Joint effort between Osmosis and Stride to provide liquidity to an STRD/OSMO pool

[John_Galt]

Summary

This proposal seeks tokens from both the Osmosis and Stride community pools to create permanent STRD/OSMO liquidity on Osmosis.

Specifically, this proposal aims to deploy $500K worth of OSMO and $500K worth of STRD to an Astroport PCL pool on Osmosis. The existing Osmosis Liquidity DAO would be used to deploy the liquidity. Once deployed, all resultant LP tokens would be sent to the Osmosis community pool.

The expectation is that this liquidity position would be permanent. However, governance would still have control over it and would be able to move it if necessary. While Osmosis governance would custody the funds, it is to be understood that half the LP tokens would belong to Stride governance while half would belong to Osmosis governance.

Justification

Stride and Osmosis share a long and productive history of partnership and collaboration. Out of this, a sense of trust and respect has developed between these two communities. At this time, it makes sense to deepen the relationship between Osmosis and Stride with joint liquidity provision.

Since Stride launched in 2022, the vast majority of trading of Stride LSTs has been on Osmosis. This has been mutually beneficial for both Osmosis and Stride. Indeed, today Stride LST pools make up more than 25% of the total liquidity on the Osmosis DEX.

Contributors from Stride and Osmosis have collaborated on several massive protocol-owned-liquidity proposals. Specifically, the proposal to deploy 900K ATOM to Osmosis and the proposal to deploy 20M OSMO to Osmosis. Both of these massive proposals mutually benefited Osmosis and Stride (and Cosmos Hub).

Another big collaboration between Osmosis and Stride is that Stride protocol uses Osmosis as the venue to automatically swap DYDX staking rewards, which significantly contributes to Osmosis’ volume and fees. Stride currently has $50M of staked DYDX, which yields 8M USDC per year in staking rewards. And the entirety of these staking rewards are automatically swapped to DYDX on Osmosis.

There have been many other smaller areas of collaboration over the years. Given this history, it makes sense to deepen the relationship between Osmosis and Stride.

Specific benefit for Osmosis

Current STRD liquidity on Osmosis is nearly at an all-time-low, even as the number of users holding STRD and general interest in Stride is at an all-time-high. This suggests that STRD trading volume is currently being limited by low liquidity and high slippage.

Notably, most of the current STRD liquidity is in an inefficient XYK pool. So even though the total amount of liquidity in STRD pools is nearly $900K, most of that liquidity is not being efficiently utilized, resulting in high slippage and reduced volume.

Considering average STRD trading volume over the past six months and factoring in modest continued growth of Stride protocol, this proposal’s addition of $1M to an STRD/OSMO PCL pool would reasonably increase STRD volume by roughly $60K per day. This is a conservative projection.

As Osmosis currently charges a 0.1% fee on swaps from Astroport PCL pools, an additional $60K per day in volume would generate $21,900 annualized for Osmosis. Again, this is a conservative projection. If interest in Stride increases strongly and the crypto market as a whole grows, by the end of the year this additional liquidity could potentially generate $100,000 annualized for Osmosis.

While projections always involve some guess-work, one thing is certain: if passed, this proposal would materially increase revenue generation for Osmosis.

Price of STRD

As many people are aware, a large STRD distribution event will begin on August 1st. As per the stTIA airdrop, 5M STRD (5% total supply) has been allocated to holders of stTIA. Beginning August 1st, this STRD will be roughly linearly distributed to users over the course of 150 days.

This may justifiably cause some concern about the price of STRD. If the price of STRD against OSMO dropped significantly and permanently, it would adversely affect the OSMO side of the proposed OSMO/STRD pool.

For an example of what can go wrong with joint liquidity provision, see Osmosis proposal #420. This prop paired OSMO from the community pool with WYND token from Juno. Shortly after the proposal passed, the WynDEX became defunct and the price of WYND dropped 99%. This meant the deployed OSMO was entirely lost.

