Celestia Incentive Spend

Proposal Discussion Liquidity Incentives
1

This proposal requests a bootstrapping incentive spend for the launch of Celestia (TIA) token liquidity on Osmosis.

About Celestia

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.

Incentive spend

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.

Why is TIA liquidity important to Osmosis?

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

Requested Spend

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.

Funding management

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

3 Likes
2

Awesome. Fully support.

TIA and DYDX are clearly strategically important to Osmosis. With the continuing decline of ATOM, it’s vital that Osmosis attract liquidity and trade volume for these new tokens.

Slightly tangentially, given all the changes that have taken place for Osmosis and Cosmos in the past three months, I would like to see a complete rethink of the Osmosis incentive program.

We should ask ourselves: “if we had to start from scratch given the state of Osmosis and the Cosmos ecosystem today, how would we design an incentive plan that creates the most trade volume for Osmosis?”

3 Likes
3

100%
Perhaps this has not been advertised as clearly as it could have been, but the idea is to move towards a volume optimization mechanic where incentives encourage the most volume.

The incentives system seems rather scattered at the moment as the token is moving from being the routing asset to having far more importance placed on governance, ecosystem usage and protocol revenue.

Part of this is the use of incentives mainly as bootstrapping mechanics to establish self-sustaining markets and encourage liquidity to flow into the best locations for volume rather than an on-going flat subsidy which the previous system aimed to provide.

I’ll put together a framing post for where I hope we get to see the incentives system arrive at in the next few months.

1 Like
4

Without a plan for community pool spendings when we do and when note, still a solid no from my side.

Nothing personal for dYdX or Celestia, but the randomness we have now is something I dislike. Processes and predictability are thing I lack at this stage, introducing a subjective “I like you”-aspect in community pool spendings. Not good imo.

5

I think a blog post would be helpful from the Osmosis team/contributors outlining the direction of the chain for the coming months/years and to include suggested approaches to things such as liquidity incentives, POL, token swaps, community pool usage, code upload etc etc

The outline can help the community have a sense of direction and a loose framework perhaps to approach various proposals relating to these topics

1 Like
6

Yeah, long term plans makes judging proposals for whether they contribute to the goal or not a lot easier.

1 Like