XION Ecosystem: Osmosis Integration

XION announces a key integration with Osmosis, a premier DeFi L1 protocol serving as a central liquidity hub for the interchain.

The integration comes with a host of benefits, notably the implementation of the novel fee abstraction module, which facilitates powerful use-cases for improving the user experience. Additionally, it provides access to the asset liquidity and capital efficiency of Osmosis, which is essential for cross-chain composability. Furthermore, it plays a crucial role in aligning core innovators in the interchain, laying the foundation for future developments and collaborations to evolve the ecosystem.

Osmosis Overview

Osmosis is widely viewed as a leader in the Cosmos ecosystem, constantly innovating and pushing the boundaries of cross-chain DeFi through feature releases aimed at enhancing liquidity, capital efficiency, and the user experience. Through its more than 50+ IBC connections with other L1s, it serves as a central liquidity hub for the ecosystem. In addition, through Osmosis Grants and its own releases, such as the recently announced Osmosis Supercharged Liquidity, Osmosis is responsible for building and funding a lot of core interchain infrastructure.

What is the Fee Abstraction Module?

One such example is the Fee Abstraction Module built by the innovative Notional DAO team and funded by Osmosis Grants. The intent of the module is to allow the use of any IBC token on any chain for transaction fees, without needing to use the native token. To achieve this, it utilizes Osmosis's Cross Chain Swap (XCS). An IBC transfer is made to the Osmosis cross-chain swap contract, the token is swapped with the chain’s native token, and sent back through IBC.

How does it enhance XION’s User Experience?

XION is the first chain purpose built for retail adoption and aims to abstract away all the complexities of crypto in order to make Web3 accessible to non-technical users. This commitment to a seamless user experience spans the entire user lifecycle, from initial onboarding to ongoing engagement in the ecosystem. It encompasses efforts to reduce friction through various means including fiat denomination, social logins, gasless transactions, and instant credit/debit card transactions, among others.

XION is also the first chain to implement the Fee Abstraction module into the core of its protocol, and it is key to unlocking a multitude of additional user-experience enhancements. XION’s fee-swap module is improved by the integration, which extends the fee collection logic to automatically collect non-native fee tokens and swap them for XION tokens. This enhances XION’s ability to be fiat denominated, as well as the ability for any token to be used for purchasing or staking on the chain through one seamless transaction. Moreover, through the same mechanism, XION’s custom mint module accurately levels itself and maintains the minimal inflation (and potential deflation), ensuring the network’s security and optimally incentivizing network participants.

A foundation for the future

Working closely with pioneers like Osmosis is instrumental in driving forward the entire Web3 space and unlocking its full potential. This involves making products more accessible by reducing friction and improving the user experience, which are fundamental drivers of adoption. The integration between XION and Osmosis enables a host of related benefits and paves the way for continuous innovation, propelling us towards the biggest wave of consumer adoption to date.