Crypto assets within the Cosmos ecosystem have been on the rise since early 2022, thanks to an increased focus on conveying cross-chain compatibility with other blockchains. One Decentralized Financial Protocol (DeFi) that has benefited from the current expansion plans is Osmosis (OSMO).
Osmosis is the first decentralized exchange (DEX) to serve projects that use the Interblockchain Communication Protocol (IBC) and data from. are connected Cointelegraph Markets Pro show that OSMO price rose 123% from a low of $ 4.05 on December 17th to a new all-time high of $ 9.24 on January 7th.
OSMO / USD 1-day chart. Source: CoinGecko
Three reasons behind the price growth at OSMO are an increase in trading volume on DEX, a record high in the total value of the protocol, and the release of cross-chain bridges connecting the cosmos (ATOM) Ecosystem with other Ethereum (ETH) Virtual machine (EVM) compatible networks.
Increase in trading volume
One of the biggest factors influencing the price of OSMO was the significant increase in the volume of trading on the exchange. According to data from Token Terminal, trading volume hit a record high of $ 186.8 million on Jan. 7 and hit a new all-time high on the same day.
OSMO price vs. DEX trading volume. Source token terminal
The surge in trading volume and token price briefly led Osmosis to become the third-placed DEX by market capitalization, as highlighted in the following tweet from Twitter user Jimmy Yang.
The third largest DEX token is a @Cosmos DEX $ OSMO $ ATOM pic.twitter.com/UbBNur2Dsr
– Jim Yang is hiring (@proofstake) January 6, 2022
Other factors that have helped support the price of OSMOs as the volume of trade has increased are the fact that there are currently more than 81 million OSMOs in use on the network, according to on data from SmartStake. In addition, a large part of the offer is also used to provide liquidity in the various liquidity pools offered on Osmosis.
Total value locked in the rise
A second development that underscores the upward trend for OSMO is the steady increase in the total value underlying the protocol, which hit a record $ 1.21 billion on Jan. 11. according to based on data from Defi Lama.
Total value locked on osmosis. Source: Defi Lama
The climbing TVL comes as a multiple Tokens in the Cosmos ecosystem hit new highs. In particular, ATOM, Cosmos’ best-known asset, hit a daily high of $ 43.64 on Jan. 7, which is just one dollar below its all-time high. Osmosis’ second native token, ION, also hit a new high of $ 16,500 on Jan. 11.
Related: 3 reasons why the price of Cosmos (ATOM) is nearing a new all-time high
Cross-chain relieves dealers
A third reason for the bullish turn at OSMO is the increased attention Cosmos has paid to EVM compatibility and cross-chain bridges.
Evmos is a current project in development, working to become the first IBC-compatible EVM-based chain and currently supporting ERC-20 tokens in its test network.
IBC-compatible ERC20 tokens
Now live on @EvmosOrg‘s incentivized testnet!#IBCGang @cosmosibc @Cosmos https://t.co/0knQk4gf9G
– Federico Kunze Küllmer (@fekunze) December 22, 2021
Injective, an L1 protocol, has also shown that cross-chain bridges are being developed for Cosmos-based projects and support for OSMO is currently in progress.
Take a look at the latest Injective Bridge IBC integration @osmosezone ️ @InjectiveLabs
the @Cosmos The IBC ecosystem is getting stronger every day! pic.twitter.com/rVoRdQxjh0
– Injective (@InjectiveLabs) January 4, 2022
With cross-chain bridges going online and bridging tokens from other EVM-compatible networks into the Cosmos Hub, Osmosis has the potential to further increase trading volume and TVL simply because it is the most important DEX for the Cosmos ecosystem at the time is . In this case, there is also the possibility that the OSMO price could continue to rise.
The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every step of investing and trading involves risk, you should do your own research when making a decision.
