Why OmiseGO (OMG) is important
Network congestion is a crucial drawback of Ethereum. Usually, transactions on Ethereum are relatively fast and confirmed in 10-20 seconds. However, if gas prices become high, transaction times can stretch out to hours (even days).
Since higher-priced gas transactions get put through the network first, if you bid a low gas price, the transaction can sit around for a long time, waiting to get confirmed. Naturally, when there’s a high network load (i.e., demand for block space), gas prices go up, and transaction times increase.
In this case, you either pay a higher price for your transaction to go through, or sit around waiting for gas prices to decrease. So, there are two problems with the Ethereum network when it’s under stress: high gas fees and long confirmation times.
The OMG Network solves this by offering low cost, high-speed transactions. It offers thousands of transactions per second (TPS), at around a third of the average cost of using Ethereum.
This isn’t just important for token trading. With the plethora of DeFi applications being deployed on Ethereum, network congestion will continue to be a problem. While the Ethereum 2.0 upgrade should make Ethereum more scalable, it’s expected that Layer 2 solutions will still be necessary in the future. In addition, Eth2 will take years to roll out completely. Naturally, Ethereum users can’t wait that much for lower gas costs and faster transactions.
OmiseGO (OMG) use cases
Crypto exchanges can use the OMG Network for faster, lower-cost ERC-20 token transactions instead of using the Ethereum network. Much like exchanges, wallet providers can also benefit from fast, high-throughput, low-cost systems.
While we generally think of these sorts of systems in terms of financial assets and cryptocurrencies, the OMG Network can also be used for trustless community points transactions and various other online rewards systems. For example, Reddit’s community points system was shown to be highly efficient when used with the OMG network. This was made possible with the recently developed Community Points Engine (CPE).