CONTEXT:
Before diving into the question of whether or not to allocate any portion of our liquid supply to a decentralized exchange (DEX), it is crucial to first contemplate the strategic implications involved. The Hub’s vision of liquidity as a service underscores the necessity of considering the strategic aspect when it comes to utilizing our liquid supply.
ANALYSIS:
With this strategic perspective in mind, it is prudent to assess the potential competitive landscape to determine whether the decision is advantageous for the Hub. In light of the Duality merger with Neutron, and the return of the unclaimed airdrop to the Hub’s custody by Neutron, it’s evident that a strategic partnership has been forged. Duality’s automated market maker (AMM) with an adjustable curve model is poised to offer features similar to those found in Osmosis’s concentrated liquidity. From a purely strategic standpoint, it stands to reason that deploying liquidity to stabilize LST ATOM pairs would be more economically sound for the Hub if it were done through Duality.
CONCLUSION:
This post is not intended to dictate that liquidity deployment must exclusively occur in Duality and not in Osmosis. Rather, it underscores the importance of aligning Osmosis with a similar economic framework as Neutron has. In this regard, various possibilities can be explored, such as liquidity swaps, revenue sharing, and protocol treasury alignments. At Govmos, we sincerely hope that, at some point, ATOM and OSMO can move beyond their historical differences and reach an economically beneficial agreement. However, in the interim, it must be acknowledged that this proposal falls short in that respect. We would be more than happy to support an updated version of this proposition that would come with additional factors to compensate this gap.
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