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.