Fortunately, it’s unlikely this would happen to Stride. Taking a look at the STRD chart, it appears the market has already priced in the impending distribution event beginning in August. Further significant downside does not appear likely. Indeed, based on technical features it is possible that STRD has bottomed and is now stabilizing.

Putting aside STRD price performance, the fundamentals of Stride protocol are sound. Stride provides a useful service, and Stride’s users are diversified across fourteen different Cosmos chains. In fact, Cosmos Hub, Osmosis, dYdX, the ATOM Accelerator DAO, and other smaller DAOs collectively liquid stake over $60M with Stride.

What’s more, staked STRD currently earns a yield of roughly 5% APR, sourced entirely from protocol fees. This is a very positive signal to investors, showing the usefulness, durability, and sustainability of Stride protocol.

Finally, it bears mentioning that Stride has a history of significant token distribution to users. In the past, Stride has airdropped over 4M STRD to stakers of various Cosmos tokens. In addition, Stride has distributed over 8M STRD as liquidity incentives to retail liquidity providers. So the coming distribution event beginning August 1st is by no means unprecedented.

Taking together the available information, it’s not likely that the price of STRD will significantly and permanently fall against OSMO in the coming months, like WYND did. While the crypto market is ever-volatile, Stride is a uniquely durable, useful, and economically-sound protocol, giving investors ample reason to hold STRD.

Details

An amount of OSMO worth $500K would be released from the Osmosis community pool, while an amount of STRD worth $500K would be released from the Stride community pool.

A fourteen-day TWAP would be used to calculate the prices of STRD and OSMO. Given the volatility of prices, the exact fourteen-day TWAP used would be taken immediately prior to putting the proposals onchain.

But for the sake of discussion, the current fourteen day TWAP for OSMO is: $0.845. And the current one for STRD is: $1.59. Thus, at current prices this proposal would require 591,715 OSMO and 314,465 STRD. This data is current as of June 6th, but would be slightly different by the time the proposal goes onchain.

The OSMO and STRD would be released to the Osmosis Liquidity DAO, which is operated by trusted community members.

Here is the Osmosis Liquidity DAO address.

The multisig signers should follow these specific instructions:

1. Upon receipt of the tokens, send the STRD to your Osmosis address containing the OSMO.

2. As efficiently as possible, provide as liquidity the total amount of OSMO and STRD to the OSMO/STRD Astroport PCL pool on Osmosis.

3. Transfer the resultant LP tokens to the Osmosis community pool.

Thereafter, it is expected that Osmosis governance will custody the LP tokens in its community pool forever. Placing the full amount of LP tokens in the Osmosis community pool signals that Stride governance does not expect to ever receive these tokens back, and is satisfied for them to remain on Osmosis forever.

However, it is to be clearly understood that Stride governance owns half the LP tokens while Osmosis governance owns the other half. In the event of some unforeseeable development, if either Stride or Osmosis governance ever wanted to recall its liquidity then the LP tokens would have to be released from the Osmosis community pool and divided equally.

This proposal has been simultaneously posted to the Osmosis governance forum and the Stride governance forum, as both governance bodies would need to approve.

Final thoughts

Osmosis and Stride are both essential parts of Cosmos DeFi - they are the premier DEX and the premier liquid staking provider for the Cosmos ecosystem. Both projects are fully open source and decentralized, and both are committed to growing the Cosmos ecosystem. And Osmosis and Stride have a history of mutually beneficial collaboration.

Over the years, both Osmosis and Stride have proven by their actions that they are building for the long term. Osmosis and Stride have both achieved product-market-fit within the Cosmos ecosystem, and are both becoming increasingly sustainable. As useful, decentralized, sustainable chains, both Osmosis and Stride will be here for years and decades to come.

Given all the above, it makes sense for Osmosis and Stride to deepen their relationship through a mutually beneficial joint liquidity provision. Doing so would benefit Osmosis, Stride, and the Cosmos ecosystem as a whole.

Pending community discussion, this proposal will go onchain sometime next week. Please ask any questions or provide any feedback you may have.

