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