Osmosis Introduces Concentrated Liquidity on the Cosmos Network, Empowering LPs with Price Selection

Osmosis Labs, the developer behind the Cosmos-based decentralized exchange Osmosis (OSMO), has announced the launch of a groundbreaking feature called “concentrated liquidity.” The new functionality, revealed on July 12, empowers liquidity providers (LPs) by allowing them to define their preferred minimum and maximum prices for buying or selling cryptocurrencies.

While concentrated liquidity has become a common feature in the Web3 space, it has been relatively rare within the Cosmos ecosystem until now. Osmosis aims to enhance the original version of concentrated liquidity introduced by Uniswap v3, taking it a step further.

Unlike Uniswap’s approach, which limited LPs to setting minimums and maximums at specific price intervals or “ticks,” Osmosis has introduced a more refined system. Within each price range, Osmosis offers additional ticks, enabling LPs to establish finely tuned minimum and maximum price points. This enhancement aims to address user frustration by allowing for greater precision in price preferences.

Alpin Yukseloglu, a protocol engineer at Osmosis Labs, explained the rationale behind the improved concentrated liquidity feature, stating, “We’re keeping that scaling, but we’re adding more ticks into each bucket to make it so that you can have those more granularly placed preferences.” Yukseloglu further revealed that Osmosis has plans to develop a comprehensive on-chain order book, although no specific timeline has been announced for its implementation.

Osmosis’ emphasis on providing liquidity providers with more options aligns with its broader objective of empowering the ecosystem. Similarly, crypto futures exchange dYdX is also working on an on-chain order book as part of its transition to the Cosmos ecosystem.

The announcement comes after Osmosis co-founder Sunny Aggarwal expressed confidence in Cosmos IBC (Inter-Blockchain Communication) as a secure cross-chain bridging protocol. Aggarwal referred to IBC as “the safest bridging protocol in existence.” In October, a critical vulnerability was discovered in IBC, but it was promptly patched the following day, demonstrating the commitment of the Cosmos ecosystem to security and continuous improvement.

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