Osmosis, the largest decentralized exchange in the Cosmos ecosystem, is gearing up for a merger with UX Chain (short for UmeeX Chain), the leading decentralized finance lending protocol on Cosmos, formerly known as Umee. This integration is set to be executed through a software upgrade. According to the official announcement, this merger is expected to create numerous synergies, enhancing the capabilities and functionalities of both protocols.
Currently, Osmosis boasts a market capitalization of approximately $450 million. The exchange also maintains a TVL of $140 million, along with a daily trading volume of around $17 million. In contrast, UX Chain, which is relatively smaller in scale, holds a TVL of $13 million and a market capitalization of $21 million.
The merger between Osmosis and UX Chain is strategically designed to enhance the Cosmos DeFi ecosystem. UX Chain will transition its codebase to Osmosis, leveraging Osmosis’s higher liquidity and TVL.
Key benefits of this merger include the incorporation of UX Chain’s features into Osmosis, such as leveraging its codebase for spot margin trading with leverage options. The fusion allows for the shorting of crypto assets, as it combines a lending protocol with a DEX. This integration simplifies liquidations and brings UX Chain’s meToken, a stablecoin aggregation system, to the Osmosis ecosystem, potentially creating a dynamic stableswap solution.
The merger also sets the stage for the development of the first interchain flash loans by combining the lending protocol and DEX architectures. Furthermore, it enables the creation of diverse MEV markets, leveraging the synergies of both platforms.
From a security perspective, the UX Chain team is set to work closely with the Osmosis team to fortify network security. This collaboration, pooling their collective expertise, is geared towards establishing a network environment that is both more secure and resilient.
The projects are also considering unifying their token ecosystems in the future, potentially involving a token swap or migration. This aims to streamline the user experience and bring the merged communities together towards a shared objective.
However, the specifics of how the team intends to merge the two tokens have not been fully disclosed yet. Initially, both tokens will retain their independence as the teams concentrate on product design and merging their respective codebases.
Interestingly, while the Osmosis governance token (OSMO) did not see a significant increase following the merger announcement, the UX Chain token (UX) experienced a growth of over 25%. This suggests that investors are likely anticipating significant benefits from the merger for UX Chain’s token holders.