Passing this proposal will change the scaling factor controller address of pool 833 (stOSMO/OSMO) from osmo1k8c2m5cn322akk5wy8lpt87dd2f4yh9afcd7af to osmo12yvjuy69ynnts95ensss4q6480wkvkpnq2z2ntxmfa2qp860xsmq9mzlpn.
Summary
The stToken Scaling Factor Auto-update Contract makes use of the Stride Redemption Rate Oracle Contract to automatically update the scaling factor for stToken stableswap pools, such as the stOSMO-OSMO pool.
Currently, the scaling factor for stToken stableswap pools is updated every several days using a multisig address controlled by the Stride Association. By using the Auto-update Contract the Stride Association can relinquish this responsibility, which would thereafter be carried out in an automatic and fully trustless manner.
This proposal changes the scaling factor controller address of the stOSMO/OSMO pool from a multisig (osmo1k8c2m5cn322akk5wy8lpt87dd2f4yh9afcd7af) to the contract address of the Auto-update contract (osmo12yvjuy69ynnts95ensss4q6480wkvkpnq2z2ntxmfa2qp860xsmq9mzlpn).
Details
Normal stableswap pools concentrate the two tokens at a 1:1 ratio, which is ideal for USD stablecoins. But Osmosis stableswap pools have an optional scaling factor, which enables the concentration ratio to be continually scaled. This scaling factor is utilized for stToken stableswap pools, because stTokens constantly appreciate in value against their underlying tokens.
Currently, it is the responsibility of a Stride Association multisig address to gradually increase the concentration ratios on the stOSMO/OSMO pool. But that process can now be automated.
For example, the stOSMO:OSMO redemption rate is currently 1:1.1638. The Stride Redemption Rate Oracle Contract feeds this redemption rate to Osmosis. The stToken Scaling Factor Auto-update Contract can then take the stOSMO redemption rate and use it to adjust the scaling factor / concentration ratio on the stOSMO/OSMO stableswap pool. In order to update this ratio, the pool’s controller address must be updated to the contract address.
The admin of the auto-update scaling factor contract is the same Stride Association controlled multisig that presently controls the pool’s scaling factor (osmo1k8c2m5cn322akk5wy8lpt87dd2f4yh9afcd7af). As a transitionary measure, the admin of the contract has permission to bypass the oracle and update the scaling factor of the pool directly. However, after the oracle and auto-update contract has proven successful, this privilege will be removed from the contract such that the scaling factor can only be updated to values that are inline with the oracle.
Related Forum Posts:
#248 - Upload Stride Redemption Rate Oracle Contract
#249 - Upload StToken Scaling Factor Auto Update Contract