Key Points
- Osmosis DAO is likely to adopt a “fee-free” bitcoin bridge through the Nomic protocol.
- This move aims to enhance bitcoin liquidity on the platform by eliminating existing bridging costs.
The Osmosis DAO, the governing body of the Cosmos-based decentralized exchange and appchain, is on track to approve the adoption of a “fee-free” bitcoin bridge via the decentralized bridging protocol Nomic. The proposal has garnered significant support, with 91.7% of the votes currently in favor, with a 46.4% turnout. Voting is expected to conclude at 7 p.m. ET. The proposal has faced minimal opposition, with only 1.2% voting against and 7.1% abstaining.
Impact of the Proposal
If the proposal is approved, it would allow bitcoin to move more smoothly into the Cosmos ecosystem for DeFi-related activities. The initiative proposes a new revenue-sharing arrangement between Nomic and Osmosis, aimed at enhancing bitcoin liquidity on the platform by doing away with current bridging costs.
Currently, Nomic allows users to deposit bitcoin directly to Osmosis to receive its bitcoin-backed asset nBTC, with a capacity limit of 21 BTC, a deposit fee of 1% and a transfer fee of 0.5%. The proposal would eliminate bitcoin bridging fees for transactions originating or terminating on Osmosis. However, a flat bitcoin miner fee may still be charged on withdrawals to Bitcoin to cover transaction fees.
Revenue Sharing and Benefits
In return, Nomic would receive a part of the taker fees from trading of nBTC and its derivatives on Osmosis, aimed at promoting its use on the chain. The proposal stipulates that Nomic would receive 10% of the total taker fees on nBTC-related trades via Osmosis, and a proportional share of fees from trades involving nBTC derivatives.
This could result in reduced costs for bitcoin transactions for Osmosis users, enabling them to directly integrate bitcoin liquidity into the Osmosis ecosystem without incurring additional bridging fees. The mechanism would be implemented during a future software upgrade if approved by both Nomic and Osmosis governance for an initial term of six months, or until superseded by mutual governance action.
About Osmosis and Nomic
Osmosis is an independent Layer 1 blockchain built using the Cosmos software development kit, specifically designed to support its decentralized exchange and automated market maker functionalities. It boasts of being one of the most active ecosystems by developer activity. With $124 million in total value locked on the chain, Osmosis is one of the largest protocols in the Cosmos ecosystem.
Nomic, built on developer Turbofish’s Orga, a custom high-performance blockchain application framework, enables users to securely bridge bitcoin to blockchains that run the inter-blockchain communication protocol (IBC), Cosmos’ cross-chain messaging and bridge protocol. Nomic activated its native Bitcoin (nBTC) interchain upgrade in October 2023, which paved the way for native, tokenized bitcoin transfers within the Cosmos ecosystem.
