Osmosis Launch Sodium Upgrade
The Osmosis SodiumUpgrade v15.0.0 is a significant step in the evolution of the Osmosisblockchain. This upgrade is important not only for developers but also forusers, who will be able to take advantage of many new features it brings. Oneof the most significant additions is the ProtoRev Module, which can captureprofits from arbitrage that are currently being taken by various externalparties, such as trading bots, validators, and centralized middlewareproviders.
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The Sodium v15.0.0. update has brought a lot of new features. Let's take a look at them.
The update introduces the ProtoRev module, developed by the Skip Protocol team, which captures the Maximum Extractable Value (MEV) in the chain and converts it into revenue for the Osmosis chain. The ProtoRev module aims to solve the incentive splitting problem in cyclical arbitrage by capturing profits for the protocol. This is done by lightning-swapping OSMO for itself and executing the arbitrage transaction, then burning the self-swapped OSMO and depositing the profits into the module's account, which will be distributed according to parameters set by Osmosis governance. The revenue generated by ProtoRev will be stored in the module's account until at least June 1, 2023, and proposals are already in place to distribute them to OSMO stakers, subsidize fees for traders, offer liquidity providers incentives, support market makers, and burn tokens to make OSMO a deflationary asset.
Protocol-level minimum gas price
The Osmosis protocol will introduce a minimum gas price of 0.0025 uOSMO at protocol level, replacing the previous option of zero transaction fees. The goal of the change is to limit transactional spam and minimize the possibility of a DoS (Denial of Service) attack by increasing the cost of executing such an attack. The minimum transaction fee on the Osmosis platform will be calculated based on the time-weighted average equivalent of the asset price used to pay the fee compared with the OSMO price over 24 hours. It is also expected that this change will complement staking rewards by providing validators and their delegates with an additional source of real income in the form of transaction fees.
Initial IBC Rate Limits and IBC Packet Forward Middleware
Osmosis offers bidirectional rate limiting for IBC transfers to minimize losses in case of a "black swan" event. After the upgrade, initial rate limits for the largest assets on Osmosis (ATOM, USDC, WBTC, WETH, EVMOS, STARS, DAI, JUNO, CRO) were set at 30% TVL in and out within 24 hours, and 60% TVL in and out within 7 days.
A new packet forwarding middleware feature will reduce the need for multiple IBC transfers and improve the outpost capabilities of Osmosis Dexes on other chains.
Validator-Set Preference Module
The Validator Preferences Setting module allows users to stake OSMO with multiple validators of their choice with a single transaction, making it easier to diversify their staked OSMO. This creates opportunities to improve the user interface on the front-end for validator selection, such as displaying multiple curated lists of validators for delegates to choose from.
Pool Manager Module
The Pool Manager Module simplifies the process of exchanging and creating pools in a blockchain network. It provides a common entry point for all pools regardless of their underlying implementation, reducing complexity and making it easier for users to interact with the network. The module handles pool creation, assigns each pool a unique ID, stores the mapping of pool IDs to swap modules, and directs the execution of tasks related to pools to the appropriate module, based on the type of pool. In addition, it covers the logic of multihops and swaps within the pool, allowing for more efficient and flexible trading.
Other small modifications are the conversion of pools #833, #817, and #810 to the stableswap model, which is more efficient for pegged assets and reduces the swap fee from 0.3% to 0.05%, and Asynchronous Interchain Queries, which will allow blockchains to query the state of an account on another chain without the need for ICA authorization.
The Sodium upgrade has the potential to have a positive impact on the Osmosis ecosystem. The ProtoRev Module can help ensure that profits from cyclical arbitrage are captured for the protocol instead of being lost to external parties. This can help support the growth of the Osmosis ecosystem and increase the value of OSMO. By capturing these profits, Osmosis can incentivize liquidity providers to stay within the protocol and provide more liquidity. As a result, this can increase the efficiency and stability of the protocol, leading to increased usage and adoption. This will ultimately benefit the Osmosis community and stakeholders by creating a more robust and valuable ecosystem.
I think this upgrade is a positive step towards the future and ensuring that Osmosis remains among the top ecosystems in Cosmos. Each new upgrade that Osmosis comes up with moves this project forward with small but significant steps and solidifies its leading position.