Community Spend: Match Kava Rise Rewards for three months

Proposal Discussion
5

A few things:

  1. Since KAVA Rise rewards are based on a monthly assessment, doesn’t that mean that the multisig won’t have any liquid staked KAVA tokens (unless it is planning to swap them for KAVA tokens) to use as external incentives to match the OSMO it will be loading as external incentives for the first month of KAVA Rise and this matching program is really going to be loading external incentives to these pools after the first month of the KAVA RISE program? Or is someone or some group providing an advance/loan to the multisig so that it can upload the liquid staked KAVA/KAVA and OSMO external liquidity incentives sooner and which the multisig will be repaying as the liquid staked KAVA/KAVA rewards received come in?

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  1. If liquid staked KAVA is the token that the multisig will be receiving and using to provide external incentives to the pools that it has defined, why are we using OSMO instead of a OSMO LST? KAVA seems to have the right idea here as the KAVA LST is available only on KAVA and not on any large CEXs. This limits where KAVA Rise reward earners can use their rewards and allow KAVA to recapture some of the value that the KAVA token looses when reward earners swap/sell their rewards.

Using OSMO LSTs (stOSMO shouldn’t be the only OSMO LST used, qOSMO should be used to some extent as well, competition is healthy for the market) would allow Osmosis to recapture some of the value that the OSMO token looses when liquidity providers swap/sell their rewards.

  1. Why is the focus solely on these liquidity pools? Perhaps it is already being done, but if it isn’t why not provide some KAVA Rise Rewards to Mars to open up USDT borrowing lending on their Osmosis outpost.

  2. KAVA Rise is intended to bootstrap stablecoin liquidity, or more precisely USDT liquidity in the Cosmos. Liquidity is necessary but insufficient to bootstrap a new or struggling economy. There has to be demand for that liquidity. As such, doesn’t it make sense to provide reward to those that will create demand for liquidity such as Mars for a USDT borrow-lend pool, ION DAO for ICBX minting with USDT, Bitsong for Sinfonia NFT purchases using USDT, reimbursing Calc.FI users for USDT DCA strategy transactions, or even a KAVA LST/OSMO rebate to those that can show they bought REGEN using USDT to buy and retire eco credits on REGEN or bought NCT using USDT and retired on REGEN?

  3. Why is the chosen strategy here to double down on liquidity incentives for a endogenous liquidity providers? Why aren’t any going to incentivize endogenous liquidity providers to become non-endogenous liquidity providers?

  4. How were the $10 million and $5 million targets determined? Loading incentives to the tune of 30% APR for the first month? Why not just ask to immediately enable SFS for the OSMO/USDT pool to help reach that 30% APR? If the pool achieves the amount of volume that the OSMO/USDC pool currently has, which also has almost 2x more than the OSMO/USDT target, so that less resources needs to be spent on that pool?

If $10 million is the target for the USDC/USDT pool, why not end incentives for the composability pools and increase the share of regular incentives that stable-stable pools receive?

A $5million TVL target for the USDC/USDT pool seems much more achievable and sustainable with initial incentives starting at a 15-20% APR for the first month. In my professional opinion, using resources to achieve a 30% APR and $10 million TVL target when there isn’t even $10 million in USDC liquidity currently on Osmosis. If the longer term goal (beyond 3 months) is to have $5 million TVL in the USDC/USDT pool and expect that half of the $10 million in liquidity is going to migrate to a Major/Stable pool once incentives are shifted to them, why not simply add a Major/Stable pool so that there are three pools that endogenous liquidity providers have the option to take advantage of rather than just two, like DOT/USDT at a lower TVL target like $2.5 million for example as it appears a loan being provided from the DOT treasury to launch a Centauri bridged DOT/OSMO pool on Osmosis as the DOT governance proposal language suggests the liquidity incentives that Osmosis provides will be sold on a weekly basis to help ensure the loan can be repaid. It seems like Osmosis would be much more successful in utilizing DOT to attract USDT liquidity and DOT investors/traders if there was Centauri bridged KSM availability as well.

  1. I am not so much concerned about the over incentivization here but the over concentration of incentives. My main concern is starting with just two pools and not expanding till they reach $10 and $5 million TVL targets respectively. I fell @Govmos also raised similar concerns in the Create USDT Supercharged Pools thread.

  2. Can a dollar of USDT liquidity be obtained at a lower cost by opening up USDT paired pools for mid and small cap low volume native IBC tokens that where volume and capture a greater share of volume and new users from CEXs? It seems like Osmosis can more efficiently and effectively compete against CEXs in the mid and small cap token market and has to pay a premium for large cap token liquidity. Is it perhaps worth testing by opening up a lightly incentivized BAND/USDT pool for example as the BAND/OSMO pool no longer receives incentives and has under $50K in TVL. Current BAND/OSMO liquidity providers would have the option to enter both a incentivized BAND/USDT and OSMO/USDT pool, or if the option is available, convert to a staked position. I am very curious to see how successful a USDT pool strategy would work in terms of being able to gain a greater share of a mid and or small cap token volume from a CEX versus a SFS strategy.

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