This proposal signals that Osmosis adopts USDT via Kava as the canonical version of USDT.
Details
Canonical USDT
This proposal signals that USDT via Kava will be the canonical version of USDT in use with the following criteria defined in the previous Canonical Asset Proposal 205. The more IBC version of USDT available leads to increased security, shorter routes to source, and lower bridging fees than continuing to use the current version of USDT via Axelar.
Canonical status sets the following agreement:
Default Asset List – assets will be unprefixed in the app.osmosis.zone default asset list, e.g. USDT with all other bridges’ assets being bridge1USDT, bridge2USDT, etc. Osmosis DAO requests that allied/friendly front-ends do the same, though any front-end is free to make its own decisions.
Osmosis Incentives – the DAO commits to prioritizing the Canonical Bridge assets, incentivizing them earlier and more heavily than the comparable assets of non-canonical bridges. In general, canonical pools should earn substantially more incentives per dollar of liquidity than their counterpart pools–under the base incentives model, not necessarily counting external incentive matching.
This proposal does not currently impact incentives on Pool 831, henceforth known as axlUSDT/OSMO, but indicates that a migration of incentives is likely to happen in a subsequent proposal once Supercharged pools are established.
Why not just add DAI and IST as well at this point?
Both the DAI/OSMO and IST/OSMO pools are larger than the USDT/OSMO pools.
Accepting IST would benefit Agoric, Crescent, Shade, and Umee users, as well as Gravity bridge users and stablecoin holders.
IST is also already an acceptable fee token on both Crescent and Agoric.
Accepting IST should greatly reduce the need to accept BLD and even Gravity bridged stablecoins as a transaction fee payment token since all Gravity bridged stablecoins can be used to mint IST.
IST (and BLD) can also be found on Shade Protocol on the Secret Network, and on Umee.
IST ATOM vaults are also now up and running. Accepting IST would allow Osmosis to capitalize on the growth IST as more assets are onboarded as collateral assets to mint IST. If Osmosis users would like to use OSMO to mint IST, it seems like accepting IST as a transaction fee payment token, would greatly help pave the way for this to happen sooner rather than later.
Currently, there are 1,096 Agoric smart wallets that can mint IST (source) either through a vault or the PSM. On Osmosis there are 1,901 DAI holders (source), 1,626 BLD holders (source), 1,550 USDT (source) holders, 1,057 KAVA holders (source), 633 gUSDC holders (source), 506 CRE holders (source), and 264 IST holders (source).
If accepting IST serves BLD, gUSDC, CRE, and IST holders (3,209 holders in total - assuming no overlap - or 2,675 holders - assuming all 264 IST holders are also all BLD holders) accepting IST serves more holders than USDT and KAVA holders (2,607 holders in total - assuming no overlap).
Ahhh…yes. The revision makes a lot more sense now.
Thank you sir!
The only thing I have to add at this moment is would it make sense to first migrate incentives and liquidity from Pool #831 axlUSDT/OSMO to Pool #XXXX USDT/OSMO to make it easier to launch a USDT/OSMO supercharged pool and provide users with some consistency in terms of following the practice established by Prop #538 that migrated of incentives from Pool #2 ION/OSMO to Pool # 1013 ION/OSMO over the period of two regular incentives proposals and reduced incentives for one pool by 50% and incentivized the other pool at 100%? (hopefully this makes sense)
I am not proposing this because the launch of supercharged pools will almost certainly occur before the launch → Prop → migration period completes. In this case, we have more complications than just incentivizing the new supercharged pools without an additional migration step between.
The current timings seem like we will:
Launch Supercharged pools with a USDT quote asset available OR this proposal will be on chain the same day as launch.
Propose OSMO/USDT, ATOM/USDT and USDC/USDT pools in a range of swap fees within a day or two of the Supercharged pools launch.
Propose a migration of OSMO/USDT and USDC/USDT incentives once these have a passing quorum.
We haven’t set any criteria yet through governance. What we had said was 30-day life - which was mainly to stop tokens buying the liquidity and then abandoning the pool once they had free transactions from their token. This proposal is more about supporting IBC native USDT than anything else. We will likely have to shift the pool it uses to a CL pool before long anyway.
I plan on proposing USDT Supercharged pools as soon as possible; threads will go up once USDT launches and/or v16 is on chain.
USDT will easily get the depth (5000 OSMO) on day 1 - we need a pool to exist to even add this parameter.
USDT has been around for ages though? It is just the minting mechanism that would be in question, and the worst case for us would be some people getting free transactions, the worst case for USDT/Kava would be a huge depeg event.
USDT is around for a loooong time indeed, but we don’t know how the demand will be on the DEX itself. There a bit of time might be required to know if people will flock to the pool or not.
