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【Network Introduction】Onomy Protocol

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Basic Information

How does Onomy solve the challenges of the Forex Market?

The Problem

The Forex market currently works with a more centralized infrastructure, providing intermediaries like banks, traders, and brokers potential opportunities to manipulate their ability to access the trading channels and utilities that individuals cannot completely access. At the same time, retail traders complain about the lack of visibility on these channels, which allows intermediaries on both sides to increase charges, withhold accurate pricing information, and trick customers. Such practices cause retail traders to bear unnecessary costs and delay transaction processing.

Onomy’s Solution

To solve the prevailing challenges of the Forex market, Onomy’s blockchain protocol decentralizes its infrastructure and removes the entry barriers for retail customers, providing them with a more transparent, open, and composable platform for trading and exchange. Stablecoin integration for the Forex market leverages the fiat interfaces to offer consistent liquidity with no hindrances, an idea the Onomy team introduced and implemented. Retail customers can access all the data related to price and other factors that determine cost with no intermediaries.

Network Detail

Brief Introduction

Onomy protocol is a layer 1 blockchain network designed to work as a multichain decentralized exchange. It aims to converge the decentralized finance and Forex market through cross-chain bridges that support a variety of crypto assets and Stablecoin representation of fiat currencies.

Social Media

WebsiteRedditDocumentsTwitterMediumDiscordTelegramGithub

Roadmap

August 2021, Onomy was in the early stages of its development roadmap and it indicated the first versions of the following initial products will be launched by the end of Q4 2021:

Onomy Network Mainnet

Onomy Bonding Curve Platform

Onomy Exchange

Onomy Wallet

Onomy Bridge Hub

Onomy is also scheduled to conduct a public sale for the NOM token through a unique Bonding Curve Offering (BCO) via an audited smart contract deployed on the Ethereum chain. Unlike traditional token sale models, BCOs operate as Automated Market Maker (AMM) contracts that automate the relationship between token pricing and supply, bringing forth deterministic pricing, instant liquidity, and incentives to connect purchased tokens to Onomy’s mainnet at a 1:1 ratio. The date for this hasn’t yet been revealed.

The newest roadmap 2022 is as below:

Feature

Onomy supports cross-chain minting, trading, and lending of stable coins with the ability to be open, permissionless, and highly interoperable. To enable this cross-chain trading of Stablecoins, Onomy employs a bridge called EntangleMint that acts as a decentralized exchange, helping users get liquidity from chains through bridging.

The Onomy network, in a way, replicates the existing financial infrastructures in a more decentralized and transparent manner. The protocol’s native token, $NOM, plays a significant role in the Onomy ecosystem development. From being utilized for governance purposes, to securing the network, to allowing minting of Stablecoins, $NOM serves various purposes, including collecting revenue from exchange fees.

By the way, Onomy’s architecture serves as a reliable and immutable system with complete openness, fair distribution of access rights, and interoperability. There is no need for any middlemen, clearing house, or escrow since most functions are executed through the code written on “smart contracts.”

Products

Onomy Network (ONET)

An application specific Layer 1 blockchain leveraging Tendermint’s BFT consensus. It powers Onomy’s products & bi-directional bridges to prominent blockchains in and outside of the Cosmos ecosystem — such as Near, Aurora, Avalanche, Polygon, Ethereum, and more.

Onomy Exchange (ONEX) Online- Detailed introduction

An unique, hybrid and multi-chain DEX with AMM liquidity pools and an order book model for intuitively trading cryptocurrency and Forex pairs, with support for limit, market, conditional, and stop loss orders, alongside cross-chain trading and advanced charting.

Onomy Access (OACC)

A non-custodial multi-chain mobile wallet app through which users may manage all assets from integrated blockchains. This includes staking, governance, transferring assets, and even viewing your NFT collections from multiple blockchains — all on one singular wallet app.

Onomy Reserve (ORES)

Governs minting decentralized stablecoins named Denoms, utilizing NOM as collateral. Denoms may be used for FX trading, payment, remittance, lending, and settlement.

What makes Onomy protocol unique?

Onomy continues to grow with its motivation to expand the Forex market, raise the prevalence of Forex exchange beyond USD, and bring its infrastructure on-chain through blockchain technology. To achieve these goals, the network features various unique attributes, which are outlined below.

