Create Initial Wormhole Supercharged Pools

Proposal Discussion
1

This proposal would create nine new Supercharged Liquidity pools:

  • SOL/USDT 0.2% Spread
  • SOL/USDT 0.05% Spread
  • APT/USDT 0.2% Spread
  • APT/USDT 0.05% Spread
  • SUI/USDT 0.2% Spread
  • SUI/USDT 0.05% Spread
  • BONK/USDT 0.2% Spread
  • BONK/USDT 0.05% Spread
  • whUSDT/USDT 0.05% Spread

Background

During the rollout period, the creation of Supercharged Liquidity pools is permissioned by governance as established in Proposal 532.

Choice of Pools

The proposed pools are the planned initial assets provided by Wormhole to Osmosis.

Wormhole was recently granted Canonical bridge status for these assets in Proposal 582.

Pairings with USDT are proposed as stablecoin pairings are more attractive to liquidity providers who only have to account for the volatility of one side of their position.

These pairings will also be beneficial to Osmosis when the Taker fee, approved in Proposal 530, is implemented as it will form additional yield to stakers as well as establish non-OSMO value in the community pool.

The higher spread factors mirror the typical spread factors used on Classic pools. The lower spreads will potentially be more efficient at collecting rewards for the same liquidity, as seen in other concentrated liquidity models but require more volume to reach the same fee generation and so are likely poor for initial bootstrapping purposes. The addition of two levels of the spread factor will enable the market to decide where liquidity reward collection is optimal as the markets grow.

About Solana

Solana is a blockchain built for mass adoption. It’s a high-performance network that is utilized for a range of use cases, including finance, NFTs, payments, and gaming. Solana operates as a single global state machine and is open, interoperable, and decentralized.

Website: https://solana.com/

About Aptos

Aptos is the layer 1 blockchain engineered to evolve. Built with Move to create a home where developers build future-proof apps efficiently and enjoyably. Aptos is designed with scalability, safety, reliability, and upgradeability as key principles.

Website: https://aptos.dev/

About Sui

Sui is a next-generation smart contract platform with high throughput, low latency, and an asset-oriented programming model powered by Move.

Website: https://sui.io/

About Bonk

THE DOG COIN OF THE PEOPLE

Initially launched as a free airdrop to the Solana community on Christmas Day 2022, BONK’s adoption has since grown parabolically to emerge as the true community coin of web3

Website: https://www.bonkcoin.com/

Target on-chain date: Latest of 18th August 2023 and Gateway Launch

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Hey Johnny! A few questions here.

When will these pools be created? Will they be ready to go as soon as the proposal passes or will we need a software upgrade?

Will we be looking at incentives for these as part of the rollout of Hathor’s incentives mechanism? If so, which ones and what’s the timeline for this?

I very strongly feel that we also need a wormholeUSDT / USDT supercharged pool as part of this rollout. It’s great that we’ll be able to get people to bridge over from Solana, Near, Aptos, and Sui as part of this, but Wormhole users will also want a way to bridge over from the EVM. Since Wormhole has 3x the Ethereum liquidity that Axelar does, not allowing that liquidity a path to bridge to Osmosis with a liquid market is a mistake.

Given that USDT is the quote asset of choice here, wormholeUSDT would be a natural choice as an onramping asset, and would allow for an Osmosis-native way to convert between bridged versions of USDT and the new canonical version from Kava.

I would strongly encourage adding this to the list of initial pools at a 0.05% and 0.2% spread factor as well.

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Pools can be created now without a software upgrade, this should coincide with the process easing with v17 though :slight_smile: So these will be ready to do instantly.

Incentives - since the Hathor mechanism only adjusts once a month right now planning on making these a series of bootstrapping proposals (and targeting the low swap fee pools makes the most sense to me there). Because of this, these proposals would only go in once the pools existed so there is a bit of time before this. What are your thoughts on which ones? Personally I feel that “One of these things is not like the others”. But Bonk has quite a lot of hype around it still so may be worth some still. Maybe governance should just decide on all individually.

You may know more about the Wormhole ecosystem here. I agree that we need a route there between whUSDT and USDT. Transmuter would be best, we’re still at least 2 weeks off this though. Willing to add a whUSDT/USDT pool to this if that eases liquidity transitions. Would be 0.01% or 0.05% as the stable/stable type. Maybe just the 0.05% to start with since we would prefer the transmitter implementation long-term.

