It’s no longer news that one of the major problems of the Ethereum network is scalability. The network can only process 14–24 transactions per second, which is slow considering the large number of decentralized apps (DApps) connected to it. This problem led to the need for layer-2 solutions like the OMG network, which focuses on speed. This article will simplify crucial information you need to know about OmiseGO in 2024.
KEY TAKEAWAYS
► OMG Network is a layer-2 scaling solution for Ethereum that uses a plasma protocol to enable faster and cheaper transactions.
► Originally launched as OmiseGO in 2017, OMG Network aims to combine Ethereum’s security with high transaction throughput and lower fees.
► OMG uses a proof-of-stake model with decentralized watchers to monitor transactions and ensure accuracy without compromising security.
► Despite its potential, the OMG Network has struggled with adoption, and its plasma-based approach has been overshadowed by newer scaling solutions.
What is OMG Network?
OMG Network is a layer-2 solution for Ethereum that allows the swift transfer of digital currencies and digital assets within the network in a secure way.
OMG seeks to become one of the top decentralized exchanges, allowing users to move crypto assets across borders and make payments. Likewise, the platform aims to get higher transaction throughput at a lower cost while leveraging on the security that the Ethereum network provides.
It’s building on a foundation that can process more scalable transactions, to the tune of 4000 transactions per second, which is more than 200% faster than Ethereum. OMG Network ensures that users are in total control, and if they decide to exit to get to the main chain, they can do so without disrupting the balance of things.
OMG Network facilitates the transfer layer that scales the Ethereum network to speed up transactions. So, while users rely on the Ethereum network for security, OMG increases the overall functionalities of the network.
Evolution of OMG Network
The roots of the OMG Network can be traced to the bubble era of 2017. While several smart contracts were being built on the Ethereum blockchain, OMG envisioned a world where people could move various digital assets on the blockchain at high speed without any security breaches.
Formerly known as OmiseGO, it was developed by a Thai fintech company called Omise. It is an online firm created in 2013 by Jun Higawa to make financial operations easier, like most fintech companies.
In 2017, OMG network conducted an Initial Coin Offering, gaining the support of big names in the crypto world. One of them was Vitalik Buterin, a Canadian-Russian programmer and co-founder of Ethereum, who later became an advisor for OmiseGO.
During the ICO, the fixed total number of tokens created was 140 million tokens. The project sold 65% of the tokens to investors, and 5% was airdropped to ethereum holders who had over 0.1 Ether (ETH) in their wallets. The remaining 30% was kept. After the ICO, there was a massive decline in the value of OMG, and this left investors doubting if the project would succeed.
However, in 2019, there was an adjustment in the administration. The new CEO, Vansa Chatikavanij, brought changes, and OmiseGO was separated entirely from the Omise company. Under a different administration, the company continued with its unique plasma Implementation.
In June 2020, OmiseGO was renamed OMG network, launching mainnet Beta. A few days after the rebranding, a project that was deemed dead resurrected.
How does OMG work?
Aside from solving Ethereum’s scaling problem, OMG Network balances centralization and decentralization by bringing the efficiency of conventional payment platforms (PayPal, Visa, and so on) onto the Ethereum blockchain.
It combines Ethereum’s security with high transaction speed to give users the best experience. OMG Network has unique ways of incorporating these on the blockchain network. Let’s have a look.
Plasma protocol
Plasma is an off-chain scaling protocol for the Ethereum blockchain. It is based on a child chain designed to process a set of transactions before deploying them to the Ethereum root chain. However, the child chain depends on the root chain as the ultimate trust and settlement layer.
Child chain
This takes care of the whole transaction process. It processes the user’s request, confirms them, then arranges them into blocks, and publishes those blocks to the root chain (Ethereum).
Watchers
OMG Network runs on a proof-of-stake consensus model. It employs decentralized watchers to monitor the system to ensure accurate validation of network transactions.
These watchers view the operation status of the network validators and ensure child chains comply with the network in read-only mode without interfering with the transaction process.
Core features of OMG
The OMG Network deviates from the original plasma design. Instead, it has modified its own architecture in the following ways:
- Runs a single block producer, proof-of-authority (PoA) chain
- Does not allow mass exits
- Can not act as the parent of any other child chains
The root chain contract exists on Ethereum and connects the OMG Network to Ethereum. It tracks OMG transactions using the UTXO model, holds the funds deposited onto the chain, and manages exits.
Any Ethereum address can deposit funds into the root chain contract. Users can exit the contract, regardless of whether the chain follows consensus. OMG provides users the ability to exit with some challenges.
For instance, only funds represented by a UTXO can exit. Additionally, if a child chain operator attempts to exit the users’ funds with a dishonest block, earlier UTXOs are given priority and can exit before the operator.
