem renders it a well-rounded archetype in the DeFi arena.

The History of the Onemy Project

Onomy’s founder Lalo Bazzi has been involved in the cryptocurrency space since 2017. He has tried many early DeFi products, and Onomy’s integration with the Cosmos ecosystem comes from Lalo Bazzi’s interest in Cosmos. Onomy’s product layout and specific function presentation are all closely related to this founder.

The other project co-founder, Charles Dusek, is a talented software engineer with over 10 years of experience in energy finance, private equity, machine learning, and consensus systems.

Together, they have developed hardware mining facilities using ASIC chips and established Onomy in 2021 as a global infrastructure partnership network.

Business Types Covered by Onomy

As previously discussed, Onomy is a vertically integrated DeFi ecosystem with a wide range of business types. Broadly speaking, Onomy offers the following service components to its users:

• A scalable Layer1 blockchain network that provides overarching support for other Onomy products.
• A DEX (Decentralized Exchange) that offers a CEX (Centralized Exchange) experience, granting certain rights to liquidity providers.
• A multi-chain mobile wallet that enables smooth on-chain interactions.

These basic service components ensure the smooth operation of all business aspects that Onomy is involved in. Operating on a fully decentralized principle, Onomy Protocol also relies on Onomy DAO for proposal initiation and ecosystem governance.

The business types covered by Onomy can be simply understood as decentralized smart contracts that provide corresponding CEXs and cross-chain bridges, as well as non-custodial multi-chain mobile wallets on this basis.

Of course, the two core elements supporting the development of Onomy’s business are its blockchain network and its decentralized exchange, ONEX. The former provides foundational support for the overall ecosystem, while the latter combines with the ecosystem’s native token $NOM to offer a range of specific application scenarios, including staking and governance.

It was mentioned earlier that Onomy is a fairly typical example of a DeFi project with high overall completeness. This is precisely due to the synergistic effects generated by Onomy’s multiple businesses. Combined with the DAO’s early push in the project, it’s clear that Onomy’s team intends to create a fully decentralized monetary governance system.

However, because its exchange, ONEX, adopts a non-custodial and order book model, users experience something more akin to a centralized exchange when using its products. But this does not conflict with the underlying decentralized mechanisms; on the contrary, it is a DApp approach that takes into account user experience, with its underlying logic still being decentralized matching.

It’s worth mentioning AMM which is a trading model widely used on DEX platforms.

AMM, or Automated Market Maker, is a DEX model that relies on liquidity pools for trading between different trading pairs. The invention of AMM allows exchanges to operate without relying on centralized mechanisms for order matching, and enables trades to be executed automatically. It uses mathematical formulas to regulate the token reserves in the pool. Traders don’t have to deal with a counterparty, as smart contracts that execute the mathematical conditions will help traders complete the transactions automatically. In an environment where the blockchain network has limited throughput and high transaction costs, the AMM model is popular for its simplicity and effectiveness.

How Does Onomy Operate?

After the launch of its DAO, most of the proposals and actions within the Onomy ecosystem are completed through Onomy DAO. Its overall operation mode is as follows:

• The Onomy blockchain network is an independent Layer 1 application blockchain built using the Tendermint BFT consensus mechanism and is constructed based on the Cosmos SDK developer toolkit.
• Arc Bridge Hub is a typical two-way cross-chain bridge that provides bi-directional cross-chain capabilities for important blockchain networks both inside and outside the Cosmos ecosystem. This includes support for the transfer of crypto assets between Cosmos public chains that support IBC, and other public chains like Avalanche, Polygon, and Moonbeam.

• ONEX is the most crucial component of the Onomy ecosystem. It features on-chain, decentralized, and non-custodial elements combined to address a large volume of user trading needs. ONEX combines AMM automated liquidity pools with an order book UI, allowing liquidity providers to earn revenue while enabling traders to engage in familiar order book trading strategies, supporting market orders, limit orders, stop-loss orders, and conditional orders.

  Thanks to the support of Arc Bridge Hub, ONEX can achieve cross-chain capabilities and is inherently multi-chain, able to integrate with Onomy Access and Onomy’s bridging network. This allows ONEX users to trade native assets seamlessly across different blockchain networks or trade native assets on a specific blockchain network.

• Onomy Access is the wallet application belonging to the Onomy ecosystem. It is a non-custodial, multi-chain mobile wallet application. Users can manage all assets from integrated blockchains through it, including staking, governance, and asset transfers. The official release is now mainly promoting multiple blockchain NFT asset viewing and management features, which can be seen as Onomy’s attempt in the non-DeFi sector.

• Finally, the complementary Onomy Reserve serves as the treasury for the project, providing the necessary financial reserves while also being the autonomous basis for the Onomy DAO. The Onomy Reserve also manages and offers the minting of decentralized stablecoin Denoms, and the Onomy DAO votes on various proposals, including the collateralization rates for Denoms. Denoms stablecoins can be used for foreign exchange, payments, remittances, lending, and settlements.

Overall, this is how the Onomy project operates. In it, Denoms serves as the ecosystem’s stablecoin, working alongside the native token $NOM. However, compared to the latter, which is widely used for various payments and DeFi scenarios within the ecosystem, Denoms is more anchored to fiat currency, providing ecosystem users with a basic dual-token model design, with $NOM playing a relatively larger role.

Features of the Onemy Project

One of the most distinctive features of Onomy’s operational model is the vertical integration evident throughout its ecosystem.

