This proposal would adjust the set of Superfluid pools to support the OSMO decoupling initiative and encourage the migration of assets from variant to alloyed assets.
While Superfluid can be used for users to hold OSMO and another token long-term while contributing to the security of the chain, the set of pools included was reduced heavily in Proposal 807 to a core set of assets.
Since this proposal, incentives have been removed from all OSMO pairings except stable pairings Proposal 824 as part of the OSMO decoupling initiative, which aims to increase the independence of the OSMO token from the previous routing strategy.
This includes Stable tokens such as USDC and USDT and high market cap tokens such as BTC, ETH, and SOL.
In addition, alloy assets are increasingly used in Osmosis as the main representative of these assets. Maintaining Superfluid on the variant pools and not on the Alloy pairings gives an incentive not to migrate, restricting the growth of Alloys over these previously approved variants.
This proposal would remove Superfluid from all currently approved pools, except USDC pairings/approve Superfluid pairings using the alloyed assets for USDT, BTC, ETH, and SOL.
Superfluid Pools to be removed
DAI
cl/pool/1066 0.2%
WBTC.eth.axl
cl/pool/1090 0.2%
cl/pool/1430 0.01%
ETH.axl
cl/pool/1134 0.2%
cl/pool/1281 0.05%
cl/pool/1477 0.01%
ATOM
cl/pool/1135 0.2%
cl/pool/1265 0.05%
cl/pool/1399 0.01%
cl/pool/1400 0%
TIA
cl/pool/1248 0.2%
cl/pool/1347 0.05%
WBTC
cl/pool/1432 0.2%
cl/pool/1433 0.05%
cl/pool/1434 0.01%
USDC
cl/pool/1221 0.2%
cl/pool/1263 0.05%
cl/pool/1464 0.01%
stOSMO This should have been removed in Proposal 807 but was missed in the parameters in error
Wow, that is quite a heavy reduction in terms of pools relevant for Superfluid.
I get the transition towards BTC and ETH as main assets outside of stables. But why is something like SOL added while ATOM is removed?
Although ATOM is (a little bit) contested in terms of value stability, it is and remains one of the core assets of the ecosystem.
SOL is far more comparable to ETH than ATOM.
SOL is the main ecosystem outside of EVM where activity is happening and has 35x the marketcap of ATOM.
Osmosis also has much lower Liquidity for SOL in general compared to ATOM
Adding more varied SOL markets increases Osmosis’ connection to one of the most active ecosystems by adding minor incentives to those who wish to hold both assets.
The current liquidity pairing structure for OSMO looks like this:
This is somewhat inaccurate in that it treats all liquidity evenly when the concentrated pools have a more significant impact - the bulk of the larger pairings are less efficient than the more concentrated USDC pool for example.
It can be clearer to look at the Volume through OSMO pairings - although that is biased by recent demand
The idea behind removing Superfluid from the variants and lower marketcap assets is to encourage the further adoption of stablecoin pairings and alloys as the main pairings for this tool. USDC can be seen to be dominant, but ATOM, ETH.axl and WBTC.eth.axl are present when we should see BTC, ETH and SOL there as the main volatile pairings if we are a more general interchain exchange.
In general, superfluid isn’t used often since concentrated liquidity since a narrower position will often outperform the passive superfluid return. Still, when used for a long-term position, it should aim to pair the OSMO with the most stable assets across crypto, which are stables and the big 3 ecosystems.
Edit: If this looks to be contentious, then I could post as three proposals instead:
