$ION Technical Analysis

The Osmosis $ION token is something of a mystery. It's the second native staking token of the network, which is used to govern how DeFi protocols get built on the base Osmosis protocol and chain infrastructure. This has great potential to drive ReFi liquidity innovations built on Osmosis.

$ION Technical Analysis

Hello, Earth citizens!

Welcome to this week's analysis, in which we will talk about a mystery, diving into Osmosis DEX to search for the origins of $ION, how this was creation, what is its utility, and what the future holds for this token. Finally, we look at the evolution of its price, which is far from calm!

$ION is the second native on the Osmosis DEX, and it was distributed during the initial airdrop, along with $OSMO.

As Osmosis continues to grow, an increasing number of protocols will be built on top of its base layer. These protocols require specialised governance to function correctly. The needs of these protocols will be orthogonal to issues relating to the base protocol.

$ION DAO

Establishing $ION as its own commonwealth will create a model for future protocols built on top of Osmosis. Osmosis governance will be able to focus on the platform’s parameters, such as AMM reward distribution, without having to govern every application built on top of Osmosis.

The DAO is an important signalling event for Osmosis. It shows that Osmosis can develop secondary protocols that are symbiotic with its base layer governance. This model will be crucial for developing a diverse DeFi ecosystem on Osmosis, that is  capable of rivalling Ethereum.

The $ION DAO will enable token-holders to govern second-layer protocols on Osmosis, ensuring that the overall ecosystem continues to be decentralised. Autonomy for the DAO will enable specialisation within Osmosis communities, while maintaining the collaborative community-driven ethos that has played a vital role in generating proposals such as the one that created $ION.

Without sub-governance for $ION, there's no way to implement an $ION protocol without taking a significant amount of funding and developer attention from the core Osmosis protocol. The DAO prevents the ION protocol from having to mint new supplies to pay for building costs. The DAO, as envisioned by the community, will take on the responsibilities for ensuring the construction of the ION protocol and governing upgrades to its core code.

Benefits for OSMO holders

Stablecoins create a symbiotic relationship between $OSMO and $ION.

The DAO can choose to treat LP tokens containing $OSMO as a more valuable form of collateral than other tokens. Therefore, $OSMO holders can mint stablecoins with a lower collateralisation ratio. $OSMO holders can compound these incentives by creating special rewards for liquidity pools containing the native stablecoin.

Most importantly, a native stablecoin will create tremendous value for $OSMO through superfluid staking. Osmosis LPs can simultaneously deposit their $OSMO into a liquidity pool, delegate it to a validator for staking, and use it to collateralise a stablecoin. Superfluid staking means every LP on Osmosis could be collateralising stablecoins with their LP tokens, allowing Osmosis to enjoy all the benefits of over-collateralised stablecoins (stability) without the downsides (capital inefficiency).

This proposal shows that Osmosis can develop second-layer protocols with specialised governance and further align stakeholders across Osmosis. This model will be crucial to the continued growth of Osmosis and DeFi as a whole.

$ION Technical Review:

All prices shown are as of 14/04/2022 at 10:00 UTC

Let’s dive into the charts!

Weekly Chart

This token is unique: there aren’t many people who trade it, so volumes are pretty low, and the price can fluctuate a lot if someone sells a high quantity of tokens.

Over two weeks, we can identify a “bubble” period; prices were going to the moon because of more volumes and various rumours. People were talking about a use case and more functionalities with the token, but there was no confirmation at this point.

Since then, we have been in a retracement, with first support currently under high pressure, at $USD 5,536. Breaking this level would bring prices back to the $USD 2,819 area, the beginning of this coin.

Note that every Fibonacci Retracement support is broken, allowing prices to go back to the Genesis level.

Daily Chart

If we zoom in on the Daily Chart, we can see that prices are currently on the first top, and we need to wait until the end of the week to see how the Weekly Candle will close.

Note that prices will go up with the possible evolution if devs can find something with a high interest to do with this token. The best thing to do is to wait and see how it’ll evolve and how the market will price this evolution.

Main support: $USD 5,539currently under pressure

Main resistance: $USD 9,962

In Summary

$ION is a lovely surprise. There are a ton of memes and rumours in circulation, and nobody really knows what to think about it and how it will go in the following months.

Let’s see how Sunny (developer of Osmosis) will develop a solution and how revolutionary it will be!

It might also be on a good track for a #ReFi solution with the proposal for a Carbon Market. This opens the possibility for more ReFi innovations to be built on the Osmosis liquidity protocols.

Thanks for reading, have a lovely weekend, and enjoy!

Cheers,

Romain


Not financial or tax advice. Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. For tax advice talk to your accountant. DYOR – do your own research. DYOR – do your own research.