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 & burnFee 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
💰 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.