Deploy $500k POL on the XPRT/OSMO pool on Osmosis jointly from the Persistence One and Osmosis Community Pools

Proposal Discussion
1

Summary

As early supporters of each other, the Persistence One and Osmosis Ecosystems have a symbiotic relationship that has crossed paths on multiple occasions since Genesis. Both communities would benefit from co-deploying POL on the XPRT/OSMO pool on Osmosis. With this discussion, I would like to propose the Osmosis Community Pool to match $250k in OSMO liquidity (the Persistence One Community Pool will provide the other $250k in liquidity, subject to Governance) to deploy in the XPRT/OSMO Supercharged pool (pool #1101).

Brief History Together

  • Persistence One <> Osmosis was one of the first IBC connections (Osmosis channel-4) in Cosmos
  • XPRT/OSMO was one of the first pools to go live on Osmosis (Pool #15) and enable Superfluid Staking.
  • At its peak, XPRT had $30M+ liquidity and was one of the most traded tokens (~$35.7M avg monthly volume) on Osmosis before the Terra collapse.
  • Persistence Labs runs the Audit One validator on Osmosis (100% uptime) and 78.46% (out of 650) governance participation.
  • Persistence One contributors are closely following the development of Mesh Security, believe in the benefits it can bring, and are strongly supportive of Cosmos app chains adopting it when it goes live.
  • pSTAKE, a Persistence One Ecosystem dApp for LST issuance, has launched OSMO liquid staking that focuses on transparent OSMO delegations and decentralization of the Osmosis chain.

Rationale

Persistence One is on a mission to maximize liquid staking yield in Cosmos. Expanding liquid staking to the biggest Cosmos Ecosystems like Cosmos Hub, Osmosis, and dYdX will bring a new wave of DeFi and users to Cosmos.

Osmosis has solidified its position as the central liquidity hub of Cosmos. Currently, Osmosis facilitates ~30% of the daily XPRT trading volume across CEXs and DEXs. Undoubtedly, Osmosis will be the premier place for XPRT trading and act as a gateway to the Persistence One Ecosystem.

The most significant benefit to the Persistence One Ecosystem is having deeper liquidity for its native token on the leading exchange in Cosmos, attracting more volume, LPs, and eyeballs.

Benefits to Osmosis Community

  • Increased trading volume on Osmosis
    • XPRT monthly volume has increased ~4x since its lows from September 2023. As the Persistence One Ecosystem expands (within and beyond Cosmos) through new products, partnerships, and targeted efforts on distribution, XPRT trading volume on Osmosis is expected to increase.
    • Higher volume will bring more taker fees for OSMO stakers and generate additional yield for the Osmosis Community Pool through this POL injection.
  • Diversified Osmosis POL
    • Beyond being a show of support and alignment, POLs can be an excellent way for the Community Pool to increase liquidity, facilitate trading, and ultimately act as a strategic revenue source for Osmosis.
    • Through its Community Pool, the Osmosis Ecosystem can benefit from deploying diversified strategic POLs that capture potential upsides.
  • Distribution for Persistence One
    • More spotlight on Persistence One can result in people looking more into its Ecosystem offering like stkOSMO by pSTAKE. With its additional focus on decentralizing the Osmosis chain, this can be a fruitful flywheel for Osmosis.
    • The potential success of Persistence One’s LSTfi Ecosystem will directly tie in and contribute to Osmosis’ success.
  • Increased arbitrage opportunities on Osmosis
    • XPRT/ATOM on Dexter, a DEX on Persistence One, has ~$750k+ liquidity and does ~$30k daily trading volume. While it is proposed that this joint POL be deployed only on Osmosis, more visibility and deeper XPRT/OSMO liquidity can empower more arbitrage opportunities on Osmosis.
    • This can lead to more trading on Osmosis and increase IBC volumes between the two ecosystems, an additional mutual benefit.
  • More DeFi usage with a possible vault on Quasar
    • With deeper liquidity via the POL and higher community incentives, XPRT/OSMO can become a great candidate for a vault on Quasar to attract more liquidity providers and increase pool activity.

