What is Osmosis?

Osmosis is a DEX protocol, which means it uses smart contracts to determine the price of digital assets, to produce liquidity via a peer-to-peer (P2P) methodology, and to exact trades between users. This approach to an exchange platform is known as an AMM — a DEX protocol that prices crypto assets in liquidity pools.

What is OSMO?

OSMO is the native token of the Osmosis network. Primarily, OSMO is used for staking to secure the Osmosis chain. As a PoS token, OSMO is inflationary. Over time, new tokens will be minted and entered into circulation. The maximum number of OSMO tokens has been set at 1 billion and its current total supply is 325,000,000.

Osmosis Governance

Osmosis users who have Staked their OSMO are eligible to vote on governance proposals. Osmosis has an on-chain governance mechanism for passing text proposals, changing consensus parameters, spending funds from the community pool, and for updating Osmosis pool incentives. Osmosis governance is driven by the Osmosis community, which has large overlap with the Cosmos community. Much of the documentation this repo is based off was funded by the community fund itself in Cosmos Hub Proposal 23. Governance discussions happens in a number of places moderated by diverse community members such as Discord, Telegram and anywhere else user might interact with members of the Osmosis community. (Official Osmosis Governance Zone)

Proposals #114, #196 and #337

Props 114, 196 & 337 were all passed in an effort to promote decentralization within the Osmosis ecosystem.

• Proposal #114: This proposal attempts to increase the MaxValidators parameter from 100 to 118. (Read Full Details)
• Proposal #196: Proposal to increase the validator set size to 135. (Read Full Details)
• Proposal #337: Increase the Osmosis Active Validator Set to 150 Validators from 135. (Read Full Details)

Methodology

In this dashboard, I am going to first, show some data about 3 mentioned proposals (#114, #196 and #337) to see how they were passed.

Then, I am going to analyse voting power and also nakamoto coefficient change after these proposals and compare them together at different timespans.

But, What are Voting Power and Nakamoto Coefficient ?

Voting Power is the amount of tokens that were delegated to (staked in) a validator. The more tokens the more voting power the more power in the consensus protocol that the specific validator has. On the other hand, if a validator does have a high voting power, the decentralization of related chain (here, Osmosis) will be lower because the big validator vote’s weight is more than many other validators.

Nakamoto Coefficient ascertains the number of nodes that must be compromised to affect the blockchain and obstruct it from functioning correctly. A higher Nakamoto measure indicates a more decentralised network. This means that the network has a large number of nodes.

The main tables that we are going to use for analysis of voting activity on these proposals are osmosis.core.fact_governance_votes joining with osmosis.core.dim_vote_options for votes description.

The main table that we are going to use to analyse validators delegation and their voting power and also the Nakamoto Coefficient is osmosis.core.fact_staking.

Obviously, I am only considering Succesfull transactions (votes and stakes).

According to the left charts, the participation in proposal #196 was way more than 114 and 337. Proposal ID 114 had the least participation (both number of votes and voters) among these proposals.

As we see and as was mentioned, all of these 3 proposals were successfully passed.

As we see on the above charts, as time goes on, more and more ratio of users have decided to vote YES on increasing validators size. For example, on Proposal ID #114, 18% of votes voted no and 10.6% of were abstain but on proposal ID #337, almost 97% of all voters have voted YES.

On the left chart we can see the distribution of votings on proposals over time.

As we see, The voting for Proposal ID #114 was started on 29th December 2021 and ended on 1 January.

The voting for Proposal ID #196 was started on 8th April 2022 and ended on 22nd April.

The voting for Proposal ID #337 was started on 28th September 2022 and ended on 3rd October.

As we see the validator address osmovaloper1clpqr4nrk4khgkxj78fcwwh6dl3uw4ep88n0y4 known as Cosmostation has currenlty the highest net delegated OSMO (Voting Power) among all other active set validators.

Voting Activity on 3 Proposals

Validators and Their Delegated (Voting Power) Amount

For this part, I have calculated the net delegated OSMO to each validator by using osmosis.core.fact_staking (Delegate + Redelegate - Undelegate) to rank Osmosis validators by their voting power.

