OMG network is one of the several layer-2 ‘child chains that emerged to address the scalability trilemma faced by Ethereum prior to the launch of upgrade 2.0. More so, just like other layer-2 protocols, the OMG network also aims to achieve a higher transaction throughput at a lower cost while leveraging the security of the underlying host chain.
Just before we go on to describe what, and how it operates, below is a brief history of the decentralised network.
Brief history of OMG network?
Omise Go Pte Ltd., a subsidiary of Omise Holdings (or SYNQA), a Thailand-based payment processor, launched OMG Network, formerly known as OmiseGo in 2017. OMG network is currently led by Vansa Chatikavanij as the CEO, and has a team of over 50 remote employes located across the world.
The journey, however, began in 2015 when the company was exploring ways to leverage blockchain technology, leading to the birth of Omise Blockchain Lab which was set up in the same year to conduct research and testing of blockchain initiatives.
Two years after, OmiseGo was launched as a non-custodial, layer-2 scaling protocol for transferring value on Ethereum, its host blockchain. By 2017, the same year OmiseGo launched, the project was able to raise $25 million via initial coin offering (ICO), selling around 65% of its OMG cryptocurrency’s entire supply.
OmiseGo subsequently rebranded as OMG network with additional modifications three years later, on June 1st, 2020.
What is OMG network?
OMG network as mentioned earlier, is a permissionless and trustless layer-2 scaling solution built on the Ethereum blockchain and is notable for increasing a network’s transaction throughput.
The decentralised protocol is specifically designed as a plasma child chain anchored on the Ethereum blockchain.
If you’re wondering, the plasma framework is a second-layer scaling solution built on top of Ethereum or any other base layer blockchain, such that it interfaces with secondary protocols like the OMG network.
Not only that, the plasma framework, while it moves bulk transactions off the Ethereum blockchain to the child chain, also introduces a significant increase in transaction throughput that superseded that of the base layer.
In general, by leveraging the plasma framework, the OMG network is able to facilitate a high transaction rate without trading off the benefits of the host blockchain.
How does the OMG network work?
The OMG network as mentioned earlier relies on the plasma framework, which at its core, utilises an upgraded variant of plasma known as More Viable Plasma, or simply put, MoreVP.
Specifically, MoreVP operates a single block producer known as Proof of Authority (PoA) chain which enables the network to create a value transfer layer on top of Ethereum.
On the other hand, the POA chain is responsible for bundling Ethereum transactions and validating them through a speed-optimised child before sending them back to the Ethereum blockchain for confirmation and finality
The implication of the aforementioned, however, is that transactions are validated in batches rather than individually as against the model employed by the base layer blockchain, thereby lowering transaction costs and increasing transaction throughput.
In addition, because the OMG network primarily caters for high throughput and lowered transaction costs, it is backed by a security model provided by Ethereun, alongside a network of monitoring nodes.
Generally, the OMG network is made up of three main interconnected components that ensure the safety of transactions and ultimately, transparency. The OMG network smart contracts comes at the top of the list, providing the interface through which into and out of the network.
The second component, Child Chain Application which is run by the network’s core team, is responsible for bunding transactions for validation as well as publishing them on the smart contracts which then relay to the base layer for completion.
Lastly, there is the watcher application i.e, monitoring nodes who are tasked to observe the Child Chain application and serve as a second security protocol other than the one provided by the base layer. This set of nodes are to report any form of misconduct within the network that may be endangering subscribers.
OMG network native token – OMG
Just like most decentralised networks, OMG network also makes use of a native token, OMG token. The ERC-20 standard coin primarily functions as a utility token within the network, acting as the default method by which a holder can interact with the network’s numerous features.
The network does not yet enable staking, however, part of its theoretical plan is to transition to Proof-of-Stake (PoS) validation model, which implies that only OMG token holders will be able to play an active role on the network by running validator nodes using their tokens as a security deposit.
Currently, OMG network has a maximum token supply of approximately 140.24 million, with 65.1% distributed to investors, and 20% locked in the network’s smart contract reserve for future funding, development, and network’s validation.
29.9% of the OMG token supply is awarded to the project team, 5% distributed via airdrop, with the remaining 9.9% reserved for the funding team.
OMG network governance
Because it is an open-source platform, anyone can participate in the governance of the OMG network, and as such, proposals can be submitted through the project’s Github repository. However, the company also employs full-time developers who are in charge of the core protocol code’s planning and maintenance.
Ultimately, OMG is a multi-versatile project, and beyond its well-established native asset, it also offers unique propositions for hosted dApps.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.