Enable Permissionless Creation of Supercharged Pools

Proposal Discussion
1

This proposal would enable the permissionless creation of Supercharged pools, allowing pools to be created by any user.

This proposal also pre-approves the creation and migration linking of the remaining incentivized Classic pools that do not have a Supercharged equivalent.

This proposal also validates the Pool Creation fee as 1000 OSMO as adjusted during the v19 upgrade.

Background

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

There were three main reasons for this.

  • Preventing large numbers of Supercharged pools from being created for each asset, causing liquidity fragmentation.
  • Suboptimal parameters being selected for a pool
  • Over-complication of migration linking by having multiple migration options.

Liquidity fragmentation

Liquidity fragmentation has been addressed through the whitelisting of both Quote assets and available Spread factors. While this allows multiple pairings possible for each asset, there is still a finite number of pools between which liquidity can be fragmented. As liquidity pairings will have different levels of trading possible, the numbers of pools should be proportionate to the popularity of the base asset.

In the recent software upgrade, the pool creation fee was set to 1000 OSMO as part of the taker fee implementation rather than the 100 OSMO previously approved by governance. As this has been discussed on the forums but never proposed, no proposal has been made to rectify this setting. This proposal confirms that the pool creation fee will remain at 1000 OSMO and assist in forming deliberate pools to minimize liquidity fragmentation.

The creation of bulk Supercharged pools may still occur with no creation fee via the governance process.

Suboptimal parameters

Since the initial launch of Supercharged liquidity, the creation process has also been simplified by removing the exponentatpriceone parameter, decreasing the variability of the pools.

All other parameters are currently whitelisted with a currently allowed range of:

  • Seven spread factors
  • Seven quote denoms
  • Four tick spacings

While this gives a potential combination of 196 pools for any base asset, the number of these created will likely be proportional to the demand for different routes and other attributes of the base asset.

Over-complication of migration linking

Most incentivized classic pools have been linked, with only the 18 exponent bases still pending, being created in a future software upgrade. Supposing one of these pools is created before this software upgrade. In that case, the pool will not be functional for trading, so minimal liquidity will be added.

To preemptively simplify the creation and linking of these pools, this proposal acts similarly to Proposal 571 by signaling the creation of Supercharged pools for the remaining incentivized OSMO paired pools that have not migrated to Supercharged liquidity.

Any pools with Superfluid enabled must have liquidity and spot price established in the Supercharged pool at the time of upgrade. The upgrade handler will pair 1 OSMO with each required asset at a spot price within 0.1% of the spot price in the pool with the newly established Migration link at the time of upgrade using community pool funds, capped at 10 OSMO for safety reasons.

The pools created will maintain their current Spread Factor and Superfluid status and are the following, with the linked pools attached.

  • ARB/OSMO - Pool 1011
  • AVAX/OSMO - Pool 899
  • BNB/OSMO - Pool 1060
  • EVMOS/OSMO - Pool 722
  • FET/OSMO - Pool 681
  • INJ/OSMO - Pool 725
  • MATIC/OSMO - Pool 789

Why Enable Permissionless Creation Now?

While some incentivized pools are still pending migration, this proposer believes that the time is right to enable permissionless creation of pools.

With the arrival of multiple native IBC assets on Osmosis such as USDC, WBTC and wstETH, Osmosis will benefit from faster creation of pools able to utilize these assets.

There have also started to be proposals on the forums from teams who want to see specific pools available as Supercharged versions such as stOSMO/OSMO as well as specific requests for USDC pairings by teams who are slowed by the governance process. Allowing permissionless creation will enable teams who want to bootstrap a pool with particular settings to do so.

Target on-chain Date: 23rd September 2023

1 Like
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This happened a lot faster than expected! That’s great news!

Are there any plans to carve out exceptions to the quote-asset rule in the future so that we can have supercharged liquidity pairings for other assets?

Thinking in particular of things like stAsset / Asset pairs (stDYDX / DYDX, stTIA / TIA, stUMEE / UMEE, stLUNA / LUNA, etc) but i’m sure that there are other pairs that could be valuable.

3

Looking at making quote assets only apply to permissionless creation, with governance being able to make any pools to keep things to the few routes.

4

Glad for this. I’m a bit bothered about the 1000 osmo fee being implemented single-sided without governance. If it was a mistake is bad and if it was done on purpose is bad. That being said, I think it’s time to raise it considering the OSMO price and that way avoid having so many almost-empty pools.

Thoughts on also doing an unused pool cleanup?

2 Likes
5

Someone in Telegram pointed out that the default was set for the chain months ago as 1000, and this is where the figure came in when the new module started up.
I also think this change without governance (or at least not being explicitly mentioned in the v19 upgrade notes) was bad and Max’s proposal to refund early users who suffered this makes sense. Especially since the 1000 OSMO cost wasn’t particularly obvious when creating a pool.

A pool cleanup is on the todo list, it would help routing efficiency too, but just has never been high priority. We do have a very, very old proposal that was never actioned and would take out about half the pools. Bumped the issue.

1 Like
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I’m a little late to respond here but i’d also like to see a cleanup of unused pools given govenance voted for this over a year and a half ago and it was never implemented.

If we’re not going to implement prop 85 i think we should put up a prop to repeal it, as continued non-adherence to governance puts the chain at legal risk.

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This one is quite scary as a statement. For prop #530 we say “governance passed it, so we need to execute” and for prop #85 you state “if we are not going to implement”? What happened to consistency?
If passed, it needs execution, right? Or does the Osmosis team don’t want to execute justifying not executing it?

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Prop 530 has been implemented already and is gov controllable, so governance itself can make changes from here.

Prop 85 can only be implemented by the protocol code maintainers (or another entity that may benevolently contribute the required code for free and hope the code maintainers merge it).

If this proposal is going to remain uninplemented (which I understand, Osmosis Labs has other priorities), we should probably repeal it to stave off any potential legal risk. The proposal can always be re-raised later.

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9

True!

But at the time of prop #530 it was also not implented on chain yet as far as I can remember. Since it was part of a later upgrade (v19 as voted on in prop #606).

So developping that between mid June and beginning of September.

And we are still waiting on the implementation of #85 which has passed already in December 2021. So I feel a bit of weird vibe on it if we are going to say “the first is already implemented and the other not”. Whereas I would like to hear: “both have passed governance. One has already been developed, now the other one has to follow suit”. Otherwise we are allowing the Osmosis Labs team to just choose what to implement of stuff which passed governance.
I’m ok with that, but then we are also free to challenge (and not execute) other stuff which passed governance as well.

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I’ve been harping on them to do this for literally years. I’m done trying :sweat_smile:

But by all means feel free to take up the mantle and try yourself. Think the taker fee proposal should probably be left out of it though because i’ve easily spent 100x the effort trying to get prop 85 executed. At some point DAO contributooors need to move on to other things or the protocol will be left at a standstill.

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11

Hahaha, I feel you.

Don’t worry about the taker fee stuff, that will be handled on other levels.
But I’m kinda worried about the “governance is leading for everyone, but not for us” take.

You know me. I like a levelled playing field and not a different set of rules based on who is playing.

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12

Hello, as this proposal has already been passed, is that we can create such pools without the need for governance’s approval? Or we still need to wait for some chain upgrades?

14

Hey,
Yes you can, full documentation available here:

1 Like