The basis of Osmosis is:

• IBC ( Inter Blockchain Communication) protocol
• Tendermint core
• Cosmos SDK (software development kit)

IBC protocol allows communication between two or more blockchain networks by communicating with and connecting different servers.

IBC enables the creation of an interchain account that will be the same across all blockchain networks that support it. This connection enables you to stake, trade, or participate in DeFi protocols across multiple blockchain networks from a single location.

All blockchain networks connected to IBC have a Tendermint core. Together with the Cosmos SDK, these are the building blocks of the network. With the same foundation, these blockchain networks can communicate easily, as the IBC takes data from one blockchain, wraps it, and unpacks it on the other blockchain in the correct format. This communication is possible despite different programming languages, due to the same core.

The Osmosis blockchain is further divided into modules that are linked together:

• Epochs
• GAMM
• GOV
• Incentives
• Lockup
• Mint
• Pool incentives
• Superfluid staking
• Token factory
• TWAP
• Fees

Epochs determine the start time of other modules. One epoch lasts 14 440 blocks, which corresponds to one day.

GAMM: The Generalized Automated Market Maker module provides a system for creating and interacting with liquidity pools (LP) on the Osmosis blockchain.

• Pool creation: When a pool is initially created, 100 LP tokens are stamped and sent to the pool creator's address.
• Connecting to the pool: To join a pool, the user enters the amount they want to put in. GAMM calculates how many LP tokens the user will receive. The calculation takes place at the time of transaction processing (verifying that there are enough tokens at the address). Once verified, GAMM LP tokens in the pool are stamped and sent to the user's address. Connecting to the pool using a single asset is also possible.
• Exiting Pool:  To leave the pool, the user specifies the minimum number of tokens they want to select. Unlike joining a pool, an exit fee is then paid. Once the assets are withdrawn from the pool,  GAMM LP tokens are burned. Exiting the pool using a single asset is also possible.

GOV: The governance module enables $OSMO coin holders to participate in a community-driven decision-making process.

Iniciatives: The Iniciatives module provides yields to stakers.

The proceeds to be given to the stakers are stored in the gauge, and are distributed in individual epochs to stakers who meet the conditions.

There are two types of gauges: permanent and non-permanent.

• Non-permanent tokens are distributed evenly over the epoch when the gauge is active.
• Permanent distributes all tokens at once and stores them elsewhere. This is mainly used to distribute stamped $OSMO coins to LP token stakers.

Permanent coins remain after the distribution period, but non-permanent coins are burned.

Lockup: The module provides an interface for users to lock tokens (also known as bonding) into modules in order to obtain incentives. After adding tokens to a pool and converting them into LP tokens via the GAMM module, users can lock these LP tokens with a specific duration to start earning rewards.

To unlock these LP tokens, users must start the unlock timer and wait for the original unlock time to expire. After the unlock time expires, users can turn the LP tokens back into their tokens.

Mint: This module is responsible for flexibly creating assets to reward validators, offer incentives to people who provide pool liquidity, provide resources to manage Osmosis, and pay developers to maintain and improve the Osmosis blockchain.

Pool incentives: The module is separate but related to the incentives module. When a pool is created using GAMM, the pool incentives module automatically creates individual metrics in the incentives module for each lock duration that exists in that pool. The module also takes the pool incentives distributed from the gov module and distributes them among the individual incentive gauges.

Superfluid staking: This module enables a form of liquid staking. Instead of providing liquidity to a linked asset, Superfluid staking takes the linked liquidity from the asset and stacks it into the blockchain (called Proof of Useful Stake). An $OSMO coin represents the value of its share of LP tokens that are staked and delegated to validators, resulting in the security guarantee of the consensus layer also being based on GAMM LP shares. The $OSMO coin is minted and burned as part of the superfluid betting.

Token factory: This module allows any account to create a new token with the name factory / {creator address} / {subdenom}. Since tokens have a namespace based on the creator's address, this allows the minting of tokens to be permissionless as there is no need to deal with name duplication. A single account can create multiple denoms by providing a unique subdenom for each denom created.

TWAP: The Time Weighted Average Price module allows you to run TWAP for each AMM (Auto Market Maker) fund.

Fees: The fees module allows nodes to easily support many tokens for use as fees, while allowing node operators to specify fee parameters for only one "base" asset. This is achieved by having the module maintain a list of allowed tokens that can be used as fees, each with certain associated metadata. This metadata is then used with the "spot price calculator" provided to the module to convert the granted fees to their equivalent value in the base denomination. Only metadata and the spot price calculator are currently supported using the GAMM fund ID and the GAMM administrator.

Cosmos SDK - This is a software package that is based on a modular philosophy. This means developers can plug in different modules to create the necessary blockchain network, regardless of programming language.

Tendermint Core - This helps developers by having several built-in basic settings to make programming faster and easier. With Tendermint, developers don't have to start coding from scratch.

There are many DEXs on the market that work with AMM, like Uniswap and Curve.
Osmosis differentiates itself from them by having more control over DeFi, allowing the personalization of liquidity pools and deploying a custom AMM.

Therefore, each liquidity pool on the Osmosis blockchain is somewhat self-contained, similar to a DAO in that liquidity providers can set their own rules.

This solution seems to be better than what incumbent brands like Uniswap and Curve are providing.