[aaronxkong]

Since there are 3 major token swaps being pursued. It made sense to dig in and re-evaluate views on Token Swaps
After chatting internally, with the community, and validators on Token swaps over the last few weeks. I reached a few conclusions:

Token Swaps for OSMO should generally* no longer take place

• If the DEX needs liquidity for a pair, it should be evaluated case-by-case, however, reasonable targets should be established and liquidity should be monitored and incrementally increased.

• (In the case of STRD/OSMO, this is not necessary)

Projects should seek to bring sufficient liquidity for pairings. CL Pools are highly efficient, sufficient liquidity should be feasible.

• Project Foundation treasuries
• Project Community Pools
• Investors, Whales.
• Potential Strategic LP engagements with other 3rd parties

A shift towards USDC and BTC Pairs & the end goal of being a chain agnostic cross chain dex.

• All assets should seek to be paired with USDC and BTC. This allows for organic action while not being tethered to the OSMO. Which, in turn is better for the dex as well.
• With the focus on Bitcoin, BTC pairs will be increasingly valuable.

For alignment between Stride <> Osmosis specifically, there is already substantial alignment. I don’t think a tokenswap here increases that. We should focus on the growth of a Stride Alloyed BTC, considering the pursuits for BTC and the vision of BTC becoming the money for Cosmos… this makes the most sense to focus and align on.

TLDR: - I am opposed to a tokenswap here.

[John_Galt]

Thanks for the feedback!

It looks like you’re opposed to token swaps in general, as you didn’t address any of the specifics of the proposal. So let me quickly address the concept of token swaps.

In my opinion, token swaps:

-promote decentralization, since they create liquidity not paired with fait-backed stablecoins

-enable increased liquidity and volume without having to sell tokens for USDC or BTC

-meaningfully increase alignment and trust between communities

-also help to differentiate DEXes. Eg, Astroport PCL pools are live on many chains. And most (all?) of those Astroport deployments are integrated into ibc.fun. So from a UX perspective, it doesn’t matter that much where liquidity exists. But Osmosis can promote liquidity on its own chain by using token swaps

-token swaps are an occasion for cooperation between sovereign chains, which I believe is inherently good. Cosmos chains should work together whenever possible - that’s the spirit of IBC

I think token swaps are often a bad idea. In the proposal, I even cite an example of a token swap that was disastrous for Osmosis (the WynDAO one).

But when you have two stable, useful, decentralized projects like Stride and Osmosis, and it’s likely that both projects will exist for years to come, and each community believes in the integrity of both projects - in such cases, I think token swaps make sense.

Keep in mind, this proposal would meaningfully increase Osmosis revenue at no cost. to Osmosis or Stride. Just by putting idle comm pool tokens to work.

[JohnnyWyles]

I don’t think this would increase Osmosis Revenue by a noticeable amount at all - the only increased taker fees would be through arbitrage since the CL pool is very under-utilized from the low volume to liquidity ratio despite concentration being fairly narrow.

What you’re projecting there is a 4% annualized return in exchange for a relatively high-risk position.

Token swaps for OSMO should be considered on a case-by-case basis, in my opinion.

• These should be based on actual demand for liquidity on chain that is not being currently met by organic growth.
• All token swaps in this event should be able to ask for large quantities with reasoning, but the deployment of this liquidity should be staggered in increments based on average daily volume until the daily volume is no longer impacted by the increased liquidity availability, with any excess being refunded to the DAOs.

In this case, I don’t believe that Stride needs additional liquidity on Osmosis at this time. While STRD liquidity is over half in the passive xyk position as pointed out in this proposal, nearly half of the liquidity is also concentrated within the STRD/OSMO pool.

In terms of alignment, OSMO and Stride already heavily support each other through mutually beneficial allocations. OSMO through Protocol Liquidity supporting the peg of stOSMO to record levels of peg stability and Stride through incentivizing other Stride pairings. Token swaps are not needed for this when there is already an established working relationship between the two groups.

