The Cosmos DeFi protocol, Osmosis, is about to migrate to the Supercharged Pools mode, entering the concentrated liquidity phase. Cryptocurrency researcher Emperor Osmo has introduced the advantages of concentrated liquidity, as well as the plan and goals for Osmosis’ migration.
When Osmosis launched, IBC was just beginning and liquidity was low. Osmosis introduced a DEX using Balancer-style liquidity pools and incentivized Cosmos to provide a large amount of liquidity. However, because the funds were dispersed among the pools, much of the liquidity went unused.
The creation of concentrated liquidity allows liquidity providers to choose a price range to deposit liquidity. This means that concentrated liquidity will allow users to be more tactical when deploying LPs, while also allowing Osmosis to process the same amount of trade volume with less liquidity, resulting in efficiency estimates 100-300 times higher.
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The newly proposed Supercharged Pools incentive model will focus on pool usage and liquidity; rewards can be claimed at will instead of being allocated within a time period; there is no longer a deposit required upon entering the pool; if users wish to receive excess returns, they will need to pay a deposit. Osmosis will initially migrate to concentrated liquidity through the $OSMO/$DAI pool, which currently has a TVL of $2 million. The migration to the new model is expected to be completed within 30-60 days.
Reference: https://twitter.com/Flowslikeosmo/status/1668634416204365827
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