Bitcoin x Osmosis = Bitmosis

Bitmosis is a series of initiatives aimed at unlocking Bitcoin liquidity across chains, establishing Osmosis as the premier venue for BTC trading.

In this blog post, we're breaking down the core components of Bitmosis and outlining how it's going to unlock Bitcoin liquidity across all ecosystems while turning Osmosis into the liquidity hub for on-chain Bitcoin trading.

Current issues with Bitcoin-Fi

1) Bitcoin remains largely disconnected from DeFi.
2) There's no native Bitcoin DEX with seamless cross-chain liquidity.
3) Interacting with the Bitcoin network for DeFi purposes is slow and very expensive.
4) Leading to a bad UX when using BTC in DeFi.

Making Osmosis the leading DEX for Bitcoin

The following measures will help with turning Osmosis into the #1 DEX for Bitcoin trading.

a) Establishing deep BTC liquidity for the emerging Bitcoin Layer 2 ecosystem.
b) Becoming the go-to trading venue for Bitcoin and L2 assets.
c) Accumulating Bitcoin within the protocol's treasury.
d) Deploying protocol owned $BTC to deepen liquidity, boost volumes and earn fees.

BTC liquidity is fragmented & non-fungible

Osmosis' Alloyed Bitcoin solves the issue of fragmented liquidity and non-fungibility. Alloyed Bitcoin is a standardized version of BTC composed of multiple underlying assets like nBTC, WBTC, ckBTC, etc. More can be added to the Alloyed via governance.

Unifying Bitcoin liquidity and making it fungible via Alloyed Bitcoin, allows Osmosis to serve as a routing hub for transfers between all the Bitcoin L2s. In comparison, routing through the Bitcoin network would take over 2 hours, as it requires 2 costly transactions that have to settle on the Bitcoin network.

Bitcoin-related assets on Osmosis

Osmosis will focus on the following three asset classes in the Bitcoin ecosystem:

1) Liquid staked & restaked versions of Bitcoin (sBTC, RBTC, LBTC, etc).
2) L1 native tokens that build tooling for Bitcoin like $BABY from Babylon.
3) Ordinals (NFTs on Bitcoin).

The #1 BTC Trading Venue

Since the Bitmosis initiative was kickstarted, Osmosis has seen consistent growth in Bitcoin liquidity and trading volume.

1) Low Fee BTC/USDC Market: Users can market trade BTC against USDC at a market leading rate of 0.03% fees on Osmosis.

2) Free Limit Order Trading: The protocol does not take any maker fee on Limit Orders.

3) BTC as the Quote Asset: Most assets on Osmosis are paired with Bitcoin rather than stable coins, ETH, or SOL. => OM/BTC, DOGE/BTC, SOL/BTC

Bitcoin Accumulation Strategy

With Bitcoin becoming the Quote Asset on Osmosis, the protocol is also actively accumulating BTC to further strengthen liquidity and ensure sustainable growth.

A) 30% of the protocol fees are sent to the Community Pool, creating a regular source of BTC income along with other assets (USDC, ATOM, TIA).

B) 25% of the protocol fees are bookmarked for regular Bitcoin purchases and LPing of BTC.

These measure were set to increase Bitcoin liquidity on the DEX, foster trading activity, generate protocol income via trading fees while simultaneously building up a Strategic Bitcoin Reserve in the protocols community pool (treasury).

How to trade BTC on Osmosis?

Users can deposit native Bitcoin from any Bitcoin wallet or centralized exchange (CEX) directly to Osmosis and start trading.

Thanks for reading folks!

We hope this article helped you stay up-to-date with the latest developments in the Cosmos and the Bitcoin ecosystem.

Disclaimer

This article is intended to educate readers about certain topics and should not be considered financial advice in any way.