This article is part of an informational content series on ICON’s DeFi ecosystem. The series comprises short video explainers and in-depth articles for each of ICON’s DeFi platforms.
You can also check out the other articles in the ICON DeFi ecosystem here:
This is an introductory article about Omm, an open money market for the ICON DeFi ecosystem. Learn the basics about how to get started with Omm by watching this short video:
How to Onboard Fiat to Omm (All You Need is Email and a Bank Account)
DeFi protocols are convenient in that you usually don’t have to make an account or supply any personal information to the protocol. Instead, you just sign in with a compatible cryptocurrency wallet and your funds are automatically made accessible for you to use on the protocol.
In the case of Omm, you can sign in with a Chrome browser extension wallet such as Hana or ICONex. You can also use the mobile-based MyIconWallet, or the hardware Ledger wallet.
However, Omm also supports a way to onboard fiat US dollars to the platform — a unique feature among all the ICON DeFi sites so far. What’s more, it’s a simple process that only requires an email address and a US bank account (but only US banks at present, sorry). This is very useful for people who can’t be bothered with seed phrases or other complexities that plague crypto wallets and DApps.
Onboarding fiat to Omm is done via the Bridge wallet, which connects with Stably, a third-party wallet that converts crypto or fiat to the USDS stablecoin. You’ll have to convert your funds to USDS on Stably then deposit to Bridge, but don’t worry — it’s still a simple process. We published an in-depth article about Bridge wallet a few months ago, if you’re interested in learning more about it. But for a how-to, see below:
Unlike the other sign-in methods mentioned above, Bridge does require making an account — but that only entails entering your email address. Once you submit your address, you’ll be sent an email with a log-in button that expires in 20 minutes. From that new screen, you’ll be able to deposit and withdraw USDS. Once you’ve deposited some USDS to your Bridge wallet, you can use it as a sign-in option on Omm.
Stably also requires you to make an account. You’ll need to enter your personal information, including a government-issued ID and proof of address such as a utility bill — but these are all procedures anybody familiar with Web2 online banking should be able to handle. No Web3 shenanigans here. Once your account is verified, you’ll be able to connect to your bank account. Stably also supports a few different cryptocurrencies, including Bitcoin, Ethereum, Cardano, Litecoin and Stellar Lumen.
What is an Open Money Market?
The term ‘money market’ refers to the trading of very short-term debt investments, especially financial instruments with high liquidity. There are many kinds of money market instruments in traditional finance, such as treasury bills, asset-backed securities, federal funds, and so on. Traditional money markets are often quite attractive for investors because they offer immediate liquidity for borrowers, while lenders enjoy fairly high interest rates. In this way, money markets have long been a cornerstone for retail investors, corporations and small businesses.
In the case of Omm, it’s a money market in which you can take out collateralized loans, with the collateral you supply being added to a lending pool. It’s ‘open’ in the sense that it is a decentralized peer-to-peer protocol owned and operated by OMM token holders (instead of a centralized bank).
One thing to understand is that when you supply ICX as collateral, it is automatically staked on the ICON network. If you later withdraw this collateral, it may take up to seven days for your ICX to unstake.
Why Would One Use a DeFi Money Market?
It’s important to note here that you probably don’t want to take out a mortgage on a DeFi site. In fact, most people don’t use DeFi money markets for traditional banking purposes at all (yet), so it’s not advisable to take out a DeFi loan for the purposes of making a purchase elsewhere.
Instead, DeFi is generally used as a means to invest crypto that you own, in order to receive a return on your investment. We call these returns ‘yield’, and the process of maximizing your returns on a DeFi site is called ‘yield farming’. DeFi may yet replace traditional banking one day, but for now it is assumed that most people investing on a DeFi protocol are there for yield farming purposes.
Omm generates yield for you in a few different ways:
- When you supply ICX to a money market (ie. collateral), that ICX is automatically staked, earning you further ICX rewards.
- When you borrow funds from a money market, you are rewarded with OMM tokens.
- If you’ve supplied OMM tokens to a liquidity pool on Balanced, you can stake your LP tokens on Omm to be rewarded by the platform with more OMM tokens.
- You can also stake OMM tokens on the site, which generates further OMM rewards.
Please bear in mind that this article should not be seen as financial advice, and of course making any kind of investment entails some risk. Rather, the purpose of this article is to inform people new to DeFi, so that they can make their own investment decisions.
About Supplying Liquidity on Balanced
One nice thing about ICON DeFi is that all the protocols in the ecosystem are very supportive of each other. Balanced, ICON’s first DeFi protocol, supports liquidity pools for all ICON-based tokens, including OMM. Likewise, if you supply OMM liquidity on Balanced, you can be rewarded on the Omm platform, as explained above.
The concept of ‘liquidity pools’ may seem confusing for newcomers to DeFi at first. For an in-depth explanation about liquidity pools, please see this other article on The Iconist. The article also explains the concept of impermanent loss, a risk factor that all investors must be aware of before becoming a liquidity provider.
You can sign in to the Omm app on their website from your computer. You can also keep up with new developments by following Omm on Twitter, Reddit or Discord.
