Cosmos Hub governance proposal 899 has been submitted.
View the full details of the proposal via IPFS: ipfs://Qmc35ypBFE96xFuSgoBMLSpVYJtEy5WUXmoLyBz2vfngKn
Really good points. And I’m still not clear on where this ‘stableswap yield’ number came from:
It sounds like there’s an expectation that the swap fees from liquidity provision will outpace the 0.75% APR of the IST debt, making it easily repayable, but that seems…uncertain?
The concrete steps seem like (using an arbitrary amount of IST solely for example):
- Deposit collateral, mint 100,000 IST, get 99,500 IST, as 500 IST goes to the 0.5% mint fee.
- Swap 49,750 IST for 49,750 USDC. (Do any OTC desks take IST, or is this step reliant on the currently existing liquidity on Osmosis for this pair, risking slippage and possibly requiring buying it very slowly and incrementally?)
- Deposit LP, earn swap fees for a year, while regularly monitoring: the growth of the debt, falls in the price of ATOM, and any adjustments to parameters by Inter Protocol, withdrawing from the LP to pay down debt as necessary to avoid liquidation.
- Exit the position by depositing hopefully-50k-ish USDC into the Inter Protocol’s Parity Stabiity Module (PSM) for no-slippage minting of 50k-ish IST.
- Attempt to zero out the now 100,750 IST sized debt in the Vault with the hopefully-100k-ish IST the multisig now holds.
Is this everything about how it would work in practice, or am I missing something?
In step 2, the slippage incurred when initially swapping for 50% USDC might have an impact on ability to fully zero out the debt later. If you look at a potential swap of IST for USDC on Osmosis, to keep slippage below 1% the swap has to be about 75000 IST or less at a time.
And swapping IST for USDC from the Inter Protocol’s PSM isn’t an option: at some point between the launch of Vaults and now, the PSM became virtually empty of other stablecoins.
Whether it’s easy to get all of the collateral back depends on if the total stableswap yield earned (plus each DEX’s incentives, if any?) was greater than the one-time 0.5% mint fee + annual 0.75% stability fee. If it wasn’t, some of the collateral needs to be withdrawn and market-sold to buy up enough IST to pay off the rest of the debt, so we don’t quite get all the collateral back in that case.
Although if there were an ATOM Wars-esque contribution of BLD tokens to the community pool, I guess some of those could be used instead to buy up the needed IST to cover any shortfall when unwinding.
https://cf-ipfs.com/ipfs/Qmc35ypBFE96xFuSgoBMLSpVYJtEy5WUXmoLyBz2vfngKn
Saying ‘With a collateralization ratio of 500%, stATOM and stkATOM can yield ~18% annually via IST/stablecoin positions throughout Cosmos ecosystem LP positions’ still seems a little weird, when the majority of that is just the yield of holding stATOM and stkATOM, assuming the price of ATOM remains constant.
if $ATOM enters into this ouroboros pilot program where it reduces its own appeal and the defi yields it positions itself to profit from. wont this proposal only benefit those who are spending the CP at the expense of defi users?
and with regular incentive adjustments, why would osmosis not adjust its stable IST pools to a level, rendering this proposal moot, rather than pay atom an APR to disincentivize users to LP?
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https://twitter.com/inter_protocol/status/1775490338435530771
Liquidity Provision Breakdown
A strategic split of the minted IST aims to maximize impact:
30% Osmosis
25% Astroport
15% Astrovault, @Shade_Protocol , @QuasarFi eachEnhancing liquidity while capturing yield from swap fees and DEX incentives.
This tweet today looks like it’s based on the old proposal draft, and not the current proposal? Proposal 899 says:
The split of minted IST to be used in Cosmos DeFi is proposed to be as follows:
1. 30% to Osmosis IST/USDC Concentrated Liquidity pool
2. 25% to Astroport IST/USDC.nbl pool
3. 25% to a Quasar IST/USDC vault
4. 20% to Shade IST/SILK pool
Most of these are stablecoins with the same peg, but for that last one, is there any estimate of how much impermanent loss in the IST/SILK pairing might happen over the course of a year?
The proposal says positions will be adjusted if the price of ATOM falls 50%, but there are at least two other events that might merit reducing the debt: the Liquidation Ratio increasing, or the stability fee increasing to a level that exceeds the annual yield from the stableswap liquidity. The LR rising is just as risky as the value of the collateral falling, and if the stability fee is too high the debt will become unpayable as it grows too fast. (But it would be good news in the big picture, it would probably mean demand for IST became so high that charging a high interest rate became necessary.)
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Bonjour,
la proposition est intéressante. J’ai quelques questions.