Furthermore, the maximum number of exits allowable at a single time depends on the root chain, Ethereum’s bandwidth (i.e., the gas limit).
What is OMG token?
The OMG token is the native token of the OMG Network. It is an ERC-20 utility token within the OMG Network. Those who hold OMG using the tokens as security deposits will have the opportunity to take an active role in the network by running validator nodes.
They will also receive payment for their active participation in the network. Fees paid to validators do not necessarily have to be in OMG tokens.
Tokenomics
OMG token is the native token of the OMG Network. It allows users to move a valuable asset from one network to another without using a traditional exchange.
During its launch in early 2018, it had a total supply of $25 million, and based on the preceding, a total supply of about 140 million tokens was created. To date, the total supply of OMG tokens is 140.2 million.
This total supply was divided into two pools. Public and private pools.
Public, which serves the general ICO purpose — 65.1%, 29.9% for investors, and 5% were recorded as airdrop 5% for anyone holding up to 0.1 ETH. The private pool serves the reservation needs. The platform reserved 20% of the token for the OMG Network.
Roadmap and developments
- Proof of concept: This was the first technical specification for constructing a Plasma-based network.
- Alpha release: This led to a more viable plasma. The Ari release brought plasma more usage of the OMG protocol.
- Mainnet soft launch: This is the first release by the OMG Network. It’s an open-source test net.
- V1 Beta Launch: The V1 beta launched in 2020
- BOBA network: This includes a partnership with Enya and the Boba network backing OMG’s workflow.
What is special about the OMG Network?
So which elements of the OMG Network are unique? The answer is speed. The Ethereum blockchain, with its several advantages, is limited by speed. It only processes up to 24 transactions per second, and the higher the transactions and smart contracts waiting to be added, the slower the network.
Gas fees become ridiculously high as a result. In Nov. 2021, a crypto billionaire, Zhu Su, took to his Twitter page to express his frustration with the Ethereum network. He said Ethereum has left its users stranded despite the full support they received from them.
He continued and said,
“The concept of sitting around watching the burn purity tests, while new users cannot afford the chain, is gross. Ethereum’s way of doing things suffers massively from the Founder’s Dilemma.”
OMG solves this limitation by creating a network that can process thousands of transactions per second. The platform seeks to alleviate this burden on the main Ethereum blockchain with sidechain solutions.
How to buy the OMG token?
The OMG token is available on many major crypto exchanges, such as Kraken, Kucoin or Gate.io. So, you pick a platform that is secure and has your preferred deposit methods and fees. Once you find an exchange that suits you, you can easily exchange BTC or any stablecoin with OMG. E.g., OMG/BTC. Below are the next steps to take.
- Create an account: While creating an account, you will be asked to input a valid email address. Ensure the email address you input is one you have access to. After signing up, depending on the trading platform, you will be asked to verify your identity.
- Make a deposit: To buy the token, you have to make deposits by sending funds to your exchange address.
- Buy the token: This is the last and final step. After making your deposit, you can exchange your BTC or stablecoin for OMG.
Here’s the step-by-step process outlined in a little more detail.
For this demonstration, we will use Kraken. However, note that the below steps made on Kraken will generally apply to most exchanges.
1. Download the Kraken app: Go to the app store on your mobile device and search for Kraken.
2. Open the app: After you download and open the app, you will come to your home screen. Select the explore tab to continue.
3. Search for OMG: On the explore tab you will see a search box. Enter OMG to find the OMG token.
4. Select “Buy” button: On the following page you will see a chart and other metrics. Scroll to the bottom of the page and select the “Buy” button.
5. Customize your order: You will navigate to a page that allows you to select your order type and payment method. Enter the amount you would like to purchase to continue.
6. Review your order: Once you have customized your order, review your order details to ensure all the information is correct. Swipe the screen to complete your purchase of OMG.
The bigger picture
OMG Network allows individuals to access, transact, and manage digital assets stored securely on a blockchain. With it, anyone can carry out digital transactions safely and quickly. Unfortunately, in 2024, early implementations for scaling Ethereum, such as plasma, have fallen by the wayside, OMG included. Although the native token is still available for trading, much remains to be desired from the network itself, with more popular scaling solutions such as Arbitrum, Mantle, Optimism, Polygon, and Loopring leading the layer-2 charge.
Frequently asked questions
What is OMG Network?
Can you stake OMG tokens?
What can I do with OMG tokens?
Disclaimer
In line with the Trust Project guidelines, the educational content on this website is offered in good faith and for general information purposes only. BeInCrypto prioritizes providing high-quality information, taking the time to research and create informative content for readers. While partners may reward the company with commissions for placements in articles, these commissions do not influence the unbiased, honest, and helpful content creation process. Any action taken by the reader based on this information is strictly at their own risk. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
