What Is OmiseGO (OMG)?
The OmiseGO network (now known as the OMG Network) is a scaling solution that supports ERC-20 tokens and ETH, which is totally compatible with Ethereum.
Using the OMG Network, one of Ethereum's features, the scalability issues are aimed at being mitigated by lowering the gas costs, as well as delivering faster confirmation times.
Introduction
Apparently, scaling Ethereum is one of the biggest topics of discussion these days (actually, it has been for years). There is no easy way to solve this issue, and the Ethereum developer community is exploring several different avenues to try and resolve it.
OmiseGO recently changed its name to OMG Network, a rebranding that has been gaining traction. The platform guarantees faster transactions and lower fees on the world's largest marketplace for smart contracts. Let's have a look at how it works.
What is OmiseGO (OMG)?
The OMG Network (formerly called OmiseGO) is an Ethereum Layer 2 solution for transferring value on a trustless basis using OmiseGO. By reducing transaction fees and times, Ethereum's security can be maintained without compromising its effectiveness.
As a result, the OMG Network results in a solution to the scaling issues Ethereum currently faces.
How OmiseGO (OMG) works
A Layer 2 network is commonly referred to as the OMG Network. There is a second level of solutions known as layer-2 solutions, they are based on existing blockchain technology (in this case, Ethereum). It has been demonstrated that by processing transactions on the "secondary" layer, we are able to free up blocks of Ethereum's blockchain that are otherwise taken up by transactions.
As a kind of interlayer solution, we might be able to think of it as a kind of blockchain on top of another blockchain.
It is supposed that the OMG Network will have the same level of security as Ethereum, though at a lower transaction cost as well as faster transaction times - and it will be compatible with tokens based on the ERC-20 standard and ETH as well.
For those who are using Ethereum, this is some great news to hear. In spite of the fact that the Ethereum network has brought forth many exciting innovations, the Ethereum network can be exceedingly costly to use, especially if you are doing a smaller transaction.
In addition, there are many proofs of success for the OMG Network. OMG Network recently announced that a portion of the worldwide supply of the biggest stablecoin in the world, Tether (USDT), will be issued on the OMG Network.
In spite of the fact that there are a number of Layer 2 solutions that aim to scale Ethereum, such as Optimism, Loopring, and zkSync, the OMG Network is the only one entirely dedicated to scaling Ethereum.
Why OmiseGO (OMG) is important
Congestion in the Ethereum network is one of the major drawbacks of the ethereum network. The usual transaction time on Ethereum is 10-20 seconds, and transactions are usually confirmed within a few seconds. The transaction times can be stretched out to hours (or even days) if gas prices are high.
Gas transactions with higher prices get processed first, so if you are bidding a low price for gas, then the transaction can hang around for a long period of time as it awaits confirmation. When there is a high demand for block space (i.e., when the network is loaded), gas prices will rise and transaction times will be longer.
Hence, either you pay a higher price for your transaction to be processed, or wait for the price of gas to drop so you can complete your transaction. Basically, when the Ethereum network is stressed, there are two major problems that cause it problems: high gas fees and long confirmation times.
By providing low cost, high speed transactions, the OMG Network is able to solve this problem. it can support thousands of transactions per second (TPS), which is around a third of what Ethereum can offer for the same level of speed.
The importance of this is not just limited to token trading. DeFi applications will be deployed by the dozens on Ethereum, so there will continue to be a problem of network congestion due to the plethora of applications. In spite of the fact that Ethereum 2.0 is expected to make Ethereum more scalable, Layer 2 solutions are expected to remain necessary in the future. Additionally, a full rollout of Ethereum 2.0 will take a number of years. Obviously, Ethereum users can't wait that long for the costs of gas to drop and the transaction speed to improve.
OmiseGO (OMG) use cases
Through the OMG Network, cryptocurrency exchanges will be able to conduct cryptocurrency transactions using more efficient and cost-effective ERC-20 tokens instead of employing the Ethereum network. The same goes for wallet providers since they can also benefit from fast, cost-effective, high-throughput platforms.
The OMG Network is primarily used for cryptocurrency exchanges and financial assets, but can also be used for online community rewards and other types of transactions. The community points system in place on Reddit has been shown to be very effective when used in conjunction with the OMG network. It was possible to achieve this through the newly developed Community Points Engine (CPE).
The OMG Token
Tokens like OMG, which are used to fund the development of the project, are staking tokens, which allow users to stake their tokens. As of 2017, OmeiGO conducted a $25 million initial coin offering.
As part of the network, OMG is also used to pay fees, however, support for other coins is still being developed.
In addition to running network nodes, the token is also used by validators who validate blocks made by network nodes. In return for these services, validators are paid a commission.
How to store OmiseGO (OMG)
As OMG is an ERC-20 token, it can be stored in almost any wallet that supports ERC-20 tokens. Consider software wallets (web or mobile-based), or simply exchange websites.
Taking advantage of MyCrypto and MyEtherWallet, OMG can also be stored on hardware wallets that support cold storage, such as the Ledger and Trezor.