Deposit 350,000 OSMO Token into the OSMO xLP Pool on Levana

Proposal Discussion
1

Governance Proposal Draft - Deposit 350K OSMO to the Levana Osmo Liquidity Pool

Scheduled to be published on chain October 9th, 2023

Proposal Summary

This proposal seeks approval from the Osmosis community to deposit 350,000 OSMO tokens into the Levana xLP pool. The initiative aims to enhance financial profitability of the community pool, support the Levana protocol, signal to other Dapp builders that the Osmosis community supports projects built on Osmosis and enable more active leverage trading on the Osmosis blockchain by providing additional liquidity.

What is Levana?

Levana is a decentralized leverage trading platform deployed on Osmosis since July of 2023. It allows traders to engage in leverage trading across various crypto assets while ensuring solvency through its uniquely designed perps system.

Trade on Levana’s OSMO market here:

https://trade.levana.finance/osmosis/trade/OSMO_USD
Read more about the Levana design here:

Read and watch more about Levana’s growth since launch here:

  • Fee Analysis https ://twitter. com/ario_57_/status/1707023000040575092
  • User retention - https ://twitter. com/Abbas_ra21/status/1707324929501180323
    • https ://x. com/Abbas_ra21/status/1707664235147194400?s=20
    • https ://twitter. com/0xham3d_eth/status/1708226803599302906
  • Trader Behavior - https ://twitter. com/Abbas_ra21/status/1706986083018293693
  • Scaling Perps -https ://x. com/Cryptodreams8/status/1707710200126284255?s=20
  • Open interest analysis - https ://x. com/ario_57_/status/1708173902013194452?s=20
  • General Performance Overview - https ://twitter. com/ario_57_/status/1706355915350217049
  • Youtube Interview with Jack Zampolin - https ://www.youtube. com/watch?v=8F5fRMBw990
  • MetaMask Snaps Spaces - https ://x. com/Mystic_Labs_/status/1707062448203726895?s=20
  • Interview with The Interop - https ://twitter. com/TheInterop/status/1707748120573219139

Levana’s Metrics on Osmosis to Date

  • Levana users have deposited over $3.6 million into Levana.
    • https ://defillama. com/protocol/levana-perps
    • Roughly $150k of which is deposited into $OSMO LP
  • Over $150 million worth of volume has been traded.
  • Levana LPs have earned almost $200,000 since its inception of which $13,000 has been earned in the $OSMO LP specifically

How Does Levana’s LP Pools Work?

Levana’s liquidity pools (LP) historically have out performed the risk free rate of staking on validators or into DEX’s.

The Levana OSMO LP pool, albeit smaller, has been generating roughly 15-25% APR in real yield.

The LP pools, while lucrative, carry risks, including platform risk and potential loss due to trader wins. Additionally, Levana’s Perps system ensures solvency and supports high leverage trading across numerous crypto assets.

Single Sided Deposit

The Levana OSMO pool does not use stable coins. It is a single sided deposit and there is no impremenant loss.

Read the whitepaper

https ://docs.levana. finance/whitepaper

xLP vs LP

The xLP pools earn more yield but have a 45 day linear unbonding period which occurs on a block by block basis. xLP tokens during unbonding earn at the yield of LP tokens.

Risks of Being an LP

  • Platform Risk: Possibility of smart contract vulnerabilities or platform failures.
  • Trader Win Risk: LPs may incur losses when traders secure significant wins.

Learn more about LP Risks

https://docs.levana.finance/position-size-locked-collateral

Technical Documents and Security

Levana’s smart contracts are open-source, and comprehensive documentation is available, facilitating easy integration via API trading modules or custom front ends. The platform operates permissionlessly, without necessitating centralized, off-chain mechanisms like order books or sequencers.

Read the source code

https ://docs.levana. finance/source-code

Read the audit reports from Peckshield and Fyeo

https ://docs.levana. finance/audits

Read the high level overview

https ://docs.levana. finance/high-level-overview

Benefits to the Osmosis Community by Voting Yes

  • Financial Profitability Potential: The community pool may profit financially, akin to how depositors have profited to date (note: the pool could also lose money during this time, understanding the risks is important).
  • Supporting Levana: To affirm the Osmosis community’s commitment to supporting a robust ecosystem of successful DApps and demonstrating solidarity with Levana.
  • Enhanced Leverage Trading for Osmosis Users: Enabling larger and more active leverage trading on the Osmosis blockchain by mitigating liquidity issues currently hindering users from opening substantial positions on Levana.

Levana will also continue to create blog posts, tweet threads and instructional videos to help educate Osmosis users how to safely and effectively use the features of Levana alone and in collaboration with other services on Osmosis.

Levana Airdrops as a reward to Osmosis community members

Levana does not currently have a token. However, should this proposal pass, Levana commits to allocating 400,000 LVN [Levana Tokens] during a future token generation event, to be distributed among Osmosis users who have traded on the Levana platform on Osmosis. The distribution of these tokens would be decided based on two variables

  1. The amount of fees you paid to LPs on Levana’s Osmosis dapp
  2. How active you have been on Osmosis historically

The exact method of calculating the airdrop distribution would not be published until a later date to help prevent airdrop hunters from gaming the system, but general principals would focus on

  1. Creating a minimum amount of tokens distributed to each trader
  2. Creating a smoother distribution system via capping the amount whales can receive
  3. Filtering suspected bot accounts

It is worth noting that geofencing will be applied to airdrops and USA persons and potentially other persons will not be eligible for airdrops.