I have considered only top 150 of these validators because they are active ones and others are inactive.

We can also compare our extracted results to the official Osmosis validators webpage. (below screenshot)

For each part, First, I have brought some over-time charts to see trend lines and over-time changings. Then, I have calculated the average voting power of validators during different timespans (before and after submittin each proposal) for a raw and clear understanding.

On the left chart, we can see how voting power of each top 150 active set validators have changed over time.

On the left chart, we can see the share of each validator’s voting power on Osmosis over time.

And for a more clear view, On the left chart, I have classified validators by their rank and charted a normalised visualization of their voting power over time.

As we see, as time goes on, the share of voting power of top validators is decreasing over time and on the other hand, other validators’ voting power is increasing. So, Time is playing a factor !

On the left charts, we can see the change of validators’ voting power over time and after and before each of 3 proposals.

As we see on the above charts, the average voting power of top validators have decreased over time and after submitting each decentralization proposal. For example, the voting power of top 20 validators was at its highest amount before submitting first proposal (#114) and now is at its least amount after submitting last proposal #337. On the other hand, the voting power of least rank validators (rank 100 - 150) has increased dramatically after submitting the proposal #337 and they have currently the highest vote power of themselves since inception.

Nakamoto Coefficient

As mentioned above, Nakamoto Coefficient ascertains the number of nodes that must be compromised to affect the blockchain and obstruct it from functioning correctly. A higher Nakamoto measure indicates a more decentralised network. This means that the network has a large number of nodes.

So, for this part, I am going to continue previous methodology and expand previous queries in order to calculate estimated Nakamoto Coefficient for the Osmosis ecosystem over time and compare it in different timespans before and after submitting proposals.

On the left charts, we can see the Nakamoto Coefficient on Osmosis is increasing over time and this means this platform is being more and more decentralized.

I have also broke the Nakamoto Coefficient change down by different timespans before and after submitting each decentralization proposal.

As we see, the Nakamoto Coefficient did not change immediately after submitting the proposal and for each proposals, it took some times for Nakamoto Coefficient to increase days after that.

So, In this part too, Time is playing a factor!

And on the left average charts, We can obviously see that the Average Nakamoto Coefficient after submitting each proposal has increased compared to the previous proposals or before submitting any of them.

Osmosis had the least Nakamoto Coefficient (most centralized) during the days before submitting proposal. But the Nakamoto Coeffirient of this ecosystem is now at its highest amount after submitting proposal #337.

Summary and Conclusion

• All decentralization proposals #114, #196 and #337 were succesfully passed. proposal #196 had the most participation while the proposal #114 had the least. As time goes one, more users tend to vote for increasing active validators' set size. for example, in proposal #114, 70% of votes have voted YES while this participation for proposal ID #337 increased to 97%.
• The validator address osmovaloper1clpqr4nrk4khgkxj78fcwwh6dl3uw4ep88n0y4 known as Cosmostation has currenlty the highest net delegated OSMO (Voting Power) among all other active set validators.
• As time goes on, the share of voting power of top active set validators is decreasing over time and on the other hand, other validators’ voting power is increasing. So, The Time is playing a factor !
• The average voting power of top validators have decreased over time and after submitting each decentralization proposal. For example, the voting power of top 20 validators was at its highest amount before submitting first proposal (#114) and now, is at its least amount after submitting last proposal #337. On the other hand, the voting power of least rank validators (rank 100 - 150) has increased dramatically after submitting the proposal #337 and they have currently the highest voting power of themselves since inception.
• The Nakamoto Coefficient on Osmosis is increasing over time and this means this ecosystem is being more and more decentralized.
• The Nakamoto Coefficient did not change immediately after submitting the proposals and for each proposals, it took some times for Nakamoto Coefficient to increase days after that. So, In this part too, Time is playing a factor!
• Osmosis had the least Nakamoto Coefficient (more centralized) during the days before submitting proposal. But the Nakamoto Coeffirient of this ecosystem is now at its highest amount (more decentralized) after submitting proposal #337.

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