Osmosis and UX Chain propose merger within Cosmos ecosystem

Osmosis OSMO

+
the largest decentralized exchange on Cosmos, and the lending protocol UX Chain (formerly Umee) have proposed a merger with each other – signaling major consolidation in the Cosmos ecosystem. Once approved, this merger could see the integration of UX Chain’s credit logic and algorithms with Osmosis’ DEX, creating a comprehensive DeFi hub.

This proposal, a joint effort by employees from both Osmosis and UX Chain, describes a Strategic Plan for the proposed merger. The process will unfold in steps, starting with integrating the UX Chain code base into the Osmosis Chain. This integration aims to merge the capabilities of both platforms. The expected results of this first step include combining the shared total value locked across the two networks. In this first step, both chains will continue to trade their respective tokens – the Osmosis token and the UX token – separately.

Then there will be the possibility of a step related to combining the two tokens, including a possible token exchange or migration. According to the proposal, this move would lead to the creation of a unified token representing both networks. The token swap configurations will be determined based on community management.

“Each chain will have a separate governance vote from each blockchain network. The community board will manage the processes for each network separately to reach consensus on the end goal of creating the DeFi hub,” Brent Xu, co-founder of UX Chain told The Block in a statement.

Umee and Osmosis proposed to unite capabilities

This proposed merger also aims to enable UX Chain to add value to Osmosis’ mesh security – the network’s ability to secure other blockchain projects – by potentially leveraging the combined expertise or by merging validator sets from both networks. By leveraging each other, UX Chain and Osmosis can explore the potential for developing advanced liquidations, native margin trading and MEV markets.

“This proposal to merge the Umee UX DeFi experience with the Osmosis Chain would enable some really powerful new features and functionality for our users – and we are excited to continue our partnership with UX Chain with what the community considers the best,” says Osmosis co. founder Sunny Aggarwal said.

The development teams behind both projects have previously secured significant funding. UX Chain raised $32 million through a CoinList coin offering in 2021, preceded by a $6.3 million seed round led by Polychain Capital. The same year, Osmosis secured $21 million in a token sales round, with Paradigm leading the investment.