The OSMO Token
OSMO is the native token of Osmosis. It secures the chain through staking, governs the protocol, and pays for transactions. OSMO is currently used for the following (although governance is free to add or remove these functions):
Supply and emissions
OSMO has a maximum supply of 1 billion. New OSMO is minted each day as staking and ecosystem rewards, on a declining schedule: every reduction period the daily emission is multiplied by a reduction factor of two-thirds, cutting it by a third. This is known as the thirdening. The reduction period is currently 730 days (roughly two years), so emissions step down toward the supply cap over time.
Each day's newly minted OSMO is split between several uses by a governance-controlled set of proportions. As of writing, the split is weighted toward staking rewards, developer rewards, and the community pool. Because these proportions and the reduction schedule are governance parameters, they can change by proposal. For the live values and the mechanism, see the Mint module page under Build.
Staking
Staking OSMO secures the network and earns a share of emissions and fees. When you stake (delegate) to a validator, your OSMO backs that validator's voting power, and you earn rewards in return. Unstaking goes through an unbonding period during which the OSMO earns nothing and cannot be transferred. Staked OSMO also carries governance voting power. For how delegation, rewards, unbonding, and voting work, see Staking and Governance.
Voting
Governance is the critical component of how Osmosis evolves. Active stakeholders of the network are responsible for proposing, vetting, and passing protocol upgrades and parameter changes. Voting power is proportional to staked OSMO. See Staking and Governance for how a proposal becomes a protocol change.
Transaction Fees
Transaction fees are paid by any user to post a transaction on the chain. The fee amount is determined by the computation and storage costs of the transaction. The network-wide minimum gas price is set algorithmically by Osmosis's EIP-1559 style fee market, which adjusts the base fee with network load. This transaction fee is distributed to OSMO stakers on the network.
Validators can choose which assets to accept for fees in the blocks that they propose, allowing users to pay for gas in almost any token listed on Osmosis. All accepted assets are converted back to OSMO before distribution, retaining this utility.
The list of tokens accepted for tx fees is permissionless. Head to the Fee Token Whitelist Controller DAO.
The token must have reasonable liquidity, paired with $OSMO as a minimum requirement.
Taker Fees
Osmosis charges a small taker fee on all trades with a 0.1% default. Several routes have reductions or exemptions, which are managed by the Protocol Fee Controller subDAO.
Taker fees are initially collected in the asset provided as the entry point to the trade.
Non-OSMO collected is divided, with 25% going to the Community Pool and 75% used to buyback OSMO before further distribution.
OSMO collected is distributed partially to stakers (30%) and partially burned (70%) to reduce the maximum supply of OSMO.
ProtoRev
The ProtoRev module mints and burns tokens in order to perform privileged arbitrage transactions onchain, ensuring prices are balanced across all liquidity sources. This happens within the same transaction and results in a net gain after the mint and burn from the arbitrage performed.
If a non-OSMO asset is recovered from this arbitrage, it is sent to the Community Pool as specified in Proposal 709.
If OSMO is recovered from this arbitrage, it is burned as specified in Proposal 710, permanently decreasing the Maximum Supply of 1 billion. All permanent burns can be tracked by viewing the Null Address.
Other Fees
The OSMO token is required as fees for several tasks onchain to prevent spam and encourage considered usage of features. All fees paid go to the Community Pool.
- Adding External Incentives to a pool: 50 OSMO
- Topping up External Incentives on an existing stream: 25 OSMO