As far as price speculation goes, I am not fully convinced that this unlock has been priced in, although I agree that it has likely been the cause of the drop from $7. Before the TIA launch STRD was worth a third of what it is today. During peak hype, it was worth 4x. Partially due to the low liquidity STRD is still a highly volatile token. With 5% of supply being released to potential airdrop farmers over 5 months into 0.5% of supply as liquidity, this potentially has a large downside to the OSMO pairing and adding liquidity at this time seems ill advised.

I would revisit this in late 2024 when the majority of this unlock has taken place, any potential dilution has occurred and volumes may have increased to require additional liquidity.

This may also be a good time to revive Leonoor’s discussion that was started during the last set of swap proposals:

Community pool usage

At this point in time we have a wave of requests of protocols asking for a part of the community pool to strengthen their service. We have seen in the very recent part: a request of 20 million OSMO from Stride a request of 2 million OSMO from Eris a request of 350k OSMO from Levana The proposal from Stride has passed, the one from Eris is rejected and currently the proposal from Levana seems to be passing. With another 70 million OSMO in the community pool (and growing on a day to day basis,…

[John_Galt]

Thanks for direct engagement with the proposal! Let me quickly respond.

I think the crux of the issue is low STRD liquidity. Looking on Coingecko, buying $30K worth of STRD on Osmosis would move the price by roughly 5%. In my view, this is huge slippage and is constraining potential volume.

Given the wide holder base of STRD, the wide Stride mindshare, and the significant investor / OTC interest this year, I’m confident volume would significantly increase with more liquidity.

Regarding the price of STRD, as stated in the OP I think STRD is in a good place price-wise, due the fundamentals. For example, the real yield APR of STRD is the second-highest in the Cosmos ecosystem, after dYdX. I believe the long-term value of STRD is roughly comparable to OSMO itself, since both Stride and Osmosis are similar projects with similar fundamentals.

In general, I don’t think it makes sense to try to “time the market” with token swaps.

Putting everything together, I think if ever a token swap made sense it would be between OSMO and STRD, given how inter-dependent both projects are. Plus, Stride and Osmosis are both open-source, decentralized, solid, and building for the long-term.

Personally speaking, I am an optimist and a believer in Cosmos cross chain-collaboration. I think collaborating and working together is an inherent good. In the fall of 2023, I was even a huge proponent of merging Stride and Cosmos Hub. I think it’s unfortunate that the Cosmos community had been so battered over the years by all the traumatic things that have happened.

In my view, the lesson of the past few years in Cosmos is: don’t be so naive and trusting. But even as we take this lesson to heart, I think we should still strive to be open and trusting when the situation warrants it. Because the fundamental idealism of Cosmos is its strongest asset.

[maxpower]

@John_Galt

In general, I don’t think it makes sense to try to “time the market” with token swaps.

In a broad sense, I agree. However, I don’t think this is the time for this particular swap.
Like Johnny said, the existing liquidity is barely utilized. This proposal serves no constructive purpose for the protocol.

[whitemarlin]

Agree with the negative feedback here and don’t think token swaps bring any value. I challenge anyone to name a token swap that has been beneficial to osmosis. I urge Stride to purchase osmosis tokens if they are needed.

Also if stride is concerned with liquidity, they should aim to be listed on a wide range of exchanges. Not only will this add liquidity to stride more broadly but will also indirectly add more liquidity to osmosis. Adding more free tokens on osmosis will not add sufficient liquidity as a long term solution. Long term solutions need to be done by expanding the base (more CEX listings) and that is Strides responsibility and not osmosis community.

Will be voting no and do not plan to engage further in this thread.

[John_Galt]

I respect your opinion, even if it is rather stern. I think your comment is a good reflection of the mindset of Cosmonauts in mid-2024.

You’re completely right that Osmosis token swaps usually don’t work out. The WynDAO deal, Stargaze deal, MantaDAO deal, and Neutron deal all went badly for Osmosis. (I think the Axelar deal actually benefited Osmosis, though, but still most token swaps go poorly).

In the Cosmos ecosystem in general trust, idealism, and openness seem to be at an all time low - and for good reason. Just two years ago, I know this proposal would have been greeted favorably.

