Now that we have looked into the underlying mechanism of how Cosmos Ecosystem works and what it does rely on. We'll move into a sub-system of Cosmos which is Osmosis. Osmosis works on built key concepts of Cosmos. Osmosis extends its functionalities and so it's name from Cosmos-is. Anyways ,Osmosis also heavily believes in preserving it's sovereignty and heterogeneity and you'll see them echoed in ever feature.
Osmosis is an automated market maker (AMM) built with the Cosmos SDK; it specializes in the InterchainDeFi movement (Tendermint-based blockchains) in the Cosmos ecosystem. In other words, Osmosis is a decentralized exchange specifically built for Cosmos, seeking to extend to more blockchains. Osmosis Lab is founded by Sunny Aggarwal and Josh Lee. Osmosis Lab is where all the Osmosis takes place. Osmosis Lab is a Defi Dapp providing multiple functionalities to the user.
Let's delve into their website "https://app.osmosis.zone/" and it's features to fully understand the Osmosis.
How to use Osmosis?
There are 3 categories of fees on Osmosis.
Anyone who transacts on the chain will pay the fees. The fees are subjected to change and depends on computational storage and costs. The fees are distributed among OSMO stakers and validators operators.
Anyone who swaps fees on DEX will pay swap fees which are determined by each liquidity pool’s parameters and trade size.
Liquidity providers are obliged to pay exit fees when they pull their liquidity out of pool. The LP shares are then burned, and the value is distributed to the remaining liquidity providers.
Osmosis Key Features:
1. Setting up and funding Keplr account:
To use this functionality of the dapp you will have to connect supported Cosmos Ecosystem web3 wallet which is Keplr,a google chrome extension. Unfortunately, there is no Keplr extension for Firefox at this time. The same way we fund ether to Ropsten test network in Meta mask we will also need to fund our wallet with some $ATOM.
2. Creating a Keplr account:
Those who are familiar with meta mask know how things will work out when creating a wallet. You will be given 12 or 24 word mnemonic seed phrase. Choose an account name and set a strong password. The seed phrase is the key to accessing your assets within the wallet, and is what you’ll need to restore access to your wallet should you lose it for any reason, for example, if you lost your password or computer. The security should be your top concern especially in crypto wallets.If you have a Ledger hardware wallet you can connect it and use Keplr for interacting with dApps. This keeps the seed phrase hidden within a secure element on the device and requires you to physically approve each transaction by pressing a button. You can find a Medium article explaining how to do it here.
3.Deposit $ATOM to your Keplr wallet:
So now our wallet is setup it is ready to receive some $ATOM. Using Binance or Kraken we can easily buy some $ATOM and withdraw using Keplr.
Make sure Cosmos is selected from the drop-down menu at the top of Keplr. Under the account name you chose earlier, click to copy your wallet address beginning with cosmic... When withdrawing from your preferred CEX, paste this address into the Recipient form. The $ATOM should appear in your Keplr wallet within a few minutes.