Onomy is a layer-1 blockchain built on the Cosmos network designed to boost the foreign exchange market through the minting of virtual denominations of fiat currencies.
The emergence of decentralized finance (DeFi) has paved the way for numerous innovative financial services that eliminate the need for middle entities that slow down financial transactions and drive fees up. Many view DeFi as a ‘strong contender’ that could finally unseat centralized finance (CeFi) and bring a much-needed change in the global economic landscape.
The truth is that real progress could arrive not by pitting these two worlds against each other, but by creating a bridge between them so both can benefit from each other..
Table of Contents
BACKGROUND
Lalo Bazzi, the founder and CEO of Onomy Protocol, together with co-founder and CTO Charles Dusek, has envisioned a platform that would link the massive worlds of CeFi and DeFi.
Despite the opposing nature of these two financial realms, they’ve seen that establishing a bridge between CeFI and DeFi can bring a major change in the financial industry.
The Onomy Protocol’s goal is to fulfil this ambitious dream and help CeFi institutions tap the massive benefits of blockchain’s secure, trustless and quick transactions.
What is Onomy?
Onomy is a layer-1 blockchain built on the Cosmos network designed to improve the foreign exchange market. It is used to mint, trade, and lend stablecoin representations of national currencies called Denominations (Denoms).
Various types of technologies run behind Onomy Network, which includes ‘Cosmos’ ‘Tendermint protocol’ ‘IBC framework’ and ‘Equity.’
The Cosmos Ecosystem sits on the Tendermint protocol, which is the first working proof-of-stake (PoS) consensus protocol. This protocol uses the IBC framework, a cross-chain functionality between Cosmos and other blockchains.
Equity is a new consensus algorithm that provides the required transaction throughput and leaderless ordering, addressing validator front running.
Onomy Products
- Onomy Wallet
- Onomy Validator
- Onomyt Bridge
- Onomy Exchange
- Onomy Mint
- Onomy Stake
- Onomy Bonding Curve Platform
- Onomy Liquid Stake
NOM Token
NOM is the native token of the Onomy Protocol and is specifically used to secure the network through staking and serve as collateral for the minting of Denoms through the Onomy Reserve (ORES).
The Onomy Decentralized Exchange (ONEX) provides detailed Automatic Market Making (AMM) price discovery used to rebalance collateral ratios of ORES minting accounts. NOM holders would also have collective governance on the platform as it would provide them with decision-making powers (through NOM-weighted votes) to determine the platform’s direction.
Onomy also highlighted NOM’s primary features, which include being malleable, scarce, transferable, durable, verifiable, and fair.
NOM Staking Incentives
The platform will incentivize NOM staking with a dual inflationary schedule. Also, Onomy Protocol said that its initial hyperbolic hyperinflationary period (with a peak reward of 100% ARR inflation) would motivate network participants to stake and secure the network.
Transaction fees from ONEX and associated bridge liquidity pools will also serve as rewards for platform users who stake their NOM tokens.
Those who use NOM to mint Denoms can deposit NOM in ORES accounts and enjoy negative interest rates.
Participants that delegate or bond NOM and Denoms to validators can receive an inflationary reward.
NOM Token Distribution
| Area | Percentage | NOM Quantity |
| Private Round | 20% | 20 million |
| Team & Partners | 20% | 20 million |
| Ecosystem | 20% | 20 million |
| Strategic Reserve | 40% | 40 million |
3 Pillars of Onomy Protocol
ONEX and ORES (mentioned a while ago) are two of the platform’s most essential pillars. Onomy Network (ONET) joins them to form a complete and robust foundation for Onomy Protocol. Here’s a detailed look at these three aspects.
Onomy Exchange (ONEX)
The Onomy Exchange is a base-layer decentralized exchange used by Onomy users to trade NOM and Denoms and serves as a bridge between the Forex market and virtual currencies. ONEX works hand-in-hand with Onomy Reserve to manage reserve accounts’ maintenance and rebalance collateral ratios.
Onomy Reserve (ORES)
Onomy Reserve’s primary role is to govern the minting of Denoms and use NOM as collateral. Since Denoms is now a globally recognized substitute for their represented fiat currencies, currency flow grows as Denoms becomes a more preferred means of payment because of their convenient, immutable and self-stabilizing P2P transactions.
On top of these things, ORES can also provide collateral-based stablecoin lending, which contributes to the overall progress of the DeFi market.
Onomy Network (ONET)
Onomy Network is a Cosmos-based decentralized peer-to-peer computational network that processes transactions provided by users and rewards operators with NOM and uses a proof-of-stake (PoS) model. It directly solves the blockchain’s biggest problems in security, scalability, and decentralization.
NOM Bonding Curve Offering
The Bonding Curve Offering is an automated market maker that provides platform users a fast lane in accessing NOM tokens and an instant market with liquidity and deterministic pricing.
Bonding Curves are crypto-economic token models that help automate transactions between price and supply. In this model, the tokens, called Continuous Tokens, undergo continuous calculation.
These tokens have a notable difference compared to their peers as they do not undergo ICOs or even token launches. Instead, Continuous Tokens are minted continuously over time through the help of automated market maker contracts.
These processes, which are clearly outside the norm, help develop the platform’s sustainability and the token’s demand and promote instant liquidity and deterministic pricing.
As described by the protocol, bonding curve models lack any central authority for issuing the tokens. Buyers can simply purchase a project’s token through a smart contract. The cost of the tokens increases as the supply increases, and their price depends on the pre-existing algorithm.
Major Benefits of Bonding Curve Offering
| Continuous Price | The price of token n is less than token n+1 and more than n-1. |
| Instant liquidity | Tokens can be bought or sold instantaneously, with the bonding curve serving as an automated market maker. |
| Collateralization | In conjunction with the staking inflation curve, Ethereum acts as a reserve backing the NOM token. |
| Deterministic Price | NOM tokens’ buy and sell prices go up and down depending on the number of tokens minted. |
Partnership
Onomy Protocol has inked a deal with Avalanche, an open-source platform for launching decentralized applications (dapps) and enterprise blockchain deployments, to establish a cross-chain stable economy.
Onomy and Avalanche believe that the massive potentials of stablecoins can only flourish through a cross-chain environment, which has led both of them to collaborate and create an interoperable stablecoin economy.
Onomy Protocol will create a bi-directional bridge to the world’s major blockchain networks and would integrate its products on the Avalanche ecosystem, making way for smooth trading of stablecoin pairs and native assets between Onomy and Avalanche.
Onomy Product Roadmap 2021
- First Quarter
Completed an audit of the bonding curve contract with the help of NCC Group, a UK-based information assurance company handling top-level cybersecurity audits.
- Second Quarter
Onomy Wallet, Exchange, Bonding Curve Platform, Bridge Hub, and Network Mainnet have undergone further developments.
- Third Quarter
Audited and formally verified TLA+ specifications used to dictate core logic order book + AMM exchange solution.
- Fourth Quarter
Released the first production versions of products and run user incentives, feedback liquidity, and growth campaigns.
Conclusion
The emergence of DeFi will certainly create winners and losers in the field of finance. Companies and institutions that are slow to adopt DeFi and continuously resist its influence risk losing not only the opportunity of tapping the massive benefits of this rising trend, but also obsolescence due to their inability to adapt to the evolution of fintech.
But those who are quick to adopt blockchain technology and turn it into an innovative financial service will likely be rewarded with success as openly embracing this disruptive tech advances financial freedom for all people all over the world.