Reminds me of @sunnya97 's “Mesh security is like NATO speech” from 2022 in Columbia. Back then, the Cosmos community was still very enthusiastic about cross-chain collaboration.

And I really think that Stride and Osmosis are totally interdependent, and have very similar cultures and fundamentals. Both have strong track-records, and both have a history of cooperation and contributing to the greater Cosmos ecosystem. Ideal candidates for a token swap, I think.

But again, I respect your opinion. I hope that some day the original idealism of Cosmos can start to come back…

[kopeboy]

Current STRD liquidity on Osmosis is nearly at an all-time-low, even as the number of users holding STRD and general interest in Stride is at an all-time-high. This suggests that STRD trading volume is currently being limited by low liquidity and high slippage.

No data backing these strong claims?

Indeed, based on technical features it is possible that STRD has bottomed and is now stabilizing.

Like what? I don’t see it from the graph. How is not more pool liquidity exit liquidity for insiders unlocks?

[PostTenebras]

@John_Galt

You’re completely right that Osmosis token swaps usually don’t work out. The WynDAO deal, Stargaze deal, MantaDAO deal, and Neutron deal all went badly for Osmosis. (I think the Axelar deal actually benefited Osmosis, though, but still most token swaps go poorly).

The MantaDAO-Osmosis POL is currently in profit AND because of price increase of MNTA between voting & execution, the Osmosis community pool ended up with an extra 37k MNTA currently worth ~$9k (on a $50k treasury swap).

It’s pretty bold of you to make a false claim about other projects while pushing for a new massive $1M POL paired with a token currently down 80% from its local high and sitting below its launch price (with further big unlocks coming).

[ValarDragon]

I hope that some day the original idealism of Cosmos can start to come back…

Lets please not equate “willingness for the osmosis community pool to at-market-price buy and LP a 20x less liquid token, thats about to get a massive unlock”, with “the original idealism of cosmos”.

The pushback seems to be about fairness of the economic deal at hand. Cross-chain idealism is not the issue at hand here. There is tons of cross-chain colloboration going on products. Market makers would engage in deals based on discounts on token purchases, or even just funds in a retainer (which here would mean in a vault)

To me the proposal would at least read better if it was about just trying to get the community pool to diversify into stride, which if so I think would make sense post-unlocks. (Thats moreso community alignment IMO, either chain could independently happen to choose to LP)

LP’ing against osmo dampens Stride upside and introduces more-than-the-existing correlations in downside. Happy to engage in brainstorming of product ideas to enhance the stride liquidity depth. If the concern is helping investors get more ability to buy, the Stride community pool can use the prescribed funds in a single sided CL LP above the existing spot price.

Also the modelling of volume being linear in liquidity only makes sense imo if the volume is CEX<>DEX arb. If the volume is on-chain flow, that should actually be relatively constant (unless the claim is there is more buyers with this liquidity being brought in)

[ValarDragon]

Another potentially interesting idea:

What if Osmosis used say 50% of the taker fee on STR pairs, and had that get automatically re-deployed as POL?

[Cman_Crypto]

In general, I do not believe in protocol owned liquidity like this.

It creates an enormous and unnatural barrier to competition.

A protocol should be able to generate enough revenue to fund their own liquidity.

I would support allocating incentives to pools to actually promote LP - but not like this.

@John_Galt

Given the wide holder base of STRD, the wide Stride mindshare, and the significant investor / OTC interest this year, I’m confident volume would significantly increase with more liquidity.

This is more reason to not do so.

We can’t say on one hand that we need deeper pools to buy STRD and then on the other say that big volume will be OTC and the pools are only for selling.

@John_Galt

Keep in mind, this proposal would meaningfully increase Osmosis revenue at no cost. to Osmosis or Stride. Just by putting idle comm pool tokens to work.

In a situation where a project/users have bought OSMO for a LP pairing, the greatest damage it can do to OSMO and Osmosis holders is to sell the tokens that have been bought, thus putting the LP back to where it would have been otherwise.