Implementation

To start things simply and efficiently, the following steps can be followed:

Steps Involved

  1. Put a proposal on Osmosis for $250k worth of OSMO to a multisig
  2. Put a proposal on Persistence One for $250k worth of XPRT to a multisig
  3. IBC transfer XPRT tokens to Osmosis
  4. Deploy ~$500k liquidity on the XPRT/OSMO pool on Osmosis

Liquidity Management

It is proposed that the POL be deployed for at least one year on the XPRT/OSMO Supercharged pool (#1101). ONLY OSMO governance will hold power to continually re-evaluate the POL’s duration, size, withdrawal, and any further actions.

OSMO governance can transfer the POL position to Timewave’s non-custodial POL solution once its Covenant v2 is audited and released.

Incentivization

The XPRT/OSMO Superchated pool #110 is currently incentivized with ~15,000 XPRT tokens monthly. The Persistence One Community, through XPRT governance, can substantially increase this amount to support the POL with more liquidity providers to amplify its benefits further.

Participate

We look forward to hearing Osmonauts’ thoughts and feedback on this proposal to strengthen ties between the Osmosis and Persistence One communities and provide substantial value to the Osmosis Ecosystem.

Notably, we request your feedback on the following:

  1. What do you think of the proposed joint XPRT/OSMO POL?
  2. What are your thoughts on deploying liquidity on the XPRT/OSMO supercharged pool (#1101)? Are you aligned with the pool’s current parameters to host this POL?
  3. Who do you suggest be a part of the â…— multisig that will hold the POL?
  4. How should the POL’s LP tokens (and subsequent swap fee yield) be split?
  5. Do you believe this proposal has merits and benefits for the Osmosis Ecosystem?
4 Likes
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The ask here seems excessively high with no metric to determine that an additional $250,000 in OSMO to pool #1101 will bring the stated value adds

I think the key point to focus is:

  • Adding $250k/$250k of OSMO/XPRT doesn’t guarantee increased trading organic trading volume, as we’ve seen with DYDX/USDC pool #1246, with $75k/$75k is facilitating around $600,000 in 24h volume.
  • the existing XPRT/OSMO pool already has $135k in liquidity and is doing around 1% of that volume. The amount is sufficient and is likely a matter of demand
  • This should start off with a request of $25,000 and see how this increase performs, then re-evaluate after that.

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I do think Persistence’s goal of maximizing liquid staking yield in Cosmos is great, and I am definitely supportive of that and stkOSMO growth. But based on the mentioned value adds, I do not think this specific proposal request of $250,000 in OSMO will achieve those value adds.

2 Likes
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To me isn’t seems excessively high, indeed it´s very cheap, if you look at 20M OSMO deployed to STRIDE protocol or the 2M ERIS protocol pretend to the same pourpose, you can obtain some perspective.
Here is a quote from PHilipp:

Of course all this moves like everything in life request time, we wiil not seeing high volumes overnigth but the cost / benefit here is paramount. PSTAKE and persistence team are working tirelessly bringing stkOSMO and instant unbonding for LP assets adding stkDYDX soon and some others so i see so much potential vs low risk and “cheap” investment , personally i migrated my ATOM and XPRT from OSMOSIS to DEXTER because OSMO no longer offer liquidity in no “strategic assets” this POL can change things and make OSMOSIS more appealing for XPRT holders and others LST´s again, agree with @aaronxkong about the state of things rigth now but that´s what they want change, to me it is worth giving a chance to this POL at least for a year.

Worth give a chance because the upside potencial.

Agreed seems reasonable.

I have no candidates.

50/50

Oh yeah¡¡

1 Like
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Invite representatives from both ecosystems, including key contributors and developers, to ensure a balanced decision-making process.

Distribute LP tokens and swap fee yield proportionally to each ecosystem’s contribution, with negotiations based on perceived value.

Yes, I believe, but the merits should be emphasized for both ecosystems.

1 Like
5

Deploying $500k liquidity in the XPRT/OSMO supercharged pool seems to be reasonable, especially If the pool’s current parameters for hosting POL align well with the goals of providing stable liquidity and potentially earning rewards such as takers fees for OSMO stakers from the ~4x increased volume on XPRT then i believe it is worth the try

Between the persistence and PSTAKE team have been working tirelessly bringing stkOSMO and instant unbonding for LP assets and made over 20M IBC volume , 180% surge in TVL and increase in daily active users over the last 30 days

2 Likes
6

The example given here is not comparable, the request of this proposal is not the same and is asking for $250,000 osmo to pair with $XPRT, this proposal does not ask for OSMO for stkOSMO.

