This proposal requests a bootstrapping incentive spend for the launch of Celestia (TIA) token liquidity on Osmosis.
Celestia is a new type of blockchain that aims to launch a new modular paradigm where each chain is minimal in composition and highly specialized to perform specific tasks. This specialization provides breakthroughs in scalability, flexibility, and interoperability, enabling developers to build blockchain applications for mass adoption.
Celestia is specialized as a data availability blockchain with the TIA token used to pay for blobspace. This allows new blockchains to be spun up without their own native token, instead using TIA similarly to ETH on Ethereum-based rollups. Developers may opt to bootstrap their chain quickly by using TIA as a gas token and currency, in addition to paying for data availability. In this mode, developers can focus on creating their application or execution layer instead of issuing a token right away.
This proposal requests a community pool spend to incentivize liquidity on Osmosis for the TIA at the launch of the Celestia chain.
This pool will have a 0.05% spread factor Supercharged pool paired with USDC.
As of Proposal 638, Osmosis no longer allocates ongoing internal incentives to most pools.
By spending specific quantities of incentives with a fixed end date, initial liquidity can be crowdsourced for a pool to launch new markets on Osmosis. After the market has been established, these external incentives will end, and the market will reach a sustained level of liquidity through trading fees alone.
The modular blockchain paradigm is an extension of the appchain thesis, with each blockchain focusing on its own specialty. As a modular blockchain focussed on data availability, Celestia is deliberately unable to run a native exchange, and so the dominant decentralized exchange for TIA must be run on another chain.
Osmosis should not only be aiming to be the decentralized exchange of choice for TIA, but also be the connector between all IBC chains, such as Celestia, and all other modular blockchains and rollups that will use the Hyperlane bridge. Building TIA liquidity is the first step towards Osmosis becoming the crossroads of liquidity trading for the emerging modular blockchain ecosystem.
See this talk at this year’s Modular conference for more information on Osmosis and Celestia: https://www.youtube.com/watch?v=9DVwjwYvPsk
This proposal requests that a 300,000 OSMO budget be granted to incentivize liquidity of the TIA token with the following restrictions.
The incentives program will start when TIA is listed on Osmosis and freely available to trade.
The incentives program will last no more than 50 days to give sufficient time for the liquidity market to establish.
The quantity of OSMO has been chosen as a spend equivalent to fifteen days of the redirected incentives removed in Proposal 638.
New Proof of Stake networks can have issues attracting staking security as well as trading liquidity. Some tokenomic designs have a high level of inflation in order to attract community stakers, but the initial inflation of the Celestia chain is 8%, and all tokens, including vested, may be staked. This is comparable to the standard across the Cosmos and should result in an expected staking return of 12%-16% at typical bonding levels for proof of stake chains.
All incentives may not be spent as they will be loaded according to the following methodology:
Minimum spend of 3000 OSMO per day (150,000 over the period)
Maximum spend of 6000 OSMO per day (300,000 over the period)
Week 1 incentives to be loaded as the maximum
Week 2 onwards then revise within these restrictions as per the formula:
Value per day = Celestia Staking rate per day * Pool TVL * 3
This allows Celestia liquidity on Osmosis to be a highly attractive venue for using the token as the pool grows whilst being tempered by both the quantity of Celestia staked and in the event that the pool does not attract the intended liquidity.
This proposal spends the requested OSMO into a multisig on DAODAO to be loaded to the specified pool by the members according to the above criteria.
Members of the multisig are:
- CryptoCrew (Validator)
- John Galt (Stride Contributor)
- Johnny Wyles (Osmosis Labs)
Target on-chain date: 24th October 2023