OmiseGO (or OMG Foundation) is a scaling solution for Ethereum Fully compatible with tokens ERC-20 and ETH. Promises lower gas costs and faster confirmation times, OMG aimed at mitigating some of the scalability issues that are hindering Ethereum.
What is OmiseGO (OMG)?
OmiseGO is a Layer 2 solution for reliably transferring value on Ethereum. It aims to reduce fees and transaction times without compromising the security of Ethereum.
In essence, the OMG Network helps to solve Ethereum's existing scalability problems.
How OmiseGO (OMG) Works
The OMG network is known as a Layer 2 solution. A Layer 2 solution is built on the foundation of a blockchain existing (in this case, Ethereum). Since transactions are processed on the “secondary” layer, precious block space is freed on blockchain Ethereum.
Roughly speaking, you can picture a Layer 2 solution as a kind of blockchain is on a blockchainThe OMG network is said to have the same level of security as Ethereum, but with lower transaction fees and faster transaction times - and it works with all tokens ERC-20 and ETH.
This is good news for those who are using Ethereum. While Ethereum has brought many exciting innovations, the Ethereum network can sometimes become extremely expensive to use, especially for small transactions. The OMG network also has proof of its success. . Part of the supply stablecoins largest in the world, Tether (USDT), was released on the OMG Network.
The OMG Network is just a Layer 2 solution amid a sea of competitors looking to scale Ethereum, such as Optimism, Loopring and zkSync.
The importance of OmiseGO (OMG)
Network congestion is a crucial weakness of Ethereum. Usually transactions on Ethereum are relatively fast and are confirmed in 10-20 seconds. However, if gas prices go up, the transaction time can last for hours (even days).
Since transactions that place a higher gas price are prioritized through the network first, if you set a low gas price, the transaction can drag on, waiting to be confirmed. Naturally, when network traffic is high (i.e. demand for block space), gas prices increase and transaction times increase.
In this case, you can either pay a higher price to get your trade done or sit back and wait for the gas price to drop. So there are two problems with the Ethereum network under stress: high gas fees and long confirmation times. The OMG network solves this problem by providing high-speed, low-cost transactions.
It offers thousands of transactions per second (TPS), at about a third of the average cost of using Ethereum. This is not only important for token transactions. With so many applications DeFi being deployed on Ethereum, network congestion will continue to be a dilemma.
While the Ethereum 2.0 upgrade will make Ethereum more scalable, it is expected that Layer 2 solutions will still be needed in the future. Also, Eth2 will take years to fully launch. Naturally, Ethereum users can't wait that long for lower gas fees and faster transactions.
OmiseGO (OMG) use cases
Exchanges cryptocurrency could use the OMG Network for faster, lower-cost ERC-20 token transactions instead of using the Ethereum network. Like exchanges, wallet providers can also benefit from fast, high-throughput, low-cost systems.
Although we often think of these types of systems in terms of financial assets and cryptocurrency, the OMG Network can also be used for unreliable community points transactions and many other online rewards systems.
For example, the community points system of Reddit proven to be highly effective when used with the OMG network. This has been made possible by the recently developed Point-score Engine (CPE).
The OMG token is a staking token and has been used to fund project development. OmiseGO conducted an ICO in 2017, raising $25 million.
OMG is also used to pay fees online; however, other coins are being advocated for development.
The token is also used by validators running network nodes and validating blocks. They earn transaction fees in return for their services.
How to store OmiseGO (OMG)
Since OMG is an ERC-20 token, you can store it in a variety of wallets. Think of software wallets (web-based or mobile) or simply exchanges like Binance.OMG can also be stored on cold storage hardware wallets, such as Ledger and Trezor, when combined with MyEtherWallet or MyCrypto.
The OMG Network is geared towards solving Ethereum scalability issues. It is a value transfer layer that enables fast transaction times and low gas fees for financial services on the blockchain.