4

Yeah this makes a lot of sense, maybe roll with the 0.05% spread and just do 1 pool, but I do think it’s important that we have this in place in some form. My major concerns (trying to put myself in the shoes of a Wormhole user):

  • No decentralized route to Osmosis from Ethereum
  • Inability to pay gas fees on Osmosis (maybe we need to whitelist a few WH assets as fees once we have liquid markets?)

Having the USDT pool solves for at least the first one. I think I will also create a couple of constant product pools paired with OSMO for wormhole assets as well so that people have a way to onboard to OSMO, though it’s doubtful that these will get a ton of traction.

Re: incentives. I mostly agree. The streets are saying that BONK may be providing external incentives though so maybe a match would be a good bet? :eyes: Maybe @robinsonburkey can confirm? If not, we could try a small share of incentives and see what the draw is? TBH I’m not really up to date on how active BONK liquidity / volume is, and there are a lot of options for trading it outside of Osmosis.

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We should likely revise the fee pool links anyway after all the CL OSMO pools are live. I’ll bump that up the priority list to regenerate with WH assets.

Since they only kick in on day 6 after launch we’ll have some basic OSMO pools created on day 1, but as you say with no incentives going to classic pools I doubt there will be much traction until the Supercharged pools launch.

I don’t see a downside of creating the whUSDT/USDT pool so I’ll drop this in the proposal unless someone comes up with a reason not so.

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Oh cool! Saves me the trouble then :sweat_smile: thank you!

And thank you for adding the additional supercharged pool! I do think it’ll be valuable to have it.

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  1. No to BONK/USDT pools.

Time and resources shouldn’t be wasted on meme coins, particularly a bridged meme coin. If Wormhole wants to create a BONK/USDT pool, they can wait till supercharged pools become permissionless like everyone else, particularly given that the BONK’s team’s main goal for BONK “is to bring back liquidity to Solana-based decentralized exchanges DEXs.”.

If Wormhole is looking for a lower cap token that is listed on Solana DEXs like Raydium and Orca to bring over to Osmosis, ATLAS, which has a slightly higher market cap than BONK and available on CEX like Gate.io, MEXC, and CoinEX where OSMO and some other IBC native tokens can be found, makes much more sense.

CoinGecko/CoinMarketCap Ranking:

  • ATLAS at #602/#616
  • BONK at #811/#622

  1. To remain consistent the whUSDT/USDT pool spread should be 0.04%. The axlUSDT/gravUSDT, axlUSDC/gravUSDC, avaxUSDC/polyUSDC/axlUSDC, and even the FRAX/axlUSDT/USTC/axlUSDC all have 0.04% spreads, particularly if a 0.01% spread pool is also not going to be created like Prop #579 did for the USDC/USDT.

  2. What about an AGLO supercharged pools?

Was really hoping for ALGO.

With AlgoFi shutting down, I would assume there is an opportunity here to attract ALGO liquidity that is already in the DeFi space relatively cheap.

It is an ICO 20022 compliant token too.

Market cap rankings/Price:

  • SOL at #10 - $23.97
  • APT at #36 - $6.53
  • NEAR at #41 - $1.28
  • ALGO at #49 - $0.11
  • SUI at #97 - $0.56
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Actually on second thought I am a no on whUSDT/USDT pool.

I don’t believe there needs to be another bridged version of USDT on Osmosis or another bridged version of USDC, especially if IBC native USDC will be available through Noble.

Instead, Wormhole and Osmosis should work with the IST Econ Committee to open up IST minting through the PSM using whUSDT and whUSDC, and whDAI just like there is IST minting with Axelar and Gravity bridged USDT, USDC, and DAI, and open up a IST/USDT pool.

I understand @RoboMcGobo point about a whUSDT/USDT pool, but why shouldn’t Osmosis users holding axlDAI, axlUSDT, gravUSDC, gravUSDT, IST, and CMST not also have the same direct access to USDT to access these Wormhole bridged token-USDT pools?

Why are current Osmosis users holding axlDAI, axlUSDT, gravUSDT, gravUSDC. IST and CMST going to be left behind here in favor of potential whUSDT holders?

If there is no harm in setting up a whUSDT/USDT supercharged pool, I don’t see the harm in setting up axlDAI/USDT, axlUSDT/USDT, and IST/USDT supercharged pools as well as there is $1.2 million axlDAI on Osmosis, $574K axlUSDT, and $$479K IST according to MintScan.