Denominations

Onomy offers a unique form of Stablecoins called Denoms. These denominations present a more efficient means to trade Stablecoins and combine fiat’s best qualities (such as value and utility) and the revolutionary features of cryptos (such as security, tamper-proof technology, and permissionless quality).

DAO Governance

The Onomy protocol integrates DAO to transfer the regulatory authority to members or the token holders. Based on the number of tokens they hold, members can propose resolutions surrounding the growth of Onomy via voting and initiations.

Chain Agnostic

The Onomy protocol’s mechanism is not limited to a specific technology; rather, it utilizes many technologies to offer users a consistent decentralized experience. For instance, users can mint and trade Denoms on the Onomy Network while funneling liquidity from multiple blockchain protocols.

Hybrid DEX model

Onomy DEX is different from traditional DEXs in that it adopts a hybrid structure, implementing the order book method and AMM. Onomy provides more powerful token and liquidity management functionalities, unlocking the full benefits of centralized and decentralized exchanges.

Single Login

Onomy brings convenience to users, alleviating the pain of managing multiple private keys and separate wallets for each crypto platform. Instead, the network offers a single login with its unique noncustodial private key management solution, Natural Rights, which allows QR login on multiple blockchains.

Staking

The Onomy protocol relies on a core group of validators to maintain the integrity of its Cosmos-based proof-of-stake (PoS) network. These validators receive an incentive through a unique reward system to meet the required obligations. Individuals can stake their tokens on their favorite validators and earn incentives if their validators perform as expected.

Teams and Partners

Teams

The Onomy protocol is relatively new in the blockchain space. Lalo Bazzi and Charles Dusek co-founded it in December 2020.

Bazzi is an ex-associate at Fidelity Investments and a former Microsoft cloud solution strategist with approximately four years of experience in the blockchain space.

Dusek is a seasoned engineer with 10+ years of experience working in finance, energy, machine learning, private equity, and consensus systems.

Both of them turned various innovative ideas into reality, developing mining hardware, utilizing ASIC chips, and building the global network that is the Onomy protocol

Partners

Onomy’s Hybrid DEX & Forex Marketplace Are Coming to Polygon

Onomy Joins Hands with Harmony for Hybrid DEX & FX Marketplace Deployment

Onomy to Deploy Hybrid DEX & Forex Marketplace to NEAR via Aurora

Onomy Protocol Partners with Avalanche to Build Cross-Chain Stablecoin Economy

Funding

Refer from crunchbase.

Funding Rounds

Onomy has raised a total of — in funding over 1 round. This was a Seed round raised on Mar 31, 2021.

Investors

Onomy is funded by Cabin VC.

Technolgy

Code

Github Homepage

Tech Knowledge

ONEX EVM

ONEX EVM is written in Solidity and limited to the EVM chain it is deployed on, with the exception of wrapped tokens representing assets on other chains. A wrapped token is a tokenized version of another cryptocurrency. It’s pegged to the value of the asset it represents and typically can be redeemed for it (unwrapped) at any point. It usually represents an asset that doesn’t natively live on the blockchain that it’s issued on.

Tendermint BFT

Tendermint is an application-agnostic engine that is responsible for handling the networking and consensus layers of a blockchain. In practice, this means that Tendermint is responsible for propagating and ordering transaction bytes. Tendermint Core relies on an eponymous Byzantine-Fault-Tolerant (BFT) algorithm to reach consensus on the order of transactions.

The Tendermint consensus algorithm works with a set of special nodes called Validators. Validators are responsible for adding blocks of transactions to the blockchain. At any given block, there is a validator set V. A validator in V is chosen by the algorithm to be the proposer of the next block. This block is considered valid if more than two thirds of V signed a prevote and a pre-commit on it, and if all the transactions that it contains are valid. The validator set can be changed by rules written in the state-machine.

Core Principles

  1. Minimalism: Institute only the necessary controls to stabilize Denoms
  2. Constraint: Base-layer virtual currency stabilization protocol, deploying no securities or contracts as defined by the SEC or CFTC
  3. Closed Loop: No outside oracles. All economic control requiring information derived from outside information will be voted on by NOM holders
  4. Separation of Concerns: Network staking with ONET for security purposes is separated from the market stabilization of Denom

Levers of Denom Stabilization

Reserve Rate (RR)

The RR of Denoms mined by ORES is used to manage deviations from parity between Denoms and the represented currencies. The RR may apply both positively to inflate the currency or negatively to deflate the associated currency to achieve parity.

