Add WBTC and ETH as Supercharged Quote Assets

This proposal would enable the creation of Supercharged Liquidity pools using WBTC or ETH as quote assets.


Quote assets restrict the combinations of pairings possible in Supercharged Liquidity pools to improve routing as mentioned in Proposal 532.

Quote assets in use are USDC, USDT, DAI, ATOM, and OSMO.

This proposal would add WBTC and ETH as quote assets for supercharged pools.

The reasoning for WBTC is that the OSMO pool containing this would be priced in WBTC rather than the paired asset.
I.E., 1 OSMO is worth 0.000016 WBTC rather than 1 WBTC is worth 62,500 OSMO reads more naturally as WBTC has greater value recognition.

The reasoning for ETH is also this, but adding it as a Quote asset also enables the creation of Liquid Staked ETH Supercharged Pools, allowing a relatively small amount of bridged liquidity to enable the use of these pools within the Osmosis ecosystem and for Liquid Staked ETH to begin entering the Cosmos.

Target on-chain date: 5th August 2023

1 Like

I get wBTC, but wETH?

Isn’t that an 18 decimals asset and therefore not able to be a Supercharged Quote Asset?
Or will it be fixed before the pools are actually created in the v17 upgrade?

The 18 Decimal place issue only applies to the “Base” asset.
DAI - 18
OSMO - 6
ETH - 18

OSMO/DAI (6/18) is the current Supercharged pool and works fine.
All the new ones in v17 will be 6/6.
Enabling ETH as a Quote asset allows OSMO/ETH (6/18) which is also fine.
What wouldn’t work is ETH/OSMO (18/6), or, as in the proposal that was voted down, MATIC/OSMO (18/6) or CRO/OSMO (18/6).

You could technically enable things like MATIC and CRO as quote assets but then you would start having a huge variety of pools to route through. Ideally, the only things added to Quote after this would be Stablecoins.

Clear, so the problem only exists if the 18-decimal asset is placed as first asset (X1) of the X1/X2 pair.

When it is added as second (X2) then there is no issue at all.

Could we then not migrate the other pools where the issue persists towards OSMO/CRO & OSMO/MATIC to solve the issue on the short term already? Maybe even “force” OSMO to be the first in pairings anyway if it is an OSMO/XXXX pool?

We could, but that would open up lots of CRO based pools or MATIC based pools to be made when we go permissionless. Which in turn causes routing issues.
Generally the Quote assets should only be Stablecoins, high value assets like ETH and BTC, and we are using ATOM and OSMO as what has been typical in Osmosis up to now.

Why would it open up lost of CRO based or MATIC based pools when permissionless?
You expect a lot of people want a XXXX/CRO or XXXX/MATIC pool on Osmosis?

I don’t, but there is the potential to make them and clog up the routes - see the NGM pools for examples.

Ok, and that risk is mitigated if we have CRO/XXXX or MATIC/XXXX pools? Where the XXXX is limited to assets like stables, ETH, BTC, OSMO, ATOM?

Yes, exactly, the more quote assets, the more routes become possible as multihop.