Quasar Whitelisted Address for Deployment of CL Vaults

Proposal Discussion DApps / Tooling
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Quasar Whitelisted Address for Deployment of Concentrated Liquidity Vaults

This proposal grants the address osmo1ed6ezqx9t4e9sfm6nfgulq3005umrh6hkclagk the ability to upload CosmWasm contracts to Osmosis without needing further governance approval for each upload. This address is a multisig managed by the Quasar Association, incorporated in Switzerland and currently the owner of the QSR/OSMO pool.

Contracts

Quasar’s contracts are being audited by Halborn once a month and will use cw-vault-standard.

Quasar has been pioneering IBC-enabled CW contracts and was able to launch the first in-production use case of ICA & ICQ following the approval of Osmosis Prop #466 (thanks <3). However, these Osmosis LP vaults don’t need to be deployed on Osmosis, so there was never a need to upload a contract locally. The IBC-enabled vaults are entirely on Quasar and execute the on-chain strategy purely using IBC.

With the launch of concentrated liquidity, however, we need to opt for an Outpost model, meaning local deployments of vaults on chains such as Osmosis, in order to create best-in-class strategies.

This address will be deploying multiple CL vaults, with each pool having two strategies: short range (maximize yield, higher volatility for Gamma & IL) and long range (minimize volatility for Gamma & IL, lower yield).

Permissions

While this proposal grants authority for osmo1ed6ezqx9t4e9sfm6nfgulq3005umrh6hkclagk to upload CosmWasm contracts to Osmosis without independant governance proposals moving forward, governance only signals approval for the contracts to be whitelisted under the Concentrated Liquidity umbrella. This includes only Concentrated Liquidity vaults as they benefit from local deployment and reduced IBC complexity.

Any other vaults will continue using Quasar’s existing infrastructure or we will propose a new governance process. Given the number of vaults we intend to upload is high, this proposal will ensure users can use our CL vaults as soon as possible.

About Quasar

Quasar is building the primary asset management hub of the Cosmos ecosystem, representing the gateway to yield opportunities. We have co-developed the official ICQ implementation, pioneered IBC-enabled CosmWasm contracts & Interchain vaults. We have our own Cosmos chain and recently launched our native token, $QSR.

We are a global team passionate about improving the Cosmos UX, pushing forward IBC while abstracting it away from the users, and striving to become the premier yield aggregator across all of IBC.

Quasar will continue to guide users into vaults, as they are the right tool for most people (especially in CL). We have been clear in value, incentive, and vision alignment with Osmosis since our inception and will continue to build upon Osmosis contracts to not only offer a different user experience but also elevate yield opportunities beyond what we have done so far.

Website: https://www.quasar.fi/

Target On-Chain Date: July 12th, 2023

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Sorry i’m late to the party on responding to this!

This is super exciting. I didn’t think we’d get vault infra so quickly after the concentrated liquidity launch.

For those that don’t know, vaults are a major benefit for LPs on a CL AMM as well as for traders.

Liquidity providers benefit by not having to closely watch their concentrated liquidity positions to ensure they don’t fall out of range. The vault will adjust the ranges for you, ensuring that liquidity can be placed at tighter ranges while still allowing LPs to provide liquidity passively.

Because the vault is constantly adjusting ranges, traders benefit from increased liquidity tightly concentrated at the current rate of exchange, resulting in substantially improved execution pricing and minimal price impact.

All in all, the dex itself benefits from increased volume, and increased revenues from protorev and the taker fee implementation (when this goes live).

Thrilled to have the Quasar team be the pioneers of vault technology on Osmosis. This is a full send yes for me.

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Thank you so much Robo!

We couldn’t agree more. :slight_smile:

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FYI for anyone reading this, we will adjust the target on chain date to the 13th of July to make sure that we have the mandatory 3 day forum period before it goes on chain!

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Questions:

  • CL vaults just paired token vaults right (eg OSMO /DAI, OSMO/ATOM, OSMO/BTC)?

  • Will the long range strategy include, when it is available, SFS? If not, should it perhaps be called a medium term strategy and vaults like OSMO Pro, which to be more inclusive should include DAI and IST, and OSMO Horizon, which could then include bridged token major category pool tokens? If so, which validators are the OSMO being SFS with? Why them? What is the process for getting delegations changed or the prospects of allowing people to choose which validators to SFS to?

  • Will CL vaults be released at the same time and in the same order that current pools are migrated to supercharged pools (eg the first will be a DAI/OSMO vault, the next if I am not mistaken would be a ATOM/OSMO vault) or at least provide the option for liquidity providers to move their liquidity seamless without having to unbond to CL vaults once they become available?

  • Is there any plan to incentives the use of these vaults with QSR tokens and or OSMO liquidity incentives spending? If not, shouldn’t there be? It seems to me like this would make OSMO liquidity incentive spending more efficient and effective.

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Hey Red Rabbit!

