Rebalance Community Pool Reserves into BTC, ETH and USDC

Proposal Discussion
1

This proposal rebalances five balances in the Osmosis community pool into the reserve assets Osmosis deploys as liquidity: BTC, ETH and USDC. The assets for conversion are ATOM, wstETH, USDY, USDC.eth.axl and USDC via Noble.

Background

ATOM

The community pool holds about 29,600 ATOM, its largest holding outside the reserve assets. Held idle, it earns nothing. This proposal converts it to BTC, moving the reserve toward a more balanced mix of BTC and USDC.

wstETH

wstETH on Osmosis is bridged through the canonical interchain wstETH contracts on Neutron. As part of Neutron’s transition to long-term support (Neutron announcement), Hadron Labs maintained these contracts until 30 June 2026, and their stability is not guaranteed beyond that date. Converting the community pool’s wstETH to ETH keeps the same exposure without depending on those contracts.

USDY

Ondo has announced that it stopped minting USDY on Noble on 8 September 2026 (Ondo announcement). USDY on Osmosis is bridged from Noble, so it is affected by the same wind-down. Holders of less than 1,000 USDY can exit through liquidity on Osmosis until 7 December 2026. The community pool holds about 726 USDY, so it falls into this group and must convert before that date.

USDC variants

Proposal 1039 established Alloyed USDC as the canonical USDC on Osmosis, and the community pool’s main USDC balance has since been migrated. Smaller balances of USDC.eth.axl and USDC via Noble remain. Both are constituents of Alloyed USDC and convert into it 1:1 with no slippage, fee or price impact.

USDC via Noble no longer accrues. USDC.eth.axl continues to arrive from ProtoRev, which lists it as a base denomination and sends its arbitrage profits to the community pool in the denomination they were earned in. This proposal converts what has accumulated to date.

Proposal

Convert community pool balances

Asset Amount ~Value Converted to Method
ATOM 29,620.88 $51,100 BTC Sold via limit orders for USDC, then converted to BTC
wstETH 1.034 $3,060 ETH Sold via limit orders, then converted to ETH
USDC.eth.axl 11,823.84 $11,824 USDC Converted 1:1 to Alloyed USDC
USDC via Noble 2,020.59 $2,021 USDC Converted 1:1 to Alloyed USDC
USDY 726.33 $831 USDC Swapped to Alloyed USDC on Osmosis

The ATOM and USDC.eth.axl amounts grow slightly each day from ProtoRev arbitrage revenue and will be updated at submission.

These balances are spent to the Osmosis Liquidity SubDAO, which handles time-sensitive, multi-step operations that governance cannot execute directly. The SubDAO converts each balance as described above and returns the proceeds to the community pool as BTC, ETH and USDC.

The ATOM and wstETH are sold through limit orders on Osmosis rather than swapped in one transaction. The SubDAO may set and adjust prices as the market moves and convert the proceeds to BTC and ETH through swaps or limit orders.

Target Onchain Date: 22nd October 2026

1 Like
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I don’t really get the importance of these reserve assets. Bitcoin and ETH would have been good in 2023. These prices are too high and the market is turbulent. I think a better reserve would be just USDC or more OSMO.

1 Like
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Don’t thinking anymore pls

4

Reserve works in USDC, but ideally, we put community funds to work to make more markets functional which requires at least one other holding. We’ve tried this before with popular assets like XRP and DOGE, but it hasn’t worked well. Right now, I think BTC, ETH and SOL are the only ones that would be feasible. Single-asset USDC doesn’t have a reliable yield source in Cosmos right now, so it would sit idle if we held only USDC.

OSMO in the community pool is something that we have a lot of. There isn’t really a point in holding more - or even the amount that is there right now. Since it is non-circulating, any release of it effectively does the same thing as minting it economically.

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