Learn more about the Levana Token via a draft (subject to change) of the Levana token primer

https://perp-1551-token-primer.levana-docs.pages.dev/lvn-token-primer

Note: Due to the risks associated with leverage trading, many countries do not permit their citizens to use perps dex’s. The Levana foundation’s front end is geoblocked from the USA and other nations. You can learn more about eligibility to use Levana in the Terms of Service https://trade.levana.finance/legal/terms-and-conditions.pdf

Reasons to Vote Yes

  • Potential Profit: The community pool stands to gain financially if the pool does well.
  • Support for Builders: Demonstrate support for developers on Osmosis.
  • Enable Leverage of OSMO: By increasing the liquidity pool of OSMO on Levana, Osmo holders will have a useful tool to leverage the asset onchain on Osmosis.
  • Unlock 400K Levana Tokens: For Osmosis traders on Levana, subject to a future token generation event.

Steps to take if the proposal passes

  1. 350K OSMO would transfer from the community pool to a wallet controlled by a multisig of community Osmosis community members
  2. These members would deposit into the Levana pool located at Levana Perps
  3. At a future date when another governance vote happens to remove either the principle or rewards (assuming they exist) these multi sig holders will perform whatever action is requested by future governance (ie, withdrawal)

Conclusion

This proposal not only seeks to enhance the profitability of the community pool but also to fortify the symbiotic relationship between Osmosis and Levana, thereby fostering a more robust and thriving ecosystem for all stakeholders involved.

1 Like
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I have really enjoyed using the Levana product and seeing your dedication to user outreach to continue to refine and improve it based on end user feedback.

Directionally speaking I’m supportive of the nature of this proposal, primarily based on the grounds of:

  • Putting CP funds to productive use not only through potential yield generation but also enhancing the usability of the Levana product for OSMO trading.
  • Signal to builders of quality products that the Osmosis DAO will be supportive

That said, I don’t appreciate how the airdrop to Osmosis users of Levana is contingent upon this proposal.

You said in your conversation with Jack that 99% of Levana users were on Osmosis with only 1% on SEI, how are those numbers breaking down with your deployment onto Injective? As much cooking as Injective is doing I’m sure they’ve brought you more users…

Just seems silly to have added those five words…

However, should this proposal pass

…are really going to to burn down the community you built up, again, in the event governance rejected this prop? Because I can’t imagine how that’d go over if the majority of your products users were excluded from your tokens airdrop :joy:

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Hey Nos! Thanks for the continued support and great feedback.

For clarification, this is hopefully the first of 20-30 various proposals from Levana to the Osmosis community.

I would expect that regardless of this particular proposal passing or not, there will be plenty of airdrop opportunities in the future.

To date the usage from Osmosis has been pretty low turn out, less than 3000 Osmosis community members.l, roughly 3% of the Osmosis monthly active users.

We hope that clarifying numbers for an airdrop will help raise awareness of the project amongst Osmosis users and demonstrate a commitment to providing a quality perps experience on Osmosis.

1 Like
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For clarification, this is hopefully the first of 20-30 various proposals from Levana to the Osmosis community.

Good to know! Will keep my eyes open for them.

roughly 3% of the Osmosis monthly active users

That’s an interesting insight, thanks for sharing.

If lack of awareness of the Levana product is an issue stunting Osmosis user activation this prop going on chain should remedy that in short order! I imagine it’ll generate much discussion in the wake Prop #641 and things never seem to really heat up until the voting period begins.

NosNode will be a YES vote, I’d be thrilled with more teams like yours building on Osmosis.

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On a related note, if Community Pool OSMO is going to be deployed, shouldn’t the Community Pool be eligible to receive some portion of the Levana tokens?

If the Community Pool was eligible to receive some Levana tokens as well, i think it would be pretty nifty to use them as a secondary “airdrop” after the original one new users to Levana and Osmosis in the future, deploy as POL to a Levana/OSMO pool to provide those that received Levana tokens, or something similar.

I think it would also pretty nifty to use a portion of the requested amount to “reward/incentives” those that have and are using Levana. According to the Levana website there are about 1.1K Osmosis perp users. Perhaps 50K of the 350K (or bump up the request to 400K?) could be used to provide the first 5K pool users that have opened a position for 14 days or longer or contributed at least $10 im value to a LP 10 OSMO each ( a approx $3 value).

3 Likes
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The upside for the community pool is explained extensively above in the potential to earn significant fees paid in OSMO.

The community pool will also become an LP, and in the case that LP airdrops are announced, then this large contribution would be entitled to additional rewards.

You mentioned that you … “I think it would also pretty nifty to use a portion of the requested amount to “reward/incentives” those that have and are using Levana.”

This part of the proposal already. The airdrop outlined in this proposal is designed to reward Osmosis users that have also used Levana. Please refer to the section “Reasons to Vote Yes”

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I can see benefits here, but I seriously miss a tactic how we will deal with the CP funds.
Right now we have multiple proposals who want a piece of the CP, but we have no method to fall back on how we want to deal with these requests.

The ask compared to the other requests is quite “small”, which is a good thing imo and not near as excessive as prop #641.

I am one of the 97% who hasn’t used the tools from Levana. I am not interested in perps, since it is a concept which I need to learn to understand what I am doing and I don’t have the time for that at the moment. What I would like to see coming along with the request is the inclusion of an educational campaign with a series of ELI5 TL:DR explanations of Levana and the products build. That might generate more support for the proposal as well as maybe generate more users on the go.

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Levana has produced many videos and blog posts to help educate the Osmosis community about how to trade Perps.

Your idea is great that we need more of this. The proposal was updated to include text around creating educational content.

Thank you.

1 Like
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Thanks!

Very good (I just found this :stuck_out_tongue: Explainer slides - Levana Perps Documentation)

2 Likes