Denom Staking Rate (DSR)

The DSR dictates the inflation of Denoms staked at nodes. This is implemented to reward users for securing the network with Denoms, as well as to control market in-flows and out-flows to stabilize the Denom with its represented fiat currency. The Denom staking rate will only be positive.

Minimum Collateralization Ratio (MCR)

The MCR of Denom loans to the represented currency is based on the ONEX trading pair price ratio. The principal amount of any Denom plus any interest accrued, based on the Reserve Rate, will determine the collateralization ratio. When the MCR is reached, the Reserve Account will not be allowed to mint any more Denoms. To re-enable the account, the account holder must deposit more NOM or restore the Denom that was loaned.

Reserve Collateralization Ratio (RCR)

The RCR is used to manage the volatility risk of NOM to Denom by building a reserve of NOM within the ORES. When a specific ORES account falls below the RCR, the account-held amount of NOM equal to the market value of the specific Denom, will be taken into the ORES Reserve Account. The Denom held within the ORES may be voted on by NOM holders to purchase Denoms from the market to stabilize peg during times of extreme distress.

Collateral Liquidation Fee (CLF)

The collateral liquidation fee will be imposed upon any ORES accounts that are triggered for liquidation. After the balance of the Denoms is purchased with NOM in the defaulted account, an additional percentage of the NOM, determined by a vote of the NOM holders, will be deducted from the defaulted reserve balance before returning the account in good standing to the owner. NOM collected from CLF will be burned, distributing the value to all NOM holders by reducing the circulating supply.

When combined, these controls give a simple, yet robust way of managing deviations from parity as well as collateral risks. Because Onomy is a single-collateral and multi-stablecoin protocol, each Denom will have its own unique RR to cope with fluctuating market conditions across the multiple represented currencies. Since MCR and RCR are managing collateralization risk, RCR is applied equally no matter the Denom or instrument backed by ORES-generated NOM. All three controls are governed by staked node operators requiring no outside oracles for the system to function. Working groups will be established to suggest rates and build integrated services as part of the default node implementation based on market data feeds. Controls will then be voted on and decided through a Byzantine-tolerant averaging algorithm.

Application-specific blockchains

Flexibility

In Cosmos blockchains, the state-machine is typically connected to the underlying consensus engine via an interface called the ABCI. This interface can be wrapped in any programming language, meaning developers can build their state-machine in the programming language of their choice.

Developers can choose among multiple frameworks to build their state-machine. The most widely used today is the Cosmos SDK, but others exist (e.g. Lotion , Weave , …). The choice will most of the time be done based on the programming language they want to use (Cosmos SDK and Weave are in Golang, Lotion is in Javascript, …).

The ABCI also allows developers to swap the consensus engine of their application-specific blockchain. Today, only Tendermint is production-ready, but in the future other consensus engines are expected to emerge.

Even when they settle for a framework and consensus engine, developers still have the freedom to tweak them if they don’t perfectly match their requirements in their pristine forms.

Developers are free to explore the full spectrum of tradeoffs (e.g. number of validators vs transaction throughput, safety vs availability in asynchrony, …) and design choices (DB or IAVL tree for storage, UTXO or account model, …).

Developers can implement automatic execution of code. In the Cosmos SDK, logic can be automatically triggered at the beginning and the end of each block. They are also free to choose the cryptographic library used in their application, as opposed to being constrained by what is made available by the underlying environment in the case of virtual-machine blockchains.

The list above contains a few examples that show how much flexibility application-specific blockchains give to developers. The goal of Cosmos and the Cosmos SDK is to make developer tooling as generic and composable as possible, so that each part of the stack can be forked, tweaked and improved without losing compatibility. As the community grows, more alternatives for each of the core building blocks will emerge, giving more options to developers.

Performance

Decentralized applications built with Smart Contracts are inherently capped in performance by the underlying environment. For a decentralized application to optimize performance, it needs to be built as an application-specific blockchains. Next are some of the benefits an application-specific blockchain brings in terms of performance:

Developers of application-specific blockchains can choose to operate with a novel consensus engine such as Tendermint BFT. Compared to Proof-of-Work (used by most virtual-machine blockchains today), it offers significant gains in throughput.

