This proposal
- Recognizes the allBTC Alloyed Asset, as the canonical version of BTC on Osmosis
- Establishes static rate limits for the Alloy
- Signals the incentive structure to replace WBTC groups with allBTC by generating new volume splitting groups
- Replaces WBTC and WBTC.eth.axl as the quote asset used for supercharged pool creation.
What are Alloyed Assets?
Alloyed Assets comprise multiple underlying bridged assets within a tokenized CosmWasm Transmuter pool type and aim to provide a superior cross-chain experience to users while optimizing the capital efficiency of liquidity required for asset composability and minimizing the risk of exposure to a variety of bridges.
By swapping into an alloyed asset, a user receives a representative token of the underlying assets within the pool, which can then be used as a risk-diversified version of the asset that is usable throughout the Osmosis Ecosystem.
This results in a user flow similar to major CEXs, which accept deposits from multiple chains and increase a user’s balance, but with an entirely decentralized, on-chain mechanism.
When a transaction is initiated, IBC hooks are used to transfer the asset along the selected bridging option and automatically join or exit the Transmuter pool.
As this flow will be frontend only, advanced users, or those interacting with frontends that have not integrated the IBC hooks will be able to retain the un-alloyed asset on Osmosis.
From there a swap would route through the Transmuter pool as usual, not stranding these users if they do arrive on Osmosis via a frontend without this full integration.
For a full description of Alloyed Assets, see the Blog Post
allBTC usage
The main initial usage of allBTC will be to seamlessly integrate deposits of WBTC via Axelar and deposits of BTC via the Nomic bridge with the natively available WBTC on Osmosis.
The expansion of allBTC to encompass new assets will be decided by future governance votes as these become available as valid transfer routes.
Rate Limits at Launch
Alloyed Assets have built-in rate limitation settings, which can prevent the ratio of tokens from changing excessively in a set period. These rate limits minimize any issue with one constituent from draining the liquidity of the paired assets in the alloy.
Static Rate Limits
Determines the maximum percentage of the pool allowed to be a specific asset, preventing extreme imbalance from occurring and minimizing the exposure of the Alloyed Asset to a particular constituent.
This proposal sets the static rate limits for allBTC to:
- WBTC - 100%
- WBTC.eth.axl - 50%
- nBTC - 5%
Change Rate Limits
Determines the maximum percentage of an asset permitted to enter the pools based on the moving average of the asset’s relative weighting over a specified period.
None present to enable bootstrapping. To be activated by governance proposal once nBTC liquidity is established.
Admin Role
Osmosis Governance already is set as the admin of the allBTC contract.
The Admin Role can perform the following tasks:
Delegate Set Active Status
Allows the Admin to delegate a Moderator address to disable the underlying Transmuter pool of the Alloyed Asset temporarily in an emergency. Disabling will freeze the pool’s contents, as no internal messages can be run apart from enabling the Active Status again. This delegation allows either the wider Osmosis DAO or a large subDAO to handle Metadata and Limiter settings while retaining rapid response by a smaller subDAO in an emergency.
Set Alloyed Metadata
Adjusts the on-chain metadata for how the Alloyed Asset is displayed, such as the displayed denomination, description, and symbol.
Manage Limiters
Allows the rate limiters to be created, removed, or modified. These must be set appropriately so that normal trading is not impacted and a security issue in any of the constituent assets is minimized.
Add New Assets
Allows the admin to add a new constituent asset to a pool, which can then be used as an underlying token for the Alloyed Asset. Further administrative action can then be taken to add any limiters. This allows the Alloyed Asset to grow as more bridges become available without fragmenting liquidity by having multiple Alloyed Assets for the same token in circulation.
Moderator Role
The Moderator for allBTC is:
osmo1ugrn8qgsvyr8zwrv8h2g4r8ascngxk7qeaz7e0htjq3znswkh4cqhjdpgy which is a 3 of 6 subDAO, composed of Osmosis contributors, validators and security specialists.
Set Active Status
In an emergency, the Moderator can temporarily disable the underlying pool of the Alloyed Asset. This allows time for any information about an incident to become available and a path forward to be decided without exposing the Alloyed Asset to losses beyond those incurred by the backing at the time of the freeze.
Mark Corrupted Assets
By marking an asset as corrupted, the Moderator signals that it should be removed from the Alloyed Asset. No new deposits will be allowed, but withdrawals are allowed. This will allow the Alloyed Asset to restore its peg, particularly when paired with any intervention approved by governance, such as Insurance, which can deposit an uncorrupted asset and withdraw the corrupted component
Specification of allBTC
Denomination: factory/osmo1z6r6qdknhgsc0zeracktgpcxf43j6sekq07nw8sxduc9lg0qjjlqfu25e3/alloyed/allBTC
Symbol: allBTC
Assets: WBTC, WBTC.eth.axl, nBTC
Normalization Factors: 1 (1,1,100000)
Decimals: 8
Canonical Status
This proposal would create a new Volume Splitting Group for allBTC/Stable. It also signals incentives to move to this new grouping at the next proposal that adjusts incentives.
The current Volume Splitting Group allocates 99% of incentives to the Stable pairings rather than the OSMO pairings and so only Stable pairings are persisted here.
Canonical status sets the following agreement:
Default Asset List – Assets will be affixed and unmarked in the app.osmosis.zone default asset list, e.g., BTC, with all other bridges’ assets being BTC.bridge1, BTC.bridge2, etc. Osmosis DAO requests that allied/friendly frontends do the same, though any frontend is free to make its own decisions.
Osmosis Incentives – Osmosis DAO commits to prioritizing the canonical bridge assets, incentivizing them earlier and more heavily than the comparable assets of non-canonical bridges. In general, canonical pools should earn substantially more incentives than their counterpart pools.
Target Onchain Date: 29th July 2024
