OmiseGO (pronounced ‘Oh-me-say-go’) is a delegated proof of stake (DPOS) network built alongside Ethereum that aims to provide the infrastructure to facilitate decentralized payment processing from e-wallet operators, such as Alipay and Venmo. By enabling decentralized exchange at high volumes and low costs, OmiseGO intends to improve coordination amongst payment processors, gateways, and financial institutions.
A subsidiary of Omise, a leading online payment gateway service provider operating in Southeast Asia, OmiseGO was co-founded by Jun Hasegawa and Donnie Harinsut as an e-commerce company in 2013, and is currently registered as a LLC in Singapore with major headquarters located in Tokyo and Bangkok. The project’s advisors include Vitalik Buterin, Joseph Poon, Gavin Wood, Vlad Zamfir, and Roger Ver. The project is currently on an external testnet, focusing research on proof of stake design, Ethereum integration, and DEX integration.
OmiseGO's infrastructure enables consumers to exchange electronic cash directly with merchants, e-wallet service providers, and other users, all without relying on banks or centralized payment processors. Service providers are OmiseGO's primary network user and use OmiseGO’s token, OMG, to establish consensus nodes to secure the network, and access payment processing and exchange services.
Most activity, such as settlement and clearing, will occur on the OmiseGO blockchain, which uses DPOS to validate transaction order, while the Ethereum network records the blockchain state. The project plans on integrating Plasma architecture, a proposed scaling solution for Ethereum that would increase transaction capacity and speeds through a combination of proof-of-stake bonding, fraud proofs, and MapReduce functions. In essence, Plasma inspired scaling solutions leverage smart contracts on the main-chain to determine the rules of use-case specific plasma chains, which are like side-chains but with different exit mechanisms. Currency transfers can occur in a scalable manner: while all state transitions must be tracked on the OmiseGO’s root chain (Ethereum), it is not the case that every transaction must be submitted to the root chain individually—using a plasma chain, many transactions can be squished together and submitted to the root chain as a single state change. The significant technological challenge to this strategy for increasing transaction throughput concerns the event that everyone tries to remove funds from the main-chain simultaneously, since this requires multiple chains to reach consensus.
OmiseGO’s main features include:
A Decentralized Exchange Network. OmiseGO’s decentralized exchange is designed to be a scalable and secure Proof-of-Stake blockchain, where any form of digital asset can be traded. All transaction orders are managed on-chain and validated by nodes participating in the proof of stake consensus process. Transaction fees are dynamic, and the project intends for the exchange to provide interoperability for all Ethereum tokens and Bitcoin style blockchains.
A Trading Engine. OmiseGO’s trading engine, which publishes and matches orders as part of every block when a matched order received sufficient validation confirmations, is built into the OMG blockchain and is designed to make the DEX non-custodial.
A Cash-Out Touch Point Network. OmiseGO’s digital wallet software development kit (SDK) allows wallets to be topped up or cashed out at ATMs or over-the-counter through the wallet’s integrations with debit and credit cards. The team intends to create a network of banking, hardware, and retail partners where tokens can be withdrawn to fiat, or fiat tokenized to wallets.
OmiseGO’s token, OMG, is primarily used for participation and oversight in network consensus. Node operators stake OMG to gain the right to run validator nodes, and are compensated through transaction fees. Earnings are a function of tokens staked; validators staking more tokens take a larger portion of transaction fees. Staked OMG acts as a security deposit, and may be forfeited (burned) should node operators act improperly, such as by deviating from consensus rules. Validator activity on the OmiseGO blockchain is also enforceable on the Ethereum blockchain through native smart contracts, with the Ethereum blockchain acting as a root chain in OMG’s proposed scaling solution.