Osmosis Tokenomics Revamp
Osmosis Tokenomics Revamp
Osmosis Tokenomics Revamp

Osmosis

DeFi

Osmosis Tokenomics Revamp

Increase real revenue and make $OSMO deflationary

Seppmos

Researcher

Date

July 2, 2025

Increase real revenue and make $OSMO deflationary

TL;DR of the Osmosis Tokenomics Revamp 🧪

▶️ Shift from inflation-based rewards to real protocol revenue
▶️ Gradually reduce token emissions to near-zero
▶️ Increase burn rates to make $OSMO deflationary

💸 Changes to Osmosis' Revenue Streams:

1️⃣ Taker Fees: 0.1% on most swaps

Current Model:

  • 55/45 split between CP and OSMO buybacks (non-OSMO fees)

  • Bought-back OSMO + taker fee OSMO split 50/50 between stakers & burn

New Model:

  • Change CP/buyback ratio to 25/75 (non-OSMO fees)

  • Change stakers/burn ratio to 30/70 (OSMO fees)
    => More OSMO buybacks & burn

  • Fee tiering based on staking & trading volume

  • Focus CP on Bitcoin (mainly DCA into a BTC reserve)

2️⃣ ProtoRev: Captures arbitrages between on-chain pools

  • Under review to optimize on-chain arbitrage revenue

  • OSMO captured is burnt, non-OSMO added to CP

3️⃣ Top of Block Auction: Traders bid $USDC for block priority

  • Bug fix enabling proper USDC bidding

  • USDC proceeds used for OSMO buybacks via single-sided liquidity

4️⃣ Transaction Fees: EIP-1559 style market

  • Minor tweaks to optimize gas markets and block capacity

💰 Changes to Osmosis' Expenses:

🅰️ Staking Rewards

  • 50% cut of inflationary staking rewards in July + potential future cuts

  • Staking rewards redirected to CP

  • Goal: Security costs covered by taker & tx fees

🅱️ Developer Vesting

  • Developer allocation incorporated into circulating supply

  • Currently pre-minted but reported as inflation

  • Expected ~9% increase in circulating supply in Q3

  • 66M $OSMO still vesting

🆎 Liquidity Incentives

  • Phase out recurring liquidity incentives

  • Redirect tokens to CP

  • Future incentives = time-limited grants from CP

🎯 Target Outcomes by End of 2025

✅ Increase real revenue of stakers from 2.2% to 3%+
✅ Daily burn > daily emissions => net deflationary $OSMO
✅ Maintain liquidity and staking levels


Thanks for reading folks!

We hope this article helped you stay up-to-date with the latest developments in the Cosmos ecosystem.

Disclaimer

This article is intended to educate readers about certain topics and should not be considered financial advice in any way.

Table of contents

Title

Share article

Share article

Share article

Stay Informed and Inspired

Join our exclusive subscriber community to never miss out!
By signing up, you'll receive straight to your inbox

Join our exclusive subscriber community to never miss out! By signing up, you'll receive straight to your inbox

Our media partners