The bottom line is that this request seeks to pair $250,000 of $OSMO with $XPRT to increase volume for XPRT, while the current liquidity is already sufficient enough to facilitate over 50x the current volume and additional liquidity will not make this happen organically.

Edits* btw, the ampOSMO prop was rejected by governance ^
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2 Likes
7

Some questions which pop into my mind.

  • from where do you derive the need for the $250k? Current liquidity of the pool is around $200k, so it will make a massive jump to a rough $700k. Might be good to do a simulation with Hathor Nodes on this one where you simulate the desired target volume to achieve first and which liquidity is needed to achieve just that

  • are there plans for further value accrual towards people joining the pool or trading XPRT? Only having more liquidity does not necessarily drive demand for the asset. So having more reasons for people to buy XPRT and hold it might also justify the request for the POL to offer a good trading experience when they would get the asset. What are the core reasons for people to buy and hold XPRT? I think it is important to highlight that as well, to also indicate why a strong XPRT is good for Osmosis (the “what is in it for Osmosis on the long run” part, besides trading volume which is the same for any asset)

  • would you be open to do a time-limited POL? So that we can use it to bootstrap this pool, have some targets achieved and move on to the next to do the same exercise? I would expect that you want to target a certain increase in trading volume (or more: fees generated with the pool for Osmosis as a protocol). Maybe also targetting non-POL liquidity? Something like that.

  • would there be a direct other value accrual towards Osmosis as a chain (not the DEX)? Like boosted use of stkOSMO with a part of the request, etc? The request is now purely for POL. But looking at the request of for example Stride where the obtained funds are directed to strenghten the liquid-staked-version of OSMO which directly increases the chain security. That is not the case in this request, so might be good to think about secondary benefits on that field.

2 Likes
8

I don’t see the point of this.

Of course, I’d love to see more XPRT liquidity and volume on Osmosis, and am supportive of the Persistence project. However, I don’t think XPRT is a strategic-enough asset that it makes sense for the Osmosis community pool to spend OSMO on POL for. It’s not a product built on Osmosis (such as LVN), bringing novel functionality directly to Osmosis users (such as AXL), nor a “high cap token” (such as TIA).

4 Likes
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Osmosis isn’t part of ICS as XPRT, XPRT choose to wait for a better form of security not so invasive as ICS, for now the most widely adopted LST is STRD but that’s only because they are part of ICS, but is not the only LST solution, they don’t support smart contracts and have no means to expand to others protocols like PSTAKE, or LIDO, if we are thinking in terms of strategic partnership XPRT is a no brainer for OSMO even better than STRD because it involves so much potential, unfortunately STRD is recieving much more support in cosmos than other solutions like XPRT, never put all your eggs in one single basket, the competiton is always good for the sake of innovation, don’t make the same mistake than ATOM pretending to monopolize the LST’s to a single protocol. It’s clear why Osmosis has been so supportive to STRD but it’s not the holy grial, this could and would be outperformed soon or later.

2 Likes
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These numbers are from 01/21/2024.
Both boxes have the same pools, only difference is sorted by volume <> liquidity.

  • When sorting by volume, XPRT pools are pretty middle of the pack on the range with some notable token pairs (AXL and CRO) below XPRT.

XPRT pools in these boxes have the lowest liquidity, yet volume is middle of the pack, while proportionally the volume is magnitudes greater than the comparable pools.

The AXL and CRO pools with $781,000 and $497,000 are good examples of the liquidity being requested not necessarily bringing higher volumes.

3 Likes
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Thanks for bringing in the data!

That always makes discussions are lot less subjective.

So a better path forwards is finding methods to spark volume, which brings in higher APRs to the pools in terms of swap fees which in turn will drive liquidity.

1 Like
12

Thanks everyone with the feedback. I will put this proposal on hold until volumes on XPRT improve and we see the need for more liquidity injections via POL

3 Likes