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remove Why Osmosis from README (#1690)
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AlpinYukseloglu authored Jun 6, 2022
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Expand Up @@ -81,90 +81,3 @@ to use the SDK fork, and how to make / test updates to SDK branches.

For more information, please see [the contributing
guide](https://docs.osmosis.zone/developing/get_started/contributing.html).

## Why Osmosis?

### On customizability of liquidity pools

Most major AMMs limit the changeable parameters of liquidity pools. For
example, Uniswap only allows the creation of a two-token pool of equal
ratio with the swap fee of 0.3%. The simplicity of Uniswap protocol
allowed quick onboarding of the average user that previously had little
to no experience in market making.

However, as the DeFi market size grows and market participants such as
arbitrageurs and liquidity providers mature, the need for liquidity
pools to react to market conditions becomes apparent. The optimal swap
fee for a AMM trade may depend on various factors such as block times,
slippage, transaction fee, market volatility and more. There is no
one-size-fits-all solution as the mix of characteristics of blockchain
protocol, tokens in the liquidity pool, market conditions, and others
can change the optimal strategy for the liquidity providers and the
market makers to carry out.

The tools Osmosis provides allow the market participants to
self-identify opportunities and allow them to react by adjusting the
various parameters. An optimal equilibrium between fee and liquidity can
be reached through autonomous experiments and iterations, rather than a
setting a centrally planned 'most acceptable compromise' value. This
extends the addressable market for AMMs and bonding curves to beyond
simple token swaps, as limitation on the customizability of liquidity
pools may have been the inhibiting factor for more experimental
use-cases of AMMs.

### Self-governing liquidity pools

As important as the ability to change the parameters of a liquidity pool
is, the feature would mean very little without a method to coordinate a
decision amongst the stakeholders. The pool governance feature of
Osmosis allows a diverse spectrum of liquidity pools with risk tolerance
and strategies to not only exist, but evolve.

In Osmosis, the liquidity pool shares are not only used to calculate the
fractional ownership of a liquidity pool, but also the right to
participate in the strategic decision making of the liquidity pool as
well. To incentivize long-term liquidity commitment, shares must be
locked up for an extended period. Longer term commitments are awarded by
additional voting power / additional liquidity mining revenue. The
long-term liquidity commitment by the liquidity providers prevent the
impact of potential vampire attacks, where ownership of the shares are
delegated and potentially used to migrate liquidity to an external AMM.
This provides equity of power amongst liquidity providers, where those
with greater skin-in-the-game are given their rightful power to steer
the strategic direction of its pool in proportion to the risk they are
taking with their assets.

As AMMs mostly guarantee a level of constant total value output, those
who may disagree with the changes made to the pool are able to withdraw
their funds with little to no loss of their principals. As Osmosis
expects the market to self-discover the optimal value of each adjustable
parameter, if a significant dissenting opinion exists--they are able to
start a competing liquidity pool with their own strategy.

### AMM as serviced infrastructure

The number and complexity of decentralized financial products are
consistently increasing. Instruments such as pegged assets, derivatives,
options, and tokenized leveraged positions each have their own
characteristics that produce optimal market efficiency when paired with
the correct bonding curve. That being said, the traditional notion of
AMMs have evolved around putting the AMM first, and the financial
product being traded second.

As AMMs substantially increase the market accessibility for these
instruments, assets with diverse characteristics either had to:

1. Compromise efficiency and trade on existing AMMs with non-optimal
bonding curves or
2. Take on the massive task of building one's own AMM that is able to
maximize efficiency

To solve this issue, Osmosis introduces the idea of an 'AMM as a
serviced infrastructure'. Fairly often, adjustment of the value function
and a few additional parameters are all that's needed to provide a
highly-efficient, highly-accessible AMM for the majority of
decentralized financial instruments. By providing the ability for the
creator of the pool to simply define the bonding curve value function
and reuse the majority of the key AMM infrastructure, the barrier to
creating a tailor-made and efficient automated market maker can be
reduced.

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