This proposal seeks to bootstrap XRP as a high-volume trading asset on Osmosis by utilizing up to 250,000 AXL from the community pool and 75,000 USDC.
Improving the market for XRP enhances Osmosis as a trading venue for one of the most transacted onchain assets globally, but also prepares the DEX for new bridge integrations by Axelar and Bitfrost.
This proposal uses the format of Guidelines for Bootstrapping High-Volume Markets on Osmosis to evaluate the spend, deployment format, and reporting.
Asset Selection
Ranking
XRP is a top-50 asset by global volume, ranking #7 on CoinMarketCap with $71.5 billion in 30-day volume.
Sustained volume
XRP’s 7-day volume of $15.3B is close to the 30-day volume period normalized to this, $16.7B, indicating consistent demand across multiple exchanges.
Bridge availability
XRP exists as an Alloy on Osmosis.
The Alloy consists of:
- XRP.core - Coreum (100%)
XRP bridges are currently being developed by Axelar and Bitfrost, with the latter now deployed on Osmosis Testnet. While these are not currently part of the Alloy, Governance may add these after launch, allowing protocol liquidity to benefit these projects.
Current liquidity
XRP on Osmosis has around $35,000 in liquidity pairings, which has facilitated approximately $125,000 a day in volume despite the high spread factors in use of 0.3% and 0.5%.
Deployment Details
This spend proposal will utilize Osmosis Limit Orders to acquire $75k of the XRP Alloy and $75k of USDC for deployment.
Funding Source
This spend will involve rebalancing the Osmosis community pool by deploying almost half of the AXL holdings to minimize risk in terms of volatile asset exposure.
Current AXL holdings are 555,618, or approximately $215,000, representing 5.8% of total Community Pool holdings.
This proposal allocates up to 250,000 AXL to be sold into USDC using limit orders, and 75,000 USDC to purchase XRP. This effectively swaps AXL for XRP and slightly increases Community Pool Stablecoin holdings to obtain the assets for liquidity deployment.
The new holdings of the community pool would change at most to be:
- 3.2% AXL
- 2% XRP
- 0.6% additional to Stablecoin, bringing that total to 55.8%
This AXL is allocated on the assumption that Axelar, as a canonical bridge provider for Osmosis, will be added to the XRP alloy as a variant when available, and under the methodology of using existing undeployed volatile assets where possible.
Deployment Specifications
Deployment will be into a Margined strategy with an initially equal split of assets.
The strategy will provide liquidity to a newly created 0.05% spread factor pool, offering a narrower spread than the current 0.3% and 0.5% pools in use. This creates a more competitive environment versus CEX spreads (typically 0.01-0.02%), while leaving room for other liquidity providers to compete with the strategy.
This is an adjustment from the previous bootstrapping spend for DOGE of a 0.01% spread factor pool, as the highly efficient liquidity left little room for smaller LPs to compete and establish non-protocol liquidity.
Fee Incentives
This proposal will reduce the protocol taker fee to 0.02% for 90 days, or until the on-chain liquidity doubles from deployment levels.
This reduction incentivizes arbitrage flow and organic LP engagement during the bootstrapping phase.
This is adjusted from the previous bootstrapping spend for DOGE of complete exception, as DOGE saw occasional large spikes in volume on very little liquidity, which Osmosis did not benefit from, despite taking the risk in acquiring DOGE for liquidity provision.
Deployment Mechanism
This proposal sends AXL and USDC tokens to the Osmosis Liquidity subDAO for the multistage steps in this proposal to be actioned.
After completion, the liquidity receipt tokens and any excess AXL, XRP, or USDC will be returned to the Community Pool.
Performance Targets
After 90 Days - Assess 7-day volume growth for XRP
With the current volume on $35k liquidity at higher spreads being $120k per week, an additional $100k liquidity and lower spreads should result in a weekly average volume of at least $500k.
After 180 Days - Measure taker fees generated after the reduced period and evaluate market sustainability
At the expected minimum volumes, fee generation would be around $5000 in taker fees at a minimum over the 180 days, including the increase to standard fees after the promotional period.
If volume or fees do not meet this standard, the position may be unwound or reallocated, and market bootstrapping is deemed unsuccessful.
If organic liquidity has emerged, resulting in this bootstrapping liquidity being the minority of the XRP market on Osmosis, the bootstrapping assets may also be withdrawn and redirected to new markets or returned to stable assets.
These targets are based on a minimum expected baseline, assuming proportional growth in volume with reduced spread and increased liquidity depth. Success would indicate the formation of a sustainable market with non-protocol LP participation.
Target Onchain Date: 17th May 2025