Hey everyone,
I am in the Osmosis ecosystem since genesis and wanted to share some thoughts here in the forum.
I want to add that we just passed our ISG proposal (in the second attempt) so I am probably not the most neutral person (especcially given the situation around the proposal) and you should take this post with knowing that as background. I also want to add that this is purely my own point of view and not the one of ISG. However, I really hope to make this about the content itself and not about the people involved.
But these thoughts are there for quite some while and I thought since I was active a bit on the forum with the prop that maybe the forum is the right space to post it.
Basically what I was wondering is where the activity and innovation around Osmo went. I feel like Osmosis isnāt really changing at all in the last months (or even years)? The frontend looks more or less the same - it got some new features but tbh I find it more confusing and slow than useful. I use skip or squid to swap funds and barely use Osmosis frontend anyways.
Concentrated liquidity was a cool new feature but I feel like it has so much more potential than what it does right now. There was Quasar to manage vaults but they basically failed and left the ecosystem. Now whether that was Quasarās fault or not doesnāt really matter. Thereās no good way to manage concentrated liquidity automatically at the moment. If I am correct Magma vaults in the future should solve this but thatās not that concrete, or is it? But I think that would be a point Osmosis should tackle and not out-source. Would make Osmosis itself much more interesting too.
Which brings me to my next point - making Osmosis more interesting. Right now Polaris is the big new thing. And if it works it can be great - but will it be a game changer for Osmosis? I mean, it seems like the team is so deep into Polaris that it has to work now but itās a different product than Osmo. And without liquidity it probably wonāt route through Osmo either. At least I would expect a good bridge not to. But, and I want to add that because itās important. I heard that the underlying technology should be very different from Squid and Skip so I am really hoping for the positive here!
So to sum it up, no one is going to read long posts anyways.
What I think would help Osmo:
Solution to manage CL liquidity efficiently - do not outsource it, make it Osmo branded on app.osmosis.zone
Ship Polaris (obviously) ā but without liquidity a good bridge will not route the funds through Osmosis
Work on liquidity ā Maybe increase swap fees for more APR? If I loose 3% due to slippage I could also pay 0,5% more fee if I get less slippage
Show optimism - Osmosis team is so silent lately (maybe itās just the Twitter algorithm though, I get a lot of tweets about egg prices) -But basically show people that you are around and building
Focus on the Osmosis brand - give it some positive vibes, launch products
What I also want to add
Osmo is basically the DeFi Powerhous
Dex (obviously)
Staking (obviously)
Pooling (classic + CL)
Perps - levana
Lending & Borrowing - Mars
Margin trading - Mars
Connected to EVM, BTC, