Cosmos-based decentralized exchange Osmosis and lending protocol UX Chain have announced a merger proposal that could reshape the Cosmos DeFi landscape. If approved, this consolidation will enable UX Chain’s lending logic and algorithms to be integrated with Osmosis’ decentralized exchange (DEX), creating a comprehensive DeFi hub.
An important first step: Integration of the code base
Contributors from both Osmosis and UX Chain co-drafted the merger proposal. This proposal lays out a strategic roadmap for transformative unity. The process will begin by integrating UX Chain’s code base into Osmosis Chain. It will also be a move aimed at leveraging the combined capabilities of both platforms. As a result of the first step of the merger in the Cosmos ecosystem, the total value locked (TVL) shared between the two networks will be pooled. At this stage, Osmosis’ native token and UX Chain’s token will continue to be traded separately.
However, later on, the merger proposal leaves the door open to a token swap or migration. This brings up the possibility of a potential token merge. Community management will determine the details of this token consolidation. It is important to emphasize that each blockchain network will have separate governance votes and manage processes independently while seeking to achieve consensus on the ultimate goal of establishing a robust DeFi hub. Brent Xu, co-founder of UX Chain, made the following statement about the merger proposal in the Cosmos ecosystem:
Each Blockchain will have a separate governance game from each Blockchain network. Community governance will manage processes separately for each network to reach consensus around the ultimate goal of creating the DeFi hub.
Merging into the Cosmos ecosystem unlocks synergies
This proposed merger also aims to improve Osmosis’ network security, the network’s ability to secure other Blockchain projects, potentially by leveraging combined expertise or combining validator sets from both networks. This collaboration aims to explore opportunities to develop advanced liquidations, local margin trading and MEV markets. Osmosis co-founder Sunny Aggarwal expressed his excitement about the merger proposal in the Cosmos ecosystem. In this regard, Aggarwal said:
This offering to combine the Umee UX DeFi experience with the Osmosis Blockchain will deliver some truly powerful new features and functionality for our users. We’re also excited to continue our collaboration with UX Chain with whatever the community decides is best.
A look at past fundraising successes
Both Osmosis and UX Chain have achieved impressive fundraising successes in the past. As you follow from Kriptokoin.com, UX Chain, formerly known as Umee, raised $32 million through a CoinList coin offering in 2021 before a $6.3 million seed round led by Polychain Capital. Osmosis raised $21 million in a token sale round led by Paradigm that same year.
The merger proposal comes at a time when the Cosmos ecosystem is witnessing increased collaboration and innovation. It also underlines the dynamic nature of the DeFi space. Osmosis and UX Chain have significant financial backing. They also have a common vision for a strong DeFi hub. This merger proposal presents an exciting opportunity for the crypto industry.
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