Abstract

OmiseGO (renamed "OMG Network") is an expansion solution for Ethereum and is fully compatible with ERC-20 tokens and Ethereum.

OMG Network hopes to remove some scalability issues that have been a stumbling block to Ethereum’s development, promising to reduce gas costs and speed up confirmations.

Introduction

Ethereum expansion is a hot topic recently, and it has also been the focus of attention for several years. Solving this problem is by no means easy, and the Ethereum developer community has taken a multi-pronged approach to try various solutions.

OmiseGO is one of them, and it has recently been renamed "OMG Network". It promises to help the largest smart contract platform speed up transactions and reduce transaction fees. Let's understand how it works.

What is OmiseGO (OMG)?

OmiseGO (renamed "OMG Network") is Ethereum's Layer 2 solution that enables trustless value transfer. It aims to lower transaction fees and shorten transaction times without compromising Ethereum’s security.

The essence of the OMG network is to solve the existing scalability problem of Ethereum.

How OmiseGO (OMG) works

OMG network is a Layer 2 solution. Layer 2 solutions are built on existing blockchains (in this case Ethereum). Transactions are processed at the "secondary" layer, freeing up valuable block space in the Ethereum blockchain.

In a sense, you can think of Layer 2 solutions as a blockchain within a blockchain.

Compared with Ethereum, the OMG network is equally secure, but has lower transaction fees and faster transaction speeds. In addition, it is compatible with all ERC-20 tokens and Ethereum.

This is undoubtedly good news for the majority of Ethereum users. While the Ethereum network brings many exciting and innovative features, it is sometimes extremely expensive to use and is particularly unsuitable for small transactions.

The OMG network also has successful cases to prove: part of the world's largest stable currency Tether (USDT) is issued on the OMG network.

There are many providers of Layer 2 expansion solutions for Ethereum. Optimism, Loopring and zkSync are all typical representatives, and OMG Network is just one of them.

What is the importance of OmiseGO (OMG)

Network congestion is a major shortcoming of Ethereum. In general, Ethereum transactions are relatively fast, with confirmation times ranging from 10 to 20 seconds. However, if fuel prices increase, transaction times may extend to hours (or even days).

Transactions with higher gas price bids will be processed by the network first. If the user's fuel fee bid is too low, their transaction will be stagnant and will be waiting for confirmation for a long time. Of course, when network load (i.e. demand for block space) is high, gas prices rise and transaction times extend.

At this point, the user can choose to increase the transaction fee to complete the transaction, or wait for the gas price to drop. Therefore, under pressure, the Ethereum network faces two major problems: high gas fees and long confirmation times.

OMG Network solves the above problems by providing low-cost and fast transactions. Its transaction volume per second (TPS) reaches thousands, and the average cost is only about one-third of Ethereum.

The importance does not only affect token trading. When a large number of DeFi applications are deployed on Ethereum, network congestion problems will continue to exist. The Ethereum 2.0 upgrade will improve the scalability of Ethereum, but it is expected that Layer 2 solutions will still need to be used in the future. Additionally, Eth2 will take several years to fully launch. Of course, Ethereum users cannot wait so long to reduce gas costs and increase transaction speeds.

Use Cases for OmiseGO (OMG)

Cryptocurrency trading platform can gain more benefits than Ethereum by using the OMG network An ERC-20 token trading experience with faster network and lower transaction costs. Similar to trading platforms, wallet providers can also benefit from fast, high-throughput, low-cost systems.

We typically associate these types of systems and financial assets with cryptocurrencies, but the OMG Network can also be used for trustless community points trading and other online reward systems. For example, the Reddit community points system is extremely efficient when using the OMG network. The recently developed Community Points Engine (CPE) makes this possible.

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OMG token

OMG token is an equity token that provides financial support for project development. OmiseGO launched an ICO in 2017, raising $25 million.

OMG is also used to pay network fees, but support for other cryptocurrencies is still in the development stage.

The token is also used by validators to run network nodes and verify blocks. They earn transaction fees by providing services.

How to store OmiseGO (OMG)

OMG is an ERC-20 token that can be deposited in various wallet. Possible options include software wallets (web or mobile), or direct deposit to exchanges such as Binance.

It can also be deposited into cold storage hardware wallets such as Ledger and Trezor through MyEtherWallet or MyCrypto.

Summary

The OMG network aims to solve Ethereum’s scalability issues. It is the value transfer layer that supports fast, fast, and low-gas transaction services for financial services in the blockchain.

If you want to learn more about the OMG Network, please visit our Q&A platform Ask Academy. Members of the Binance community will patiently answer your questions.