TL;DR

OmiseGO (rebranded as OMG Network) is a scaling solution for Ethereum that is fully compatible with ERC-20 tokens and ETH.

By guaranteeing lower gas fees and faster confirmation times OMG Network aims to mitigate some of the scaling issues that hinder Ethereum.

Introduction

Ethereum scaling has been a popular topic lately (in fact, for several years). This problem is not easy to solve and various solutions are being explored by the Ethereum developer community.

One of them is OmiseGO which has just been rebranded as OMG Network. This solution guarantees faster transaction times and lower fees on the largest smart contract platforms. Let's see how it works.

What is OmiseGO (OMG)?

OmiseGO (rebranded as OMG Network) is a Layer 2 solution for transferring value without a trust body on Ethereum. The goal is to reduce fees and transaction times without compromising Ethereum's security.

Essentially, the OMG Network helps solve the scaling problem that Ethereum is currently experiencing.

How OmiseGO (OMG) works

OMG Network is referred to as a Layer 2 solution. Layer 2 solutions are built on top of existing blockchains (in this case, that is Ethereum). As transactions are processed in the “secondary” layer, valuable block space is freed up on the Ethereum blockchain as a result.

Broadly speaking, you can think of the Screen 2 solution like a blockchain on top of a blockchain.

OMG Network is expected to have the same security as Ethereum, but with lower transaction fees and faster transaction times – and works with all ERC-20 and ETH tokens.

This is good news for everyone using Ethereum. Despite bringing many exciting innovations, the Ethereum network can sometimes be very expensive to use, especially for small transactions.

OMG Network has also proven its success. A partial supply of the world's largest stablecoin, namely Tether (USDT), has been issued on OMG Network.

OMG Network is just one Layer 2 solution among a large number of competitors aiming to scale Ethereum, such as Optimism, Loopring, and zkSync.

Why OmiseGO (OMG) is important

Network congestion is a big weakness of Ethereum. Typically, transactions on Ethereum are relatively fast and are confirmed within 10-20 seconds. However, if gas prices become high, transaction times can stretch to several hours (even days).

Since transactions with higher gas prices will take precedence on the network, transactions can wait for confirmation for a long time. Generally, if network load is high (i.e., demand for block space), gas prices will rise and transaction times will increase.

In this case, your options are to pay a higher price to have your transaction approved or wait until the gas price drops. So, there are two problems with the Ethereum network when stress is high: high gas fees and long confirmation times.

OMG Network solves this problem by offering low-cost transactions and high-speed transactions. This solution offers thousands of transactions per second (TPS), which is about a third of the average cost of using Ethereum.

Solutions are not only important for token trading. With so many DeFi applications being deployed on Ethereum, network congestion will continue to be an issue. While the Ethereum 2.0 upgrade should make Ethereum more scalable, Layer 2 solutions are expected to still be needed in the future. Additionally, Eth2 will take several years to be fully released. Of course, Ethereum users can't wait too long for lower gas fees and faster transactions.

Example of using OmiseGO (OMG)

Crypto exchanges can use the OMG Network to make ERC-20 token transactions faster and have lower fees than using the Ethereum network. Just like exchanges, wallet providers can benefit from fast, high-yield, low-cost systems.

Although we consider this type of system with respect to financial assets and cryptocurrencies, OMG Network can also be used for trustless community point transactions and various other online reward systems. For example, Reddit's community points system has proven to be very efficient when used with the OMG Network. This is made possible with the newly developed Community Points Engine (CPE).

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Token OMG

The OMG token is a staking token that has been used to fund the development of this project. OmiseGO conducted an ICO in 2017 that raised $25 million in funding.

OMG is also used to pay fees on the network. However, support for other coins is still under development.

These tokens are also used by validators who run network nodes and validate the network. They earn transaction fees in return for their services.

How to save OmiseGO (OMG)

Since OMG  is an ERC-20 token, you can store it in various wallets. Examples are software wallets (web-based or mobile) or exchanges like Binance.

OMG can also be stored in cold storage hardware wallets, such as Ledger and Trezor, when combined with MyEtherWallet or MyCrypto.

Closing

OMG Network aims to solve problems related to Ethereum's scalability. This solution offers a value transfer layer that enables fast transaction times and low gas fees for financial services on the blockchain.

Are you looking for more specific information about OMG Network? Visit our question and answer platform, Ask Academy, where the Binance community will answer your questions.