The forthcoming merger of Cosmos-based networks Umee and Osmosis was revealed in an announcement made on December 4, signifying a major software upgrade. The merger involves the migration of Umee’s UX Chain code onto the Osmosis chain, effectively combining the functionalities of both networks. This integration aims to create what the development team terms a "DeFi Hub" within the Cosmos ecosystem.
Umee operates as a decentralized lending protocol on its own dedicated Cosmos chain, the "UX Chain." Conversely, Osmosis functions as one of the prominent decentralized exchanges (DEX) within the Cosmos ecosystem, operating on its independent network. Osmosis has established itself as a leading DEX with a transaction volume surpassing $23 billion and ranking as the fourth-largest Cosmos chain based on total value locked (TVL), according to DefiLlama.
The decision to merge these networks was reached by the protocol's development team. This collaboration intends to house lending applications and DEXs within the same chain, unlocking previously unattainable functionalities. The merger is expected to enable advanced features such as spot margin trading, short selling, liquidation, stablecoin pools, inter-chain flash loans, MEV markets, among other capabilities.
Sunny Agarwal, co-founder of Osmosis, highlighted the potential of the combined architecture, emphasizing the emergence of flash loans and new forms of MEV on the proposed DeFi Hub. Agarwal mentioned leveraging flashmint through protorev for cross-chain arbitrage and envisioned further optimization by enabling lending protocols on the same chain.
Although no specific date was disclosed for the merger, users were advised to await forthcoming updates. Clarifying the status of Umee UX Chain token UX, CEO Brent Xu affirmed its continued existence. Xu mentioned the team's proposal to involve the community in discussions and decisions concerning the management of the token economy for user experience.
Osmosis previously integrated centralized liquidity functionality and later announced plans for a bridged version of Bitcoin to be traded on its exchange.
