What is Onomy Protocol? Cross-Chain Forex, Hybrid DEX & DeFi Access Wallet
In a market hampered by siloed blockchains, reliance on centralized exchanges, and convoluted means of onboarding the $6.6T per day Forex market on-chain, Onomy Protocol is building the rails needed to make the DeFi ecosystem more accessible for institutions and retail users worldwide.
It will do this by simplifying the DeFi onboarding experience through a suite of products that connect to the wider blockchain universe. These include a layer-1 scalable chain, DeFi access wallet, and Onomy’s cross-chain trading ecosystem, enabled by a hybrid AMM & order book decentralized exchange (DEX), and designed to allow seamless trading of cryptocurrencies and Forex pairs.
Powered by the Onomy Network (ONET)
Onomy Protocol runs on its own application-specific blockchain network, based on Cosmos Tendermint. As a layer 1 Proof-of-Stake chain, the ONET will be 100x more efficient than the Ethereum network from day one, whilst also gaining interoperability capabilities, massive throughput, security, and the fast finality characteristics required to seamlessly trade pairs across supported blockchain networks.
Advancing Decentralized Trading
Onomy’s cross-chain Hybrid DEX will be a powerful portal that breaks down the siloed monoliths of the blockchain and fully opens up the Web 3.0 economy for the financial sector to maximise its potential.
By now, it is known that AMMs and order books each have unique selling points such as unlocking the role of an AMM liquidity provider, but also limitations. In contrast, order book trading is the cornerstone of the traditional world user experience, consisting of limit, market, and stop orders. Thus, it does make sense to create a hybrid system that incorporates the best of both worlds, paving the way to a better trading experience and speaking to both traders and liquidity providers.
Onomy’s Hybrid DEX operates with a unique AMM + decentralized order book system. The order book enables features that were the preserve of centralized exchanges, such as market orders, stop loss orders, limit orders and advanced charting. These features will be available to users in a decentralised, on-chain environment. Moreover, the AMM opens up novel reward opportunities for those who engage with the DEX, such as liquidity providers (LPs).
On-Ramping Forex into DeFi
Onomy Protocol will give institutions the means to bring the Forex trading market on-chain. This colossal market, through which $6.6 trillion sloshes daily, is still hampered by the bureaucratic and ponderous systems which govern it, and the powerful market makers that rule it. By creating a streamlined entry route for retail and institutional user bases to access stable virtual representations of fiat currencies that can be exchanged at the lightning pace required, it will allow them to have access to malleable digital assets and avoid the volatility and friction typically associated with the crypto market. On the same note, Onomy’s careful approach towards protocol security through the usage of TLA+, formal verifications, and audits, provides the peace of mind required for the convergence of centralized and decentralized finance.
Onomy users will be able to mint fiat-pegged denominations, called Denoms, of fiat currencies they require to execute their trades, like the Japanese Yen, Swiss Francs, Euro, or others. These will be issued by the Onomy Reserves (ORES) by locking the protocol’s utility token NOM, as collateral. Then, a series of mechanisms spin into action to guarantee that Denom prices remain pegged to the value of the underlying fiat currencies. This flexibility will significantly expand the stablecoin options available to both institutions and consumers, which are currently mostly linked to the US Dollar.
Denom usage is not limited to Forex trading – rather, as Onomy gains adoption, Denoms can become a standard part of diversified portfolios, be used to tap into yield opportunities, sent cross-border for remittance, or utilized as standard means of P2P payment.
These Denoms are chain agnostic and are freely tradable across multiple blockchain networks without having to go through centralized gatekeepers, whilst improving access to the DeFi space. So far, named networks Onomy is building bridges which include Ethereum, Near, Cosmos, Avalanche, Cardano, Polkadot, and others, effectively becoming the simplest way to enter and exit asset ecosystems, while enabling next-generation DeFi connectivity.
DeFi from a Single Mobile Wallet
Having to constantly handle multiple browser extensions to access the emerging DeFi ecosystem imposes unnecessary friction that further hardens the learning curve, especially for novices.
As an answer to this limitation, Onomy is also creating a DeFi access wallet, through which users may seamlessly manage, send, and receive assets cross-chain, while interacting with staking and governance processes. Coupled with an NFT collection sub-feature, managing NFTs from multiple blockchains will become significantly easier.
The technology behind Onomy Access utilizes Natural Rights, a simple and non-custodial sign-on experience that enables logins and device authorization with simple QR code scans.
NOM Utility & Distribution
The NOM utility token will be a central piece to the Onomy ecosystem, granted that it acts as collateral towards the minting of decentralized stablecoins, whilst also being required by validators who must stake or delegate NOM in order to secure the network and obtain rewards. Furthermore, NOM also unlocks governance rights within the Onomy DAO, allowing those involved in the network to shape and direct the future direction of the protocol as it develops.
Onomy Protocol is launching within the next couple of months, with its first products being the ONET mainnet, Onomy Access Wallet, Onomy Bridge, and Bonding Curve, followed by the Onomy Exchange, Onomy Reserve, and more products in the future. The protocol has already successfully completed its first testnet, with a 2nd iteration scheduled in the short-term future.
The Bonding Curve Offering is an ETH-based AMM contract & interface that will govern the distribution of NOM onto the open market. Unlike IDOs and other token distribution models, BCOs provide deterministic pricing, instant liquidity, and market collateralization as tokens are only minted as they are purchased and bridged.
Put simply, the more NOM bought from the contract, the higher the price, with the BCO ending when 1 NOM = 1 ETH. This model avoids the issues of fixed prices being set with no consideration of market demand, and creating appropriate liquidity without a mass dumping of supply on the open market. Selling NOM back to the BCO is indeed possible, but users may also avail of significant utility and incentives by bridging NOM to the Onomy Network. It is ONET-based NOM that has utility within the ecosystem and will be listed on centralized and decentralized exchanges.
Bringing Banking onto the Blockchain
Onomy Protocol plans to ultimately serve as the world’s decentralized reserve bank. By having pure, on-chain, non-custodial ecosystem for the world’s global fiat and crypto assets, it will usher in a new conception of digital asset trading that is faster, fairer and more fungible, with none of the frictions and settlement risk that traditionally occurs in and impedes these markets.