(IST minting using axlUSDT has a $975K cap and IST minting using gravUSDT has a $1.13M cap. IST minting using gravDAI has the lowest cap, which is $500K, while axlDAI minting has a $1.1M cap. I assumer the IST Econ Committee would set similar caps for whUSDC. whUSDT, and whDAI.)

9

It really isn’t any extra effort for us to make this pool and these are the tokens we were told are available at launch. BONK are very interested in establishing liquidity on Osmosis also from what I have heard and may be providing some externals.

The Whitelisted fee points are 0.01% and 0.05%, we don’t have a 0.04% rate available at the moment. Adding additional rates opens up more potential pairings for routing calculations.

Hopefully soon! If it is available then will add, just told these are the five that are being focussed on.

Most of these should imo. Transmuter pools are great for migrations but require an altrusitic maintainer. Low fee concentrated pools fill a similar task at a fee but are most sustainable.
I plan to propose a full sweep of all currently incentivised OSMO paired pools to be paired with USDT in the near future which includes pools like IST. However it doesn’t make sense to do this until:

  • OSMO pools have mostly migrated and are liquid (14+ days after v17)
  • USDT liquidity is firmly established (Kava UI live + Incentives live)
  • Taker fees are imminently implemented (i.e. just before v18)
    With the whUSDT it is the single bridge to Ethereum via Wormhole and will likely be replaced by some form of multibridge Transmuter USDT paired with the canonical USDT eventually. But having that linkage available is important as Robo argued.
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The major difference between whUSDT and the other assets you mentioned is that Wormhole users have no route from Ethereum at all without this pool.

Axelar users already have several options from Ethereum, and IST / CMST are IBC native. Gravity was not voted in by governance as a canonical brisge, so is not really relevant to these discussions.

This pool is not about giving all these stables a fair shake, it’s about ensuring that Wormhole users can get to Osmosis from Ethereum in some way, where Wormhole holds liquidity that eclipses Axelar by a huge margin.

This route could have been from whUSDC, but imo USDT is more impactful given that all these pools will be paired with kavaUSDT, and Axelar has far less USDT here than it does USDC (plus the upcoming Noble launch)

11

I don’t see issues on the pools, but I am really wondering whether we should do BONK.

We have seen in the past that starting pools for hype-coins (remember ARB?) doesn’t really attract much meaningful liquidity for the advantages we give them. So until we find a true method to breach other ecosystems, I am very much against incentivizing or giving benefits to shitcoins from other ecosystems since they simply do not add any real value. I then rather see that we would spend some time and effort in our own ecosystem, where we have project struggling for scraps while building stuff.

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12

Having read the proposal and the comments, I am in favour of Supercharged pools for the tokens mentioned here. whUSDC/USDC sounds like it is important for helping liquidity enter Osmosis via Wormhole bridge. if BONK is planning to build the liquidity for the supercharged pool, considering the fact @JohnnyWyles says it is very little additional work/overhead to create the pool and the token is available at launch and they may be providing external incentives then I have no problem with the pool being made & trialled.

Is it possible to remove the pool in the future if it doesn’t see volume/liquidity?

Also would be happy for BONK also not to be included in the list of Supercharged pools created should the community decide it is not necessary. We could make an agreement/terms with BONK prior to a proposal to list in the future, it does not have to be done in this proposal here.

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Johnny and I are already chatting with the BONK folks.

They seem very eager to add externals, and given that I think this would be a valuable pool to have.

Personally i think we’ll see good volume for the pool as well, but time will tell!

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Maybe good to split the proposal in the assets which are quite uncontested and the ones which require a bit more community input?

To avoid the risk of failing at the proposal because they are mixed? We have seen too many cases of that in the past sadly.

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There isn’t really a downside to making a pool for an additional asset though.
The worst case is that BONK/USDT gets created and doesn’t get used.
We are only permissioned because of the specific parameters that need to be set when creating a pool that are still being identified. i.e. we had an ExponentatPriceOne parameter at launch which is now hardcoded instead in v17.

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There might not be a real downside, but it also involves the level of freedom we give our voters ^^
We also strived to make proposals as clean as possible with just one topic at hand and preferably per project (impossible to do for this kind of drafts, I am aware of that), but we can at least service as much as we can to split where we have consensus on in here as must-haves and ones where we have thoughts about.

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Going to chain with this as Gateway is currently preparing for launch.
Unfortunately, Near will not be available at launch as initially thought, but the others will be so dropping this from the proposal.

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