Expanded Cosmos: Here’s Why Osmosis (OSMO) Hits New ATHs

Crypto assets in the Cosmos ecosystem have been doing well since early 2022, thanks to an increased focus on brokering cross-chain compatibility with other blockchains. One decentralized finance (DeFi) protocol that has benefited from current scaling plans is Osmosis (OSMO).

Osmosis is the first decentralized exchange (DEX) project to be connected via the Interblockchain Communication Protocol (IBC), and data from CoinGecko shows that OSMO price is up 123% from a low of $4.05 on Jan. Dec 17 to a new ATH at $9.24 on Jan 7.

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OSMO/USD 1-day chart. Source: CoinGecko

The three reasons for the price growth seen in OSMO include an increase in trading volume on DEXs, record-high total value locked on the protocol, and the release of cross-chain bridges connecting the Cosmos ecosystem. (ATOM) is compatible with the Ethereum Virtual Machine (EVM).

Trading volume soars

One of the biggest factors driving the price of OSMO is the dramatic increase in trading volume on the exchange. According to data from Token Terminal, trading volume hit a record high of $186.8 million on January 7 and a new ATH was established on the same day.

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OSMO price vs DEX trading volume. Source Token Terminal

The spike in trading volume and token prices quickly led to Osmosis becoming the third-ranked DEX by market capitalization as highlighted in the following tweet from Twitter user Jimmy Yang.

Follow According to data from SmartStake, other factors that have helped support the OSMO price as trading volume has increased include the fact that more than 81 million OSMOs are currently placed on the network. Furthermore, a large portion of the supply is also being used to provide liquidity in the various liquidity pools offered on Osmosis.

Total locked value increases

A second development that sets the bullish case for OSMO is the steady increase in total value locked on the protocol, which hit a record $1.21 billion on Jan. follow data from Defi Llama.

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Total value locked on Osmosis. Source: Defi Llama

Cross-chain eases the burden on traders

The third reason for the bullish trend in OSMO is Cosmos’ increasing attention to EVM compatibility and cross-chain bridges.

Evmos is a project currently in development that is working to be the first IBC-compatible EVM chain, and it is currently supporting ERC-20 tokens on its test network.

Injective, an L1 protocol, has also revealed that it is developing cross-chain bridges for Cosmos-based projects, and it is currently working on supporting OSMO.

As cross-chain bridges come online and allow tokens from other EVM compatible networks to connect to the Cosmos Hub, Osmosis has the potential to further increase transaction volume and TVL simply because it is the primary DEX for the Cosmos ecosystem at this time. If this happens, there is also a chance that the OSMO price could move higher.

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