This post documents a moderator action taken on the Alloyed ETH contract.
The canonical ETH on Osmosis was defined in Proposal 816, which defined the moderation subDAO with the ability to remove variants from the alloy.
The moderation subDAO is currently reviewing all Alloys to assess the risk vs. benefit of the variants, as they have been active without change for some time and have seen varied levels of usage while trading within the alloy generates no fees for Osmosis yet incurs risk to the protocol.
Alloy Information
Adjustment Summary
The Moderator SubDAO will remove the following ETH variants from the Alloyed ETH set:
- ETH.base.axl - Axelar bridge from Ethereum via Optimism
- ETH.arb.axl - Axelar bridge from Ethereum via Arbitrum
- ETH.matic.axl - Axelar bridge from Ethereum via Polygon
Following this adjustment, Alloyed ETH will consist of only:
- ETH.axl - Axelar bridge from Ethereum
- ETH.atom - Eureka bridge from Ethereum
Rationale
Observed usage of the ETH alloy shows that non-core variants are primarily used for arbitrage routing, rather than for organic liquidity provision or user-driven swapping.
Key considerations:
- No protocol revenue is generated from intra-alloy swaps due to zero swap fees.
- Each additional variant adds operational and bridge risk without corresponding economic upside.
- L2-based Axelar variants show minimal direct demand while increasing the risk within the Alloy.
Maintaining a broad set of variants, therefore, exposes Osmosis to asymmetric risk with little benefit.
For extracted data on ETH variant flows over the last year see this sheet: L2 Usage in Alloys - Google Sheets
Outcome
- The ETH alloy is narrowed to widely supported Ethereum bridge paths.
- The alloy remains functional while being materially simpler, easier to reason about, and lower risk.