Preapprove Incentives for Quote Asset Pairings

Proposal Discussion Liquidity Incentives
1

This proposal signals that Supercharged pools composed of two Quote assets should be automatically included in the Osmosis incentives program.

Background

This proposal builds on Proposal 638, which removed incentives from all non-strategic pairings by declaring that these pairings should be included by default.

This proposal asks for a narrower scope of strategic pools than Proposal 638 by only automatically making Supercharged pools with pairings of two Quote assets eligible for incentives.

Quote assets on Osmosis are currently:

  • USDC
  • USDT
  • DAI
  • WBTC
  • ETH
  • ATOM
  • OSMO

Adding incentives encourages the formation of popular non-OSMO trade pairings, such as ATOM/USDC and ETH/WBTC, as well as promoting the creation of alternative OSMO pairings that already exist, such as an OSMO/ATOM pool with 0.05% spread factor.

Incentivizing these alternative pairings will reduce trader fees for popular trade routes by reducing the requirement for multihop trades, which are no longer discounted, and allowing liquidity providers to expand into lower fee pools without missing out on Osmosis incentives.

This reduction in fees for major routes should further increase the volume through Osmosis and increase taker fees for the protocol.

Further proposals will be needed to include new pools in the correct Volume Splitting Gauge for the pairing and adjust the incentives distribution to the new gauge.

Volume Splitting Gauges will continue to have incentives allocated to the pairing according to the methodology defined for pools in Proposal 578.

Target On-chain Date: 30th October 2023

2

Just in short; this means that all pools consisting of two of the mentioned assets are automatically created? Regardless of swap fee, usage, TVL and every other metric?

You want to encourage a lot of versions of combination of these pools to find out what values work best (a bit of trial and error so to say)?

And other pairings may still be incentivized, just not automatically?

3

No, if someone was to spin up a new pool of ATOM/OSMO with any spread factor or any tick spacing then it would be included in the next routine incentive props (time allowing for adding to a volume splitting gauge).

Everything still needs making manually, but this encourages people exploring these pools to find out which values work best.

Other pairings may still be incentivised - such as stATOM/ATOM and IBCX/OSMO which are unaffected by this. But this streamlines the process of getting the new variations incentivised.

4

Yeah, I was also more reffering to including it “automatically” without second thoughts in the next incentive update. I am aware that we can’t just switch on and off on incentives on pools without going through governance :slight_smile: