What is OMG Network? (OMG)
The Beginner’s Guide
Created by an established payments processing company called Omise, OMG Network, previously known as OmiseGo, seeks to use the OMG cryptocurrency to streamline how electronic wallets issue and exchange assets.
The idea is that digital payments today mostly occur within single payment platforms like Venmo or Alipay, meaning money can’t move easily from one platform to the other.
The vision, then, is that payment networks like Omise could leverage OMG Network to trade assets on behalf users, sourcing liquidity for trades and facilitating transfers on a blockchain that serves as a real-time market for assets in all participating networks.
But the OMG Network isn’t designed to operate solely on its own. Rather, it’s built on top of Ethereum (ETH), assets on its network can be backed by Ethereum's cryptocurrency, ether.
Using Ethereum and OMG Network, Omise posits that e-wallet users could freely move and convert these assets, whether they are loyalty points, government currencies or new crypto assets.
Understanding how OMG Network works can be complex, and it’s important to remember that the network is still working to develop the technologies first outlined in its 2017 white paper.
As of 2020, OMG Network has released a public testnet with audited contracts designed to interact with Ethereum’s public testing platform. So, the project remains in its early stages.
More details and developments from the OMG team can be found on the official OMG Network blog. Here, you can find updates, including regular announcements and project updates.
Who created OMG Network?
OMG Network is developed by Omise Go Pte Ltd., a subsidiary of Omise, a Thailand-based payments processor founded in 2013. Previously known as Omisego, Omise rebranded to OMG Network on June 1st, 2020.
The company began exploring how it could apply blockchain to its business in 2015, launching the Omise Blockchain Lab to conduct research and testing.
Then, in 2017, it set up a new company, which raised $25 million to fund development by selling 65% of the supply of its OMG cryptocurrency. Thanks to Omise’s partnerships with companies like Alipay and McDonald’s, OMG was able to attract interested investors.
Twenty percent of the OMG cryptocurrency supply was then reserved for future network costs, while 9.9% was set aside to compensate the founding team.
An additional 5% of the OMG supply was distributed to anyone who had an Ethereum wallet with more than 0.1 ETH. OMG Network framed this as a payment to the Ethereum network, as it raised its funds by creating an Ethereum token.
How does OMG Network work?
The vision of Omise is to integrate many electronic wallets using the OMG Network (previously OmiseGo blockchain.)
Over time, as more e-wallet providers are added to the network, and more of the crypto assets they issue can be exchanged on a blockchain, Omise believes it could help provide banking services to those who have been excluded from the financial system.
The OMG Network
OMG Network is a proof-of-stake blockchain meant to clear and settle the movement of assets between various e-wallets, without those e-wallets necessarily having to trust each other.
The network also includes a built-in trading engine where e-wallet providers can publish orders and be matched with other parties seeking to trade various assets.
These orders can be programmed to complete within a given block on the Omise blockchain or can be left open-ended based on available asset pricing.
Not all payments have to take place within the network's decentralized exchange, as OMG Network is interoperable with the Ethereum blockchain and the Lightning Network, a payments technology built on top of Bitcoin (BTC).
How OMG Network uses Ethereum
OMG Network has a number of technical features designed to make it compatible with the Ethereum blockchain. For example, all nodes validating transactions on the blockchain need to be set up as nodes on the Ethereum blockchain.
E-wallet providers can also create new assets backed by ether, or they can create contracts that lock ether on Ethereum, pending certain conditions on OMG Network. If contracts execute, these funds can then be again unlocked and returned to their original owners.
The idea is that trading between e-wallets can take place at a high volume on OMG Network, with the final transactions being ultimately settled on Ethereum.
Why does OMG have value?
OMG Network users must buy OMG cryptocurrency to pay for work completed by the blockchain.
This means every time you use an OMG Network contract, you need to pay in OMG, which is then distributed to nodes on the network that enforce contracts according to the rules.
The OMG blockchain is maintained by these nodes, also called validators, who “stake” their OMG cryptocurrency by locking it in a smart contract for a period of time.
Users who create contracts may also lock OMG in these contracts. If the user attempts to break the rules or fail to deliver on an obligation, this OMG can be taken away and sent to an address where it cannot be spent.
This reduces the total supply of OMG cryptocurrency and helps make the token a scarce resource. Because OMG Network uses proof-of-stake, new OMG is not distributed through mining.
Only 140 million OMG tokens will ever be made available to the network, more than 100 million of which are currently in circulation in its economy.
Kraken's Crypto Guides
- What is Bitcoin? (BTC)
- What is Ethereum? (ETH)
- What is Ripple? (XRP)
- What is Bitcoin Cash? (BCH)
- What is Litecoin? (LTC)
- What is Chainlink? (LINK)
- What is EOSIO? (EOS)
- What is Stellar? (XLM)
- What is Cardano? (ADA)
- What is Monero? (XMR)
- What is Tron? (TRX)
- What is Dash? (DASH)
- What is Ethereum Classic? (ETC)
- What is Zcash? (ZEC)
- What is Basic Attention Token? (BAT)
- What is Algorand? (ALGO)
- What is Icon? (ICX)
- What is Waves? (WAVES)
- What is OMG Network? (OMG)
- What is Gnosis? (GNO)
- What is Melon? (MLN)
- What is Nano? (NANO)
- What is Dogecoin? (DOGE)
- What is Tether? (USDT)
- What is Dai? (DAI)
- What is Siacoin? (SC)
- What is Lisk? (LSK)
- What is Tezos? (XTZ)
- What is Cosmos? (ATOM)
- What is Augur? (REP)
Why use OMG?
Investors may be interested in the OMG cryptocurrency should they believe Omise’s existing partnerships and technical vision could make the platform attractive to other e-wallets.
Further, traders who are already invested in the success of ether may see it as a complement, as OMG Network is an early example of an Ethereum-based application.
Should Omise bridge the gap between centralized and decentralized financial networks with OMG Network, the OMG cryptocurrency could be of interest to long-term traders as well.