Cosmos' largest DEX Osmosis launches a stableswap: Exclusive

Cosmos-based decentralized exchange Osmosis has launched a stableswap — a protocol for trading stablecoins. 

With this launch, Osmosis developers hope to become the main venue where Cosmos users can access and trade a wider range of stablecoins, both centralized and ones backed with crypto tokens. If successful, it could become the Cosmos-equivalent to Ethereum's main stablecoin exchange Curve.

“We want to support multiple stablecoins in the Cosmos ecosystem — both larger centralized stablecoins (like USDC, USDT, BUSD), as well as some of the newer stablecoins in the Cosmos ecosystem,” Osmosis founder Sunny Aggarwal, said in a statement.

The Osmosis stableswap is similar to other stablecoin exchanges, leveraging what’s called a “curve algorithm” that concentrates tokens in asset pools in a way that traders can exchange large amounts of stablecoins with minimal price impact or fluctuations in value. 

Osmosis is the largest decentralized exchange in the Cosmos ecosystem by daily volume and holds over $177 million in crypto assets, according to DeFiLlama.

Growing stablecoin volume on Cosmos

As various bridging solutions have come online in the last one year, including Axelar and Gravity Bridge, many Ethereum-based stablecoins have poured into Cosmos, including USDC, USDT, BUSD and DAI. In October, Circle, the issuer of USDC stablecoin, said it planned to natively launch on Cosmos in the first quarter of 2023.

With the increasing expansion on Cosmos, stableswap pools will get a great deal of use, especially as the ecosystem further matures, Osmosis said. The team added that it will allow developers to create pools of different stablecoins similar to Curve’s 3pool, which it said will help improve stablecoin liquidity in the Cosmos ecosystem.

In addition to hosting stablecoin trading, Osmosis also let quasi-pegged assets like liquid staking derivatives be traded with their corresponding native assets with similar efficiency.  For example, trading of staked ATOM (stATOM), the liquid staking token issued by Cosmos’ native asset called ATOM, will have a pool called ATOM/stATOM.