Users can directly access their crypto assets from the Onomy Access wallet, execute exchanges via ONEX, and the Arc Bridge Hub provides cross-chain bridging for these assets. This means that when dealing with the exchange and circulation of different assets, everything can be completed directly within Onomy Access, eliminating the need for cumbersome operations via multiple browser extensions.

Furthermore, due to the role of Arc Bridge Hub, users experience the benefits of decentralization when using Onomy. This is evident in the agnostic approach towards various blockchain networks, meaning there’s no need to lock into a specific token for interactions. In fact, the project encourages the participation of diverse types of crypto assets within its ecosystem.

Additionally, Onomy employs Natural Rights to offer a non-custodial private key management solution for single sign-ons across multiple blockchains. Onomy Access achieves integrated cross-chain bridging, allowing users to manage their investment portfolios in DeFi projects on-chain.

As mentioned earlier, Onomy tends to offer a more centralized user experience. This is because ONEX employs a hybrid structure that combines order book methods with AMM, making the user experience on ONEX more akin to that of a CEX (Centralized Exchange).

Native Token $NOM

Onomy’s native token, $NOM, was gradually issued and released in the first quarter of 2023 as part of the advancement of ecosystem governance.

The current total market cap of this token is $6,551,197, with a current total supply of 145,887,742 tokens. Since its launch, there have been no adjustments to its tokenomics.

Source: coingecko.com

According to the original distribution ratio, the majority of $NOM is concentrated in the DAO treasury, and is used in combination with Denoms stablecoin for minting.

As the native token of Onomy Protocol, $NOM has the following functions and rights:

• Staking: $NOM holders can participate in staking rewards by delegating their $NOM to validators of the Onomy Protocol blockchain network. By doing so, $NOM holders receive staking rewards.
• Governance: As Onomy is managed by Onomy DAO, $NOM holders guide all decisions through non-weighted voting.
• Used as collateral: $NOM serves as collateral for the Denom stablecoin. Users can mint a corresponding amount of Denom by locking $NOM into Onomy’s reserves.
• Used for cross-chain bridge fees: Fees required for cross-chain transactions via Arc Bridge Hub need to be paid in $NOM.
• Participation in AMM liquidity rewards: There are two ways to use ONEX’s AMM profits. Apart from a certain percentage being paid to liquidity providers as rewards, the profits from AMM are also used to automatically purchase and burn $NOM tokens from the total supply. This process is done without the intervention of any centralized institution or DAO management, and is part of $NOM’s economic design. Onomy incentivizes users who execute this buying and burning function by providing rewards, indirectly encouraging competition.

Currently, $NOM is highly integrated into various products within the Onomy ecosystem, and its interactive design with Denom provides a fairly clear model of participation benefits and application value for the entire ecosystem.

However, since the launch of $NOM, its price trend has generally been declining. In this year’s sluggish overall crypto market environment, traditional DeFi projects are no longer performing as they used to. The current price of $NOM has now fallen to the $0.145 range, which is disappointing compared to its initial high of over one dollar, all within less than half a year.

（Source: gate.io）

Current Development of the Onemy Project

Corresponding to the declining price of $NOM, the development of the Onomy ecosystem is gradually falling into an uncertain state.

During the 2021-2022 period, Onomy went through three rounds of fundraising, accumulating a total of 10 million dollars. This amount also includes the initial startup funds from private investments. However, the current market capitalization of the project’s native token, $NOM, has shrunk to around 6 million dollars. Coupled with the development of various supplementary facilities for the project, the overall resource investment is considerable.

Fortunately, the liquidity in the Onomy ecosystem is still abundant. What the project may need more urgently now is either a favorable trend in the overall crypto market or a new round of capital injection.

However, according to Onomy’s roadmap, it’s evident that their early planning is still in progress, and collaborations with major public chains have not stopped. One can adopt a wait-and-see attitude regarding the project’s future developments.

Looking at the official Roadmap released by the Onomy project, most of the corresponding protocols have already been deployed and launched.

From the early Phase 1, focusing on product development and design and testing in TLA+, to Phase 2, beginning work on wallets and bridging to ecosystems like Ethereum, the preliminary work for the Onomy ecosystem is essentially complete. Furthermore, the testing and auditing work for Phase 3 was also completed before ONEX went live.

What crypto users are seeing now in terms of various products and protocols in the Onomy ecosystem mainly went live during Phase 4, which included the wallet and its related bridges.

By Phase 5, Onomy officially launched ONEX as well as the $NOM token, and IBC integration was also completed within this phase. In reality, the entire Onomy ecosystem has already reached Phase 6, with developments like lending and liquidity pools currently being advanced. However, no new Roadmap has been officially released, leaving the future development plans of the ecosystem unclear.

Source: onomy.notion.site

Conclusion

As the trend toward Layer 2 becomes increasingly clear, various DeFi projects are also beginning to explore new directions for expansion. Whether it’s LSD-style approaches that anchor mainstream currencies to increase liquidity or ETF-type methods that comply with regulatory policies to make advancements into the mainstream, all aim to find better prospects for project development in the current harsh market conditions.

Onomy is also facing these choices. However, in some sense, it falls under more conventional DeFi projects. For crypto users who are familiar with the DeFi landscape, it may lack a sense of novelty. Nevertheless, as long as it can generate satisfactory returns in terms of profits, it will likely effectively improve the project’s current situation in subsequent developments.