Picasso Revenue Share Proposal
This proposal outlines a Protocol Revenue sharing agreement, which entails waiving bridging fees across Picasso when a transaction originates or terminates on Osmosis. In return, a proportion of taker fees generated by trading Picasso bridged assets or their derivatives on Osmosis will be shared with Picasso.
About Picasso
Picasso is a DeFi infrastructure-focused Layer 1 protocol that leads the industry in building the trust-minimized interoperability solution - Cross-Ecosystem IBC. In collaboration with the University of Lisbon, Picasso has developed an innovation that allows Solana and other IBC-incompatible chains to be capable of supporting IBC for the first time. This solution is an AVS powered by the Solana Restaking Layer and deployed on Solana as a smart contract, providing all of the features needed to make Solana IBC-compatible. Operators of the AVS receive messages about transactions on Solana, using this information to create blocks on the AVS that reflect these Solana transactions.
Fees on Picasso bridging are currently set at a flat 0.05 SOL per transfer from Solana and a $20 fee plus 0.4% between Osmosis and Ethereum.
Proposal
This proposal signals the addition of a protocol revenue share system that will replace these bridging costs with a share on taker fees gathered from trading activity on Osmosis, resulting in Picasso benefiting from increased adoption of the Picasso bridging solution across applications on Osmosis rather than just arbitrage against the value of assets that are transferred.
Osmosis users benefit by gaining an additional decentralized bridging solution to several ecosystems that uses the same logic as IBC transfers. Ecosystems connected to include EVM chains, Solana, and potentially Bitcoin. Adding this revenue share agreement will result in a heavily reduced cost for depositing or withdrawing.
Osmosis and Picasso Governance will directly control the proportion of taker fees allocated to the split. This proposal is for an initial term of six (6) months from the activation on both chains, or until superseded by mutual governance action.
Picasso bridging fees from all connected chains for each transferrable asset will be waived, except for any fee required to cover gas costs only, as long as Osmosis includes the transferred asset within the protocol revenue share agreement.
Source of Revenue on Osmosis
When a trade is performed on Osmosis, the protocol levies a taker fee on the token that enters the trade, which is currently set at 10 bips by default.
When a swap route involves a Picasso-bridged asset on Osmosis, Picasso will receive 10% of the total taker fees on the swap charged by Osmosis.
For swaps not directly involving these assets, but involving alloys that include them as components, Picasso will receive a cut of the 10% rev share in proportion to that asset’s composition of the alloy. For example, if solana.USDT.pica makes up 40% of the allUSDT alloy, Picasso will receive 4% of the Osmosis taker fee on that swap.
| solana.USDT.pica Swap Route | Picasso cut of taker fee |
|---|---|
| solana.USDT.pica > OSMO | 10% |
| OSMO > solana.USDT.pica | 10% |
| solana.USDT.pica > allUSDT > OSMO | 10% |
| allUSDT > OSMO | 10% of share (e.g. 4% at 40% share) |
| OSMO > allUSDT | 10% of share (e.g. 4% at 40% share) |
The accrued rev share fees will periodically be transferred to Picasso for use to be decided by Pica stakers.
Osmosis Bridging Fee Exemptions
In return for this revenue, Osmosis users will no longer be charged a bridging fee for when moving from an origin chain through Picasso to Osmosis or from Osmosis through Picasso to a destination chain.
This exemption from bridging fees is applicable when Osmosis is the terminating chain and a transaction is performed through Picasso. A fee will still be charged when moving to or from Picasso with another chain as the terminating chain unless similar agreements are approved by Picasso governance.
A flat fee may still be charged on withdrawals to cover gas fees on the destination chain, but this must not be higher than the gas fee incurred by the transfer process.
IBC middleware will be used to prevent the transfer of Picasso bridged assets with this waiver from Osmosis to any other chain except Picasso. This will prevent Osmosis from becoming a new routing chain for the Picasso bridge due to the comparative lack of IBC routing charges and retain Picasso as in this role.
| Transfer Path | Bridging Fee |
|---|---|
| Origin > Picasso | Default |
| Picasso > Destination | Default |
| Picasso > IBCChain | IBC Transfer |
| IBCChain > Picasso | IBC Transfer |
| Picasso > Osmosis | IBC Transfer |
| Osmosis > Picasso | IBC Transfer |
| Origin > Picasso > IBCChain | Default |
| IBCChain > Picasso > Destination | Default |
| Origin > Picasso > Osmosis | Waived |
| Osmosis > Picasso > Destination | Waived |
| Osmosis > IBCChain | Disabled |
Implementation
This mechanism would be implemented during a future software upgrade if approved by both Picasso and Osmosis governance.
If solely approved by either governance, the mechanism may be implemented on the approving chain in case further agreements are reached with different parameters or alternative parties.
The first chain to integrate the software upgrade with the enabling mechanics should activate the benefits in a further proposal after the upgrade proposal to ensure that the start date of both mechanisms is synchronized.