In a situation where the OSMO has been provided from the community pool, the selling of STRD into the LP leads to a loss of community pool OSMO.

I think Stride brings value to Osmosis. stAssets bring value to Osmosis. Supporting STRD like this, doesn’t bring as much value as the possible downside in my opinion.

[SuperEra]

Not supportice of moving forward with this token swap.

Here are my main concerns:

• Adequate Current Liquidity: The present liquidity for STRD on Osmosis seems sufficient and underutilized. Increasing it may not lead to a notable improvement in trading volume or reduce slippage.

• Risk Considerations: Given the upcoming STRD distribution event, the potential risks are too high compared to the projected returns. We should be cautious about risking community pool funds in such uncertain conditions.

• Strategic Focus: Instead of relying on token swaps, Stride should focus on strengthening its own value. This could involve leveraging its foundation, community resources, and strategic partnerships.

• Core Pairings: Emphasizing liquidity pairs with USDC and BTC might provide a more stable and strategic growth path for both Osmosis and Stride.

Here is what I suggest Stride can focus on instead, to improve the liquidity:

Strategic Incentives for Liquidity Providers - Offer dual rewards in both STRD and OSMO for liquidity providers to enhance attractiveness and participation.

Collaboration on Marketing and Outreach - Host webinars, AMA sessions, and create educational content to inform the community about the advantages of supporting STRD/OSMO liquidity. I would be even happy to help connect them to the teams & platforms like OmniFlix.TV to help them do that.

[LeonoorsCryptoman]

Disclaimer: I have a governator position on Stride and am a validator on Osmosis.

@ValarDragon

What if Osmosis used say 50% of the taker fee on STR pairs, and had that get automatically re-deployed as POL?

The big part here would be that it effectively lowers the real yield generated for stakers and gives it to POL, which the stakers might not want to have.

For me there is not very much to add to the conversation. I totally miss the factual basis for this request tbh. If there is data available, I think it needs to be shared in here to back up the statements made about interest and more.

I also don’t think we need to do this token swap. There is already an enormous exposure via the earlier passed 20M OSMO deal with Stride (which has been halved in the meantime btw), but still. If there is a failing liquidity for STRD, then I would urge the Stride team to start thinking in creative ways to promote liquidity for STRD as an asset. And that means that the Stride team must also be very very careful with stTIA-like scenarios which is now also looming for NAM.

Furthermore, please stop using the argument of needing to have liquidity. That argument was also used for stOSMO, but that is seriously underutilized. At this point in time a mere 0.07% (!!!) is used for trading, and the rest is sitting idle doing nothing. So that is a really ridicule argument to use, since it is literally just wasting money in a very ineffective way.

For the path forwards I think @SuperEra hits the right tone with respect to promoting liquidity. I believe the Stride team should start thinking in a method where STRD as a reward for stTIA, stDYM, stNAM or whatever is given when the user has provided liquidity in the STRD-pool as well.

And start promoting the move from the xyk-pool to the more effective pool. We have done that more often, especially in the beginning of the CL-pools, so there is a history of doing so.

Anyways, good luck and I hope that you can find the right angle to get this on the road.

[JohnnyWyles]

We should not consider the correlated LST liquidity and volatile/volatile token swaps within the same discussion.
stOSMO/OSMO demand is very spiky since it mostly gets used for exits from the liquid staking holdings for liquidation or capitulation during volatility. I.E. The top Trade is often quite close to the volume for the day compared to more volatile groupings.

I think @ValarDragon 's idea is interesting and would be an expansion of the whitelisting system.

Right now we only collect taker fees on Quote Assets and then accumulate these in the community pool while dispensing all other assets to stakers as OSMO.

I think that we should change this to be a separate whitelist for accumulation [Feature]: Taker Fee non-OSMO revenue on separate whitelist to Quote Assets · Issue #7984 · osmosis-labs/osmosis · GitHub

Then implement a secondary whitelist where we only convert half of these assets to OSMO, but instead of fully distributing, add to a OSMO/X PCL pool.

