- 2024-07-24 Created initial post
This is a signaling proposal for Cosmos Hub governance to make a minor update to the instructions it issued to the ATOM Accelerator DAO in proposal 800.
In that proposal, Cosmos Hub governance entrusted the AA DAO with 450K ATOM, and instructed it to deploy said liquidity to an stATOM-ATOM stableswap pool on Astroport Neutron.
But upon further consideration, it now appears the interests of Cosmos Hub would be better served if the 450K ATOM is instead deployed to an stATOM-ATOM constant product pool on Astroport Neutron - not a stableswap pool.
This signaling proposal simply asks the Cosmos Hub to authorize this very minor change in plans.
The instructions issued by Cosmos Hub governance to the AA DAO were very clear. AA DAO members are bound by those instructions and cannot deviate from them. The instructions can be found in this post on the Cosmos Hub governance forum.
But recently, Stride contributors have determined that a constant product pool would be a better fit for this 450K ATOM - not a stableswap pool.
Due to the divergence in the values of stATOM and ATOM, providing a large amount of liquidity to an stATOM-ATOM stableswap pool on Astroport Neutron would entail operational and accounting complexities that were not fully anticipated. Thus, it would be better to deploy the 450K ATOM to a constant product pool instead.
A constant product pool is the standard pool type on most DEXs, such as Astroport and Uniswap.
You can learn more about constant product vs. stableswap pools here: https://docs.astroport.fi/docs/learn/astro-pools/constant-product-pools
This proposal asks Cosmos Hub governance to update the AA DAO’s instructions from proposal 800, so that the new instructions are:
"As soon as possible after receiving the funds, the ATOM Accelerator DAO will liquid stake 225K ATOM with Stride protocol, resulting in a certain amount of stATOM.The ATOM Accelerator DAO will then provide the certain amount of stATOM it just minted along with 225K ATOM to a liquidity pool on Astroport’s Neutron deployment.
The pool will be stATOM-ATOM. It will be the constant product pool type, with the standard swap fee of 0.3%.
By providing this liquidity, the ATOM Accelerator DAO will receive a certain amount of LP tokens from Astroport. It will hold them, and not bond them in the Astroport generator contract.
In the future, Cosmos Hub governance may or may not wish to move this liquidity to a different liquidity pool. But given the state of the ATOM Economic Zone today, it appears the most prudent and responsible option is to deploy it to a constant product pool."
This kind of proposal to Cosmos Hub governance has never been made before, because Cosmos Hub has never deployed protocol-owned-liquidity before. As Cosmos Hub enters a new era involving the ATOM Economic Zone and protocol-owned-liquidity, it’s vital that we continue striving to build and maintain a governance culture of responsibility, transparency, and respect.
Even though changing the AA DAO’s instructions from stableswap to constant product may seem unworthy of a governance proposal, when Cosmos Hub issues instructions to a multisig those instructions must be followed to the letter. Any change must be authorized by governance.
Great things lie ahead! This is the very beginning of the ATOM Economic Zone. Continued respect for the institution of Cosmos Hub governance and careful attention to procedure will contribute greatly to the success of the AEZ!
The following items describe the voting options and their significance for this proposal:
- YES: You wish to update the AA DAO’s instructions, so that it deploys its 450K ATOM to a constant product pool - not a stableswap pool
- NO: You do not wish to update these instructions, and wish for the AA DAO to execute its existing instructions
- NO WITH VETO: You 1) consider this proposal to be spam, 2) believe it infringes on minority interests, or 3) believe it violates the rules of engagement as currently set out by Cosmos Hub governance. If the number of NoWithVeto votes is greater than a third of total votes, the proposal is rejected and the deposits are burned
- ABSTAIN: You wish to contribute to quorum but you formally decline to vote either for or against the proposal