OmiseGO builds a blockchain for trustless fiat and cryptocurrency trading.
Traditional exchange of assets and securities involve a variety of organizations and companies. There are clearing houses that make sure that each party provides his part of the deal. There are liquidity providers that hold a large number of securities to facilitate the trading. Finally, there are exchanges that connect buyers and sellers on a single marketplace. Using the traditional system requires a trust in each of these organizations.
Like any decentralized platform, OmiseGO is not run by some person or a group of persons, but rather by all users of the platform. That might be useful for small and medium companies that don’t want to or can’t rely on traditional financial organizations and instead prefer an open and trustless system. Once enough companies will join the platform, the network effect will provide substantial value for each member of the platform, as users will be able to trade a large set of tokens interchangeably.
In terms of OmiseGO, a digital wallet that stores various tokens and currencies is called eWallet. A company that provides the functionality of creating an eWallet is called eWallet payment provider (EPP). OmiseGO team believes that these EPPs will join the network to facilitate payments between different tokens.
OmiseGO provides the technical toolset to set up an eWallet on its chain. The OmiseGO wallet SDK allows to issue new tokens and trade them. EPP can issue fiat-backed tokens or loyalty tokens. In the first case, it can be any fiat currency for which EPP is going to be a custody. In the second case, it can be loyalty points, airline miles, gift cards, and any other tokens that have some value guaranteed by an EPP or its partners.
These tokens can be transferred both in a centralized and decentralized way. In the first case, EPP uses its own software and servers to send tokens, and it can be helpful for internal transfers (same tokens involved) without fees. In the second case, EPP will use OmiseGO chain to send or trade the tokens, which is useful for cross transfers (different tokens involved), though requires paying a fee.
EPPs can introduce different compliance schemes if needed. For example, they may require KYC validation before token transfer. This doesn’t concern decentralized currencies. The development and integration of compliance protocols are beyond the scope of OmiseGO platform and is up to the EPPs themselves.
From the architectural standpoint, OmiseGO platform consists of three components: OmiseGO chain, interoperability tools, and payment channels. OmiseGO chain handles the business logic behind token trading. Interoperability tools allow to connect to and communicate with other public blockchains, like Bitcoin and Ethereum. Payment channels serve as an off-chain scaling mechanism.
OmiseGO blockchain represents a smart contract platform. It uses Proof-of-Stake as a consensus algorithm: validators require OMG tokens to make blocks. If validators behave honestly and produce correct blocks, they earn transaction fees. In future, it will be possible to delegate the validation.
OmiseGO will be designed for rapid offer execution and clearing. In future, a sharding may be implemented. OmiseGO supports light clients, which can obtain small parts of the network to verify their trades.
The decentralized exchange will be running on OmiseGO chain. This exchange will handle all incoming orders and execute them accordingly. Orders are matched and executed each round. Decentralized exchanges are generally slower than centralized ones because they require the participation of all active nodes. However, OmiseGO team believes that only trustless and open systems can guarantee free and honest trading. Thus, it builds a system for high-value trades rather than low-value high-frequency trading.
For the proper trading of cryptocurrencies on OmiseGO, clearinghouses should be organized for each currency. The purpose of the clearinghouse is to ensure that payments have occurred on the blockchain. For example, Bitcoin clearinghouse should post a proof that a transaction took place between buyer and seller. The clearinghouse is bonding OMG on the OmiseGO chain, so if it doesn’t post the proof of transaction and someone else will prove that the transaction happened, the clearinghouse will lose bonded tokens. Same way, if the clearinghouse will provide a false proof, and someone will show that this proof is indeed false, the clearinghouse will lose the bond. The clearinghouse may charge fees for its operations.
The OmiseGO is similar to the Ripple Net in the sense that both try to make the trading of fiat-backed tokens and cryptocurrencies. While both projects use the blockchain and related technologies, OmiseGO is much more open system than Ripple. Not only it allows to freely connect third-party gateways that can issue new tokens, but OmiseGO chain also can be validated and maintained by anyone. In Ripple, there is a trusted list of gateways and a trusted set of validators, which makes it a closed system.
OmiseGO will work as a price oracle, providing the data feed of token prices. Users of the network and external applications can use this feed as a verification of the price without downloading the whole history of executed orders. Developers might create smart contracts that are aware of the asset prices by looking at the data feed.
OmiseGO works on an implementation of Plasma, a scaling mechanism for Ethereum. On Ethereum, each smart contract computation is done on all nodes. The main idea of Plasma is to split computation among different nodes, then combine the computations and write the result on the Ethereum blockchain. That way, computation of smart contracts will be done much faster, and more work might be done on a single block.
- June 23, 2017—June 24, 2017: Pre-sale of OMG. No more sales of OMG were done. twitter.com
- September 24, 2017: Airdrop of OMG tokens to the holders of ETH. blog.omisego.network
- October 1, 2017: Initial commit on Github. github.com
- February 16, 2018: OmiseGO joins Ethereum Community Fund, which is dedicated to the acceleration of infrastructure and decentralized application development. blog.omisego.network
- February 28, 2018: Release of the eWallet SDK. blog.omisego.network