OmiseGO

  • Cryptoasset Report
  • December 21, 2018

OmiseGO is a Plasma-based Proof of Authority network built alongside Ethereum that aims to facilitate decentralized payment processing from e-wallet operators by providing the necessary public infrastructure.

Overview

OmiseGO (pronounced ‘Oh-me-say-go’) is a Proof of Authority (PoA) network, based on the Plasma framework and built alongside Ethereum that aims to provide the infrastructure to facilitate decentralized payment processing from e-wallet operators, such as Alipay and Venmo via a highly scalable blockchain architecture. 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 headquartered in Bangkok. The project is currently still in testnet as of April 2020.

Protocol Details

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 PoA to validate transaction order, while the Ethereum network records the blockchain state. The OmiseGO network is an implementation of the Plasma framework, a proposed second-layer scaling network for Ethereum, proposed by Joseph Poon and Vitalik Buterin 2017. The idea behind OmiseGo’s design choice is to batch multiple trades or transactions into a single block on the child chain (Plasma) that is then processed as a single transaction on the root chain (Ethereum). OmiseGo claims that this architecture allows a throughput of up to 4,000 transactions per second (TPS) and with fees 90% cheaper than on Ethereum. Similarly to the Lightning Network, OmiseGo’s Plasma implementation allows users to transact cheaply on the child chain by first depositing funds into a smart contract on the root chain and then ultimately settle the difference via an exit proof, allowing them to withdraw any remaining funds from the child chain.

OmiseGo has had a long development path and although it has released two alphas, Ari and Samrong in February and June 2019 respectively as well as the deployment of its P2P network in September the same year, the main OmiseGo network still remains in testnet.

Asset Details

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.