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The creator of Ethereum, Vitalik Buterin, is always on the lookout for reliable solutions to his brainchild blockchain’s scalability problem. OMG Network is one of these promising projects that he has supported for years.
After a long absence, many proclaimed it dead and buried. OMG Network resurfaced this year to release its mainnet and shine a light on its silent but encouraging development. Now, the project plans to become one of the most popular decentralized exchanges in the world. But does it have what it takes?
What is the OMG Network?
The OMG network was designed to be non-custodial and enable the transfer of ERC-20 tokens much faster and lower fees than the Ethereum network currently allows. However, in the future, OMG plans to provide easy payment solutions for any kinds of assets, and even between payment services like PayPal and Alipay.
The network functions on an innovative scaling protocol under the name of MoreViable Plasma. This solution uses a sidechain function to gather numerous transactions into a single transaction body that the Ethereum root chain later verifies. Through this method, OMG claims that it will complete thousands of transactions per second (TPS).
OMG Network also uses a native token called OMG, which holders can use to pay the network fees, which will become stackable to increase the network’s security.
A Brief History of the OMG Network
OMG Network is the crypto ramification of one of the major payment gateway companies in Southeast Asia, Omise, established by Jun Hasegawa in Thailand in 2013. Omise is very similar to more internationally known services like PayPal and Stripe.
In 2017, Omise teamed up with Vansa Chatikavanij, a Thai-born public infrastructure specialist and crypto enthusiast, to develop OmiseGo. Their project aimed to create a method to transfer development funds faster, cheaper, and easier than any other method known at that point, including PayPal and banking services.
Their model of infrastructure for the future network was the Ethereum blockchain. So, they asked Ethereum’s creator, Vitalik Buterin, for assistance in building the project. Buterin and one of the top Ethereum developers, Joseph Poon, worked with a team of developers by Hasegawa and Chatikavanij to write the OmiseGo whitepaper.
OmiseGo quickly developed into a solution for both digital and physical borderless transactions. It summed up its creed in an ambitious slogan like “Unbank the Banked” and steadily worked its way up the ladder.
Before reaching international notoriety, OmiseGo sought to cement its local authority, so it established partnerships with the regulatory bodies within Thailand, starting with the Thai Ministry of Finance, which awarded the company with the Digital Startup of the Year Award in 2017.
For nearly three years, OmiseGo developed in almost complete silence. Even its social media channels seemed deserted for months in a row without a single post. It all changed in 2020 when the company became more active on social media and in the crypto space.
In June 2020, after releasing its first functional mainnet, OmiseGo changed its name to the present-day OMG Network.
What is the OMG Token?
OMG is the native token on the OMG Network. It was first launched when the network was developing under the OmiseGo name in June 2017. It took an Initial Coin Offering (ICO) event to sell 65% of OMG’s total supply of 140 million units at a price of nearly $0.50 per token, which amounted to $25 million the project.
The remaining 35% of tokens were distributed like this:
- 20% was kept by the parent company Omise.
- 10% was given to the early developers of the project.
- 5% was reserved for future airdrops to Ethereum wallets.
The OMG token hit the ground running as soon as it entered the cryptocurrency market and reached an all-time high (ATH) of $28.35 in January 2018. However, since then, it has lost most of its gains, and it is currently trading at $3.02 per unit.
In terms of market capitalization, OMG is among the top-30 cryptocurrencies with a cap of $423,222,273. The entire amount of 140,245,398 tokens is currently in circulation.
How Does the OMG Network work?
At the moment, the Ethereum blockchain in its 1.0 version can only complete 1-20 TPS. The OMG Network can already process around 4,000 TPS. Additionally, it does it at lightning speed and only charges the traders a third of the cost that Ethereum takes for transaction fees.
The network manages to reach this performance thanks to another of Buterin’s brainchildren, called Plasma. The Ethereum creator and one of its leading developers, Joseph Poon, developed a version of this technology and named it “Minimal Viable Plasma.” The OMG team took it from there and fully developed it into what we know today as “More Viable Plasma.”
What is More Viable Plasma?
Plasma is a blockchain solution that aims to improve scalability on the Ethereum blockchain. It functions as a side chain or a child chain, and it combines multiple transactions into a single batch to increase transaction speed considerably while reducing the costs.
More Viable Plasma is a version of Plasma that employs a Proof of Stake consensus mechanism involving three elements:
- A smart contract that delivers the batches of transaction data to the core Ethereum blockchain for verification
- An entity that ensures the computing power necessary to aggregate transactions produce blocks and deliver those blocks containing batches of transactions to the smart contract. This element is also known as an “operator.”
- Centralized entities that monitor the network and ensure that the information transferred back and forth is accurate. These elements are also referred to as the “watchers.”
OMG Network aims to increase the scalability and security of transactions on the Ethereum blockchain. While it does not score many points on the decentralization scale, the developers predict that crypto traders will favor it over other layer-2 Ethereum solutions thanks to its enhanced protection against hack attacks.
The Bottom Line – The Ultimate Guide to OMG Network
Even if it’s more than three-years-old, OMG Network seems to be making its first steps in the crypto world. The progress is slow, and the company is not the most communicative entity in the crypto ecosystem. Still, it remains a promising project, and a viable solution to the scalability problem of the Ethereum blockchain is always more than welcome.
The release of the OMG mainnet is a big step ahead, and since the project is benefitting from Buterin’s full support, we can expect more exciting developments on the horizon.