An application-specific blockchain only operates a single application, so that the application does not compete with others for computation and storage. This is the opposite of most non-sharded virtual-machine blockchains today, where smart contracts all compete for computation and storage.

Even if a virtual-machine blockchain offered application-based sharding coupled with an efficient consensus algorithm, performance would still be limited by the virtual-machine itself. The real throughput bottleneck is the state-machine, and requiring transactions to be interpreted by a virtual-machine significantly increases the computational complexity of processing them.

Security

Security is hard to quantify, and greatly varies from platform to platform. That said here are some important benefits an application-specific blockchain can bring in terms of security:

Developers can choose proven programming languages like Golang when building their application-specific blockchains, as opposed to smart contract programming languages that are often more immature.

Developers are not constrained by the cryptographic functions made available by the underlying virtual-machines. They can use their own custom cryptography, and rely on well-audited crypto libraries.

Developers do not have to worry about potential bugs or exploitable mechanisms in the underlying virtual-machine, making it easier to reason about the security of the application.

Sovereignty

One of the major benefits of application-specific blockchains is sovereignty. A decentralized application is an ecosystem that involves many actors: users, developers, third-party services, and more. When developers build on virtual-machine blockchain where many decentralized applications coexist, the community of the application is different than the community of the underlying blockchain, and the latter supersedes the former in the governance process. If there is a bug or if a new feature is needed, stakeholders of the application have very little leeway to upgrade the code. If the community of the underlying blockchain refuses to act, nothing can happen.

The fundamental issue here is that the governance of the application and the governance of the network are not aligned. This issue is solved by application-specific blockchains. Because application-specific blockchains specialize to operate a single application, stakeholders the application has full control over the entire chain. This ensures the community will not be stuck if a bug is discovered, and that it has the entire freedom to choose how it is going to evolve.

How Does Onomy Protocol Work?

Onomy Protocol’s application-specific blockchain is based on Cosmos, which is widely considered to be one of the most advanced blockchain platforms in current operation — with 100x the efficiency of Ethereum, massive throughput capabilities, and a functioning inter-blockchain communication protocol (known as the IBC).

Ecosystem

Onomy DAO

Onomy will be governed by the Onomy DAO, providing NOM holders with the opportunity to guide the decision-making process through NOM-weighted votes.

Features of governance include:

Proposal submission: Users can submit proposals with a deposit. Once the minimum deposit is reached, proposal enters voting period

Vote: Participants can vote on proposals that reached MinDeposit

Inheritance and penalties: Delegators inherit their validator’s vote if they don’t vote themselves.

Claiming deposit: Users that deposited on proposals can recover their deposits if the proposal was accepted OR if the proposal never entered the voting period.

Treasury Management: NOM Holders vote on usage of Onomy Protocol’s treasury of funds.

Governance Process

The governance process is divided in a few steps that are outlined below:

Proposal submission: Proposal is submitted to the blockchain with a deposit.

Vote: Once deposit reaches a certain value (MinDeposit), the proposal is confirmed and vote opens. Bonded NOM holders can then send TxGovVote transactions to vote on the proposal.

If the proposal involves a software upgrade:

Signal: Validators start signaling that they are ready to switch to the new version.

Switch: Once more than 75% of validators have signaled that they are ready to switch, their software automatically flips to the new version.

More steps like Proposal Submission can click here to check.

Treasury Management

DAO-governance of Onomy Protocol includes governance of the Onomy Treasury of Funds, whereby funds are outside of the control of any central entity. Funds may only be accessed through a successful proposal passed by the Onomy DAO.

Therefore, Onomy Protocol will integrate a DAO Treasury Wallet into Governance such that proposals requesting funds must note an amount of funds requested alongside a recipient address. Funding proposals must pass successfully for the funds requested to be released from the DAO Treasury Wallet in an autonomous fashion.

Economic Model

Onomy Protocol (NOM) Token

NOM is Onomy Protocol’s native coin that provides users with significant utility across Onomy Network’s ecosystem of applications.

Token Functions

The platform’s native utility and governance token, NOM, has a variety of purposes within the Onomy landscape — being used as collateral to mint stablecoins, secure the network, and obtain revenue from the exchange fees. It is also used for governance purposes.

Staking

When NOM holders delegate their NOM to a validator, they are staking. Staking provides rewards in return for delegating to validators who support the security and operations of a blockchain network.