  1. Many CL vaults. OSMO PRO and ATOM PRO are really UX improvements, more so than “genius trading strategies”. CL vaults however are inherently complex, actively managed strategies that consistently move capital around to deploy it efficiently. We envision two vaults per pool - short range and long range. We are targeting having vaults for the Top 5 pools within the next two months
  2. OSMO PRO and ATOM PRO were chosen as technological showcases that leverage our IBC vault infra to improve user experience. Using ATOM and OSMO were clear cases. The reason USDC hasn’t been released yet is that we were waiting on native USDC from Noble - the original timelines have been postponed massively hence why that hasn’t shown up yet.

The actual demand is hard to note, but we are about to be 0.8-1.2% of all liquidity on Osmosis - with only UX, not actual yield improvements. That’s a huge win IMO.

in CL, you can check the demand for Uni v3 vaults - they account for massive % of the total UNI TVL as CL requires active strategies to stay competitive.

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Sorry…my cat decided to jump up on my desk and walk over my key board while I was typing out my questions and walked away for a bit to take a call. I didn’t realize you had responded so quickly. I really should have checked and just deleted it instead of editing it. My bad…I am really sorry.

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LOL! no worries, hahaha that’s actually hilarious.

Let me re-answer the updated questions again then!

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  1. yes and no. Sure, they are just that, but they are also off-chain computed strategies, dynamic re-positioning and anticipation of ranges as well as either short range (max yield) or long range (min. IL)

  2. AFAIK SFS is not intended to be enabled for CL, unless I am mistaken. If it is, then the vault could be upgraded to support that, yes. However, CL is not very logical in combination with SFS.

I think your argument is fair, that the current OSMO PRO and ATOM PRO vaults will probably have to change as pools migrate to CL. OSMO HORIZON was always intended to hold bridged assets, though the type of bridges and the different decimal numbers made it hard for us to start developing it, especially since the IBC and bridging scene is changing so rapitly right now.

The rest of the 1st question is obsolete with SFS not being enabled with CL for the time being.

  1. The migration to CL vaults is set by Osmosis, we will support them as they roll out, as soon as we can. Osmosis Labs has asked us though to not enable vaults from the get go, so there is a rollout period that will happen. But the goal is definitely to support them as soon as possible, as they roll out.

Sunny mentioned something around a seemless moving of liquidity, I’m fairly sure that the process is well thought out on Osmosis’ side, we have very little to do with it frankly.

  1. Yes. Exactly. Jup :slight_smile:

Hope this helps!

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This proposal is on chain:

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It does! Thank you!

One of the most appealing aspect of Quasar vaults, to me at least, is the opportunity it could provide to slightly more passive liquidity providers or those looking to diversify their positions easily, for example, those looking to provide liquidity to concentrated liquidity OSMO/USDT, OSMO/USDC, and OSMO/IST pools.

Quasar vaults seem like a great opportunity to adapt and test out something like the Toronoto Stock Exchange Designated Market Maker Program.

“In 2018, the TSX (Toronto Stock Exchange) gradually added a new designated market maker (DMM) to every one of its listings. Recognizing the challenge of encouraging ELPs (endogenous liquidity
providers) to supply liquidity in small securities, the TSX revives a somewhat forgotten practice of allocating DMMs one high-activity security (denoted Tier A) for every four less attractive, low-activity Tier B securities. In the assigned stocks, the DMMs are expected to maintain narrow spreads, provide competitive quotes, and facilitate price continuity. In return, the TSX provides the DMMs with a compensation package that includes a cross-subsidy from bundling Tier A and Tier B stocks.”

In a study of the program it was found “that the cross-subsidy substantially enhances market making and improves market quality in small stocks without adversely affecting large stocks.”

See: https://www.wlu.ca/academics/faculties/lazaridis-school-of-business-and-economics/faculty-profiles/andriy-shkilko/cross-subsidization-of-liquidity.pdf

OSMO seems like it could capitalize on incentivizing liquidity more efficiently and effectively to non-LST and LST pools this way. For example, rather than incentivizing the OSMO/STARS, stSTARS/STARS, qSTARS/STARS pools individually, it would just incentivize a OSMO, STARS, stSTARS, qSTARS vault something similar to the ATOM Pro vault.

I also wonder if OSMO liquidity incentive spending on Quasar vaults that combined low volume tokens pools, such as REGEN-BCNA-CHEQ-LIKE or LINK-FIL, that have been recently cut in the past couple rounds from receiving liquidity incentives, would be an efficient and effective way to provide support to these low volume tokens as their combined volume seems like it would be sufficient and justify the incentive spending as it would support multiple pools. .

I am getting a bit off tangent here. But all that being said…I am very excited about what Quasar vaults can be used and hopefully seeing both OSMO and different protocols engage in experimenting with them to incentivize liquidity and how they can be used to promote partnerships among protocols.

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Super excited to see a strengthening partnership between this two chains. There’s no doubt that managing liquidity will require a lot of flexibility in the future to have truly effective liquidity distribution, specially if another bull cycle comes along.

We can’t wait to see vaults capabilities toward managing liquidity pools allocation.
PRO Delegators has the net intention to create that kind of vaults in the future !

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