Use Cases, Technology and User Experience
What is the use case of the token?
OmiseGo is a payment platform, decentralized exchange, and white label e-wallet development kit. The network will facilitate payments using any digital or fiat currency, providing financial services to the ‘unbanked’, while removing the need for a bank account for the ‘banked’.
OmiseGo’s solutions will allow any asset, fiat or crypto, to be exchanged for Ethereum. However, all transactions will be initiated on the OmiseGo chain and all transactions fees will be paid using the native OMG token.
The consensus mechanism is proof of stake, and transactions are validated on the chain by token holders that stake OMG tokens. Transaction fees are distributed to non-faulty (honest) validators as a reward. In the case of dishonest behavior by validators, their OMG stake is burned. In time token holders may be able to delegate their tokens to third parties for staking.
The process of staking OMG tokens to earn validation rewards is a little like a deposit in a bank account earning interest. As the number and size of transactions on the network increases so to do the rewards earned by validators.
What does the technology behind look like?
OmiseGo is an ambitious project that will ultimately have its own blockchain. The network will eventually include a decentralized exchange, a liquidity provider mechanism, a clearinghouse messaging network, and an asset-backed blockchain gateway.
The blockchain is being developed with the Ethereum scaling solution, Plasma, and will have transaction speeds far higher than the ETH chain. Plasma is the Ethereum equivalent of the Lightning network being developed to assist in scaling the Bitcoin chain. The fact that the core product is being developed using Plasma means OmiseGO and Ethereum’s futures will be closely linked.
Development is focused on three areas; the decentralized exchange, the scalable blockchain built using Plasma, and the application interface.
The application interface takes the form of a white labelled wallet SDK (software developer kit). This will enable any entity to create a wallet which will allow their own digital asset to be exchanged for Ethereum on the OmiseGO network.
How is the User Experience?
A beta version of the e-wallet SDK has been released, but apart from that there is no testnet or MVP to test. The user experience can therefore not be rated.
Team & Developer Community
OmiseGo has a very large team, with 31 members listed on the website.
The founders, Jun Hasegawa and Donnie Harinsut founded the the parent company, Omise in 2013. Omise is a successful payment solutions company based in Thailand and operating in South East Asia. Both were previously based in Japan.
The Managing Director, Vansa Chatikavanij, has previously worked at the World Bank Group and Sky Visual Imaging Venture. The CTO, Robin Clart has been with Omise since 2014, and previously worked as a freelance software developer.
The remainder of the team is heavily weighted to software development and business development. The depth of specific blockchain development experience is not clear.
Perhaps OmiseGo’s biggest asset is that fact that the advisors include co-founders of Ethereum, Vitalik Buterin and Gavin Wood, and the co-author of Plasma, Joseph Poon.
A total of 140,245,398 tokens were created, and that total will not increase, though it may decrease if faulty validator stakes are burnt. 65% of the tokens were sold for $25 million during the token sale and another 5% were airdropped later. Another 20% are held in reserve and 10% went to the team.
The token model is very simple: OMG tokens are used to pay transaction fees and OMG tokens must be staked by those operating validator nodes. Transaction fees are paid to the validators that run the network. Vitalik Buterin said the model was his favorite token staking model.
Tokens can be valued the same way an interest paying bond or a dividend paying stock can be valued. For example, if the transaction fees averaged 1% of all transactions on the network in a year, and validators demanded a 5% annual return, then $10 billion in annual transaction value would equate to a value of $2 billion for all staked tokens. However, since the goal is very low transaction fees, 1% may be too high – perhaps 0.25% would be more realistic, equating to $500 million in value for all staked tokens.
The token model is very robust, but the network would require substantial transaction volumes to succeed.
Progress History, Achievements and Road Map
Progress has been slow for OmiseGo. The token sale was held in June 2017, at which point the mainnet was supposed to be launched in December 2017.
The mainnet launch was later postponed by a full 12 months, and it is not clear that it will even be launched by December 2018. The project has also been criticised for lack of transparency and communication, though this has improved since May this year.
The most recent update to the roadmap in May indicated that an MVP for the blockchain on Plasma and the beta version of the wallet SDK had been completed. There still appears to be a lot of work to do and there is also a lot of research being conducted.
There are several GitHub repositories which are frequently updated.
OmiseGo was a favorite within the crypto community at the beginning of 2018, but the community has been frustrated with the lack of progress and communication. The token price has also fallen from a high of over $26 to as low as $3.32 – this is more than the average token. Nevertheless, OMG remains the 21st most valuable cryptocurrency, and is still being taken seriously.
The advisors associated with Ethereum and Plasma are still behind the project, although it appears at least one advisor may have sold their tokens.
As mentioned, the GitHub repositories are frequently updated indicating development is active.
OmiseGO has a lot going for it. If successful, it will perform a vital function allowing value to be exchanged across many blockchains. It will also create a link between fiat and crypto, allowing payment to be made using any asset. In addition, the project has the backing of two Ethereum co-founders and the co-authors of Plasma and will play an important role in the scaling of Ethereum.
In addition, the token model is strong and token values are easier to calculate than those of most ICOs. If the project can penetrate the payments or exchange market to some degree substantial value should accrue to the tokens.
Most of the risks relate to the slow pace of development and the lack of clarity about when the mainnet will really be launched. The danger is that competitors make it to market first.
However, if there is any indication that the project is making good progress, OMG tokens are not unreasonably valued.
Total Score: 7.4/10
* The information contained in this article is for education purpose only and not financial advice. Do your own research before making any investment decisions.