Collateral

NOM is the single collateral to Onomy’s Denom stablecoins. Upon locking the token into the Onomy Reserve, users may easily mint Denoms pegged to the world’s major currencies.

Properties of NOM as Perfect Collateral:

Malleable: Ability to mint any denomination of a stabilized virtual currency

Scarce: Predefined release into circulating supply and burning of supply

Transferable: Transactions on the Onomy Network finalize near instantaneously

Durable: Secure decentralized system capable of self-stabilizing from attacks

Verifiable: Anonymous accounts are publicly verifiable on the network

Fair: Transactions are ordered by which arrives at the most nodes first

Governance

DAO (Decentralized Autonomous Organization) is an organization represented by rules encoded as a transparent computer program, controlled by the organization members, and not influenced by a central government. As the rules are embedded into the code, no managers are needed, thus removing any bureaucracy or hierarchy hurdles.

Onomy will be governed by the Onomy DAO, providing NOM holders with the opportunity to guide the decision-making process through NOM-weighted votes.

AMM Keeper Bots

NOM is programmatically purchased and removed from supply by Keeper bots observing AMM liquidity pool rewards from the Onomy Exchange (ONEX). This provides perpetually growing deflationary pressure on NOM as exchange volumes grow.

Other Information

Bonding Curve Offering (BCO) 丨BCO API

Validator

Onomy Protocol is powered by Tendermint BFT Proof-of-Stake consensus. Validators run full nodes, participate in consensus by broadcasting votes, commit new blocks to the blockchain, and participate in governance of the blockchain. Validators are able to cast votes on behalf of their delegators. A validator’s voting power is weighted according to their total stake.

Full Node

A full node is a program that validates the transactions and blocks of a blockchain. Validators must run full nodes. Full nodes require more resources than light nodes, which only processes block headers and a small subset of transactions. Running a full node means you are running a non-compromised and up-to-date version with low network latency and no downtime. It is possible and encouraged for any user to run full nodes even if they do not plan to be validators.

Staking

When NOM holders delegate their NOM to a validator, they are staking. Staking increases a validator’s weight, which helps them, and in return delegators get rewarded. A validator’s weight (total stake) is determined by the amount of staking tokens (NOM) they self-bond from their own holdings plus the NOM bonded to them by external delegators. Validators for the Onomy Network must self-bond a minimum 250,000 NOM to be an active validator. Additional NOM bonded by external delegators boosts their weight. Validators with a higher weight will propose more blocks, and in turn make more revenue.

Given that validators must validate for the Onomy Network and operate nodes for bridged chains, the active validator set during testnets and betanet will be limited to assure stability of the network and methodical expansion of the set.

The minimum self-bond, hardware specifications, and the bottom validator’s stake always forms the barrier for entry into the active set of validators. If validators double-sign, or are frequently offline, they risk their staked NOM, including NOM delegated by users, being slashed by the protocol to penalize negligence and misbehavior.

Delegator

Delegators are NOM holders who want to receive staking rewards without the responsibility of running a validator. Through Onomy Access and Cosmos-based wallets, a user can delegate NOM to a validator and in exchange receive a part of a validator’s revenue.

Delegators share the benefits and rewards of staking with their Validator. If a Validator is successful, its delegators will consistently share in the rewards structure. If a Validator is slashed, the delegator’s stake will also be slashed. This is why delegators should perform due-diligence on validators before delegating. Delegators can also diversify by spreading their stake over multiple validators.

Delegators play a critical role in the system, as they are responsible for choosing validators. Being a delegator is not a passive role. Delegators should remain vigilant, actively monitor the actions of their validators, and re-delegate whenever they feel their current validator does not meet their needs.

Other Information

Incentives & Staking RewardsTransaction Fees (Gas)Onomy Validator Guild (OVG)

Competitors

Related Readings

Onomy Protocol Opens the Door For Institutions To Take On DeFi

Onomy Protocol to Spearhead Institutional Adoption of DeFi

___________________________________________________________________

About BlockPower

Our Staking Services

Why Choose Us to Manage Your Assets

  1. We have started 7/24 staking services since 2018, and have managed over $100 million assets.
  2. We run highly available and redundant nodes in different data centers to achieve continuous operations.
  3. We are actively participating in community and governance, disclosing information frequently.

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