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Après le Mint de IST, il faudra swapper IST contre d’autre stable coin ça peut faire un peu bouger le prix de l’ist sur osmosis ? Est-ce que quelqu’un a étudier le price impact ? (c’est pas un petit swap).
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Est-ce que l’on pourrait implémenter un smart-contract qui gère le truc ? Comme ici ce sont des activités interchain, peut être que neutron pourrait héberger un smart contract qui gère les différentes opérations ? Si j’ai compris, le but de neutron c’est d’avoir des smarts contract multi-chain ? Ps : je sais que les smart contract ne sont pas autonome mais une incentive a faire tourner les actions doit faire l’affaire.
merci
X space discussion on Prop 899 happening today at 1600 UTC. Stride, Persistence, Timewave, Agoric, Inter Protocol, AtomAccelerator, DCF, Inter Protocol EC all being represented…
Check the Inter Protocol Twitter for details and link to set your reminder
Blockquote
Naive explanation. Selling 4% of ATOM community pool to LSTs wouldn’t increase ATOM demand at all, moreover there is more risk than the profit: LST risk, Liquidation Risk, Hack risks. Cosmos Hub doesn’t need any ATOM-staking revenue, Cosmos Hub needs in non-inflationary non-ATOM revenue. You are not locking ATOM at all, these CP ATOMs are already locked.
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So the bottomline is; all this for ~2 million in stable liquidity? Involve everyone with considerable VP and market presence to get it pass?
I don’t believe ~2 million stable worth of liquidity requires this much of risk.
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If you missed the X-Space focused on the proposal, hop over to the Inter Protocol twitter (@inter_protocol) and have a listen to the recording. Some great insights on the proposal and overall benefits to the Cosmos ecosystem.
Here are a few soundbites.
“A way that we can leverage the community pool to help as many Cosmos projects liquidity and the entire ecosystem as much as possible.” 0xcryptohannah
" The primary thing is adding liquidity. We will all be much better off by getting a more successful, more liquid, more active economy, and adding stabletoken liquidity that is valuable." DeanTribble
“If you look at Cosmos hub community pool, the size of the of the community pool is roughly, $100-$120m… million …and that liquidity is just sitting idle” youssef_amrani
*Prop #899 aims to mobilize 4% (eventually 10%) of those idle Atoms into yield generating LS assets.
…
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- 25% to Astroport IST/USDC.nbl pool
The proposal doesn’t specifiy which Astroport deployment and what pool type? Astroport is currently on 5 different chains (Osmosis, Terra, Neutron, Injective, and Sei). Will the liquidity be split up between the 5, or is it left to the discretion of the multisig members?
Yes, proposal should specify that the Astroport deployment is for Neutron, and that it will be using PCL, not XYK.
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There’s a 3rd option, PCL might actually be a step down from Stable Swap Pools, which are meant for just this use case.
But the choice of Neutron as the chain might be blocked on the fact that it’s currently impossible to even create pools with IST in the UI for any Astroport instance except Osmosis, because no Agoric tokens are in the list of tokens at all, they only exist in osmosis.json.
there is not $100-120million in the CP. half of that is NTRN.
Is this proposal trying to take 10% of $100-120million from the CP or 10% of the ATOM in the CP ($50million)?
It doesn’t look like anyone from Agoric/the Inter Protocol/DCF has attempted to submit a PR over the last two weeks. Now that a final draft of the proposal is up, does that mean Astroport-Osmosis is the only Astroport Outpost this liquidity proposal is meant for?
Considering a PR can be done in 5 minutes, don’t think there is an issue here. If there was an automatic deployment and this proposal was on chain, then it might be too late but multisig proposals like this one mean this can be done after it passes even and be done pretty efficiently.
It wouldn’t make any sense to allocate >50% of the funds to Osmosis and not deploy anything on Neutron/Astroport. In any case, hopefully we can get this made clear in the proposal to avoid any misunderstanding.
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Voting No here.
It is an admirable try by IST but it truly has basically no usage atm and i dont see additional DEX liquidity propped up by Collateralized POL ATOM change that.
USK and SILK should be considered first as ideas for this type of proposal.
Additionally the ask is simply too high in comparison to the current IST marketcap and relevance of the project.
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I agree, 4% of the community pool alone will not move demand at a high magnitude. However, the ripple effects of exemplifying the Inter vaults while deepening liquidity and making the whole ecosystem have deeper liquidity (and hence better user experience for participants) could lead to more community members following this strategy to increase their overall yield. If this can grow to happen at scale, with the community using their ATOM in vaults, that is where the locking benefit really begins to help the Cosmos ecosystem.
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Astroport on Neutron only
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10% of the ATOM in the CP
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