Cosmos DEX Osmosis' DAO voting to adopt 'fee-free' bitcoin bridge via Nomic

Osmosis DAO, the community governing the Cosmos-based decentralized exchange and appchain Osmosis, is set to vote in favor of adopting a "fee-free" bitcoin bridge via the decentralized bridging protocol Nomic.

Some 91.7% of votes are in currently favor of the proposal amid a 46.4% turnout, with voting due to end at 7 p.m. ET. Just 1.2% have voted against the move so far, with 7.1% abstaining. The upgrade, if approved, would mean bitcoin can move more freely into the Cosmos ecosystem for DeFi-related activities.

The proposal introduces a new protocol revenue-sharing arrangement between Nomic and Osmosis, aimed at enhancing bitcoin liquidity on the platform by replacing current bridging costs.

Nomic currently allows users to deposit bitcoin directly to Osmosis to receive its bitcoin-backed asset nBTC, with a capacity limit of 21 BTC -3.25% , a deposit fee of 1% and a transfer fee of 0.5%.

Under the proposal, bitcoin bridging fees for transactions originating or terminating on Osmosis would be waived. However, a flat bitcoin miner fee may still be charged on withdrawals to Bitcoin to cover transaction fees.

In exchange, Nomic would receive a portion of the taker fees from trading of nBTC and its derivatives on Osmosis, intended to encourage its use on the chain. The proposal stipulates that Nomic would receive 10% of the total taker fees on nBTC-related trades via Osmosis, and a proportional share of fees from trades involving nBTC derivatives.

Osmosis users could therefore benefit from reduced costs for bitcoin transactions, enabling them to directly integrate bitcoin liquidity into the Osmosis ecosystem without incurring additional bridging fees.

The mechanism would be implemented during a future software upgrade if approved by both Nomic and Osmosis governance for an initial term of six months, or until superseded by mutual governance action.

“This proposal, if passed, is a significant milestone in DAO-to-DAO deals. It provides a new 'rev share' business model for bridges, one that is uniquely possible with appchains,” Osmosis co-founder Sunny Aggarwal wrote in the Osmosis forum.

What are Osmosis and Nomic?

Osmosis is an independent Layer 1 blockchain built using the Cosmos software development kit, specifically designed to support its decentralized exchange and automated market maker functionalities. It claims to be one of the most active ecosystems by developer activity.

Osmosis is one of the largest protocols in the Cosmos ecosystem, with $124 million in total value locked (deposited) on the chain, according to DeFiLlama data. It is also among the top 15 decentralized exchanges across all chains, with a cumulative trading volume of $33.8 billion .

Built on developer Turbofish’s Orga, a custom high-performance blockchain application framework, Nomic enables users to securely bridge bitcoin to blockchains that run the inter-blockchain communication protocol (IBC), Cosmos' cross-chain messaging and bridge protocol.

Nomic activated its native Bitcoin (nBTC) interchain upgrade in October 2023, paving the way for native, tokenized bitcoin transfers within the Cosmos ecosystem. Before the introduction of the nBTC interchain upgrade, there were no options for users wanting to transfer bitcoin into the Cosmos Network via decentralized methods. The lack of a dedicated bridge protocol meant that users had to convert their bitcoin into other cryptocurrencies, adding an extra layer of complexity.