We could then maintain this secondary list through looking at tokens that have high volume (and so generate more transaction fees), but have relatively low liquidity, forming a kind of feedback loop for protocol liquidity without actually causing much additional exposure risk to OSMO since it would be a long term DCA.

[Govmos]

We would like to emphasize the long lasting and relatively stable correlation that is existing between the OSMO & STRD assets.

The correlation between the two assets has consistently exceeded 80% over a year and a half, indicating a strong relationship. This is a crucial factor when evaluating the risk of impermanent loss. Therefore this considerably reduces the risk of one party losing over the other in this potential proposition. However, the proposal also contains political alignment aspects, which may lead to divisive discussions. At PRO Delegators, we refrain from voting on such matters and encourage our delegators to make informed, independent decisions. If this comes to on-chain voting, we will have to abstain and provide all relevant evidence to our delegators for their consideration. This relevant correlation coefficient is one of these factual aspect that we would present.

We hope the community can make a good use that information to make their informed decisions.

[JohnMontagu]

Montagu from Citadel One here, a Validator on both Osmosis and Cosmos Hub (Stride’s security provider).

We are opposed to the proposed swap. The reasons, which have already been pointed out by other contributors to the discussions, are the following:

• Timing:
  The proposed token swap, if passed, will take place prior to a significant unlock of $STRD tokens (5% of total $STRD stride over the next 5 months) making this a highly risky position as we believe that, unlike what’s cited in the prop, these unlocks haven’t been priced in.
• Size:
  The proposal suggests a deployment of 500k$ worth of $STRD to be matched with 500k$ worth of $OSMO. At this moment we aren’t convinced that the demand for $STRD liquidity is correlated to the amount proposed.

Personally, I find the idea below presented by @ValarDragon a better approach to deepen $STRD liquidity since it presents true alignment between both protocols.

@ValarDragon

What if Osmosis used say 50% of the taker fee on STR pairs, and had that get automatically re-deployed as POL?

[John_Galt]

Thanks for the feedback everyone, especially the insights from @JohnnyWyles and @ValarDragon. The large amount of immediate and thoughtful feedback is encouraging, as it shows the strength of Osmosis’ decentralized governance.

Based on feedback, I will not be moving forward with this proposal at this time. As several community members have suggested, I plan to reopen this discussion later in the year.

While most feedback was well-intentioned, I’d like to quickly address some of the more cynical feedback this prop received.

First of all, much feedback focused on the price of STRD against the dollar, which is irrelevant to the prop. This is probably my own fault, since I included a screenshot of the STRD/USDC chart. The relevant price is STRD against OSMO, and this ratio has been remarkably stable for more than a year. Given the strong correlation seen here, joint liquidity provision of STRD and OSMO makes sense.

Second, I’d like to reiterate that the upcoming STRD distribution event is fairly normal for Stride. During the first year of Stride, roughly 13M STRD was distributed, through huge airdrops and generous liquidity incentives. Yet in spite of this distribution, Stride and the STRD price has continued to grow. In fact, wide STRD distribution is a good thing and helps Stride grow. The more distributed the STRD supply, the more decentralized and secure Stride becomes. And fundamentally, decentralization is the core thing that gives crypto projects real value.

Third, many commenters suggested that STRD liquidity could be improved through OTC transactions, market markers, and CEX listings. While all these avenues are in fact being pursued, they are not ideal, because they involve centralization. I do think it’s indicative of a loss of idealism that so many are quick to suggest centralized solutions.

Let’s not forget what we’re all striving to achieve here: an open, transparent, decentralized, collaborative financial system that anyone can use at any time without permission. Cross-chain liquidity deals, such as this one, help to create and maintain real, actually decentralized DeFi.

At some point later this year, I look forward to reopening this discussion, so that Stride and Osmosis can collaborate to promote trading liquidity in a fully decentralized and mutually-beneficial way.

[whitemarlin]

How does going on many exchanges promote centralization? By having many different participants including CEX, you are decentralizing the options users have and hence increasing liquidity. More participants the better. We can’t pretend that having the small core community is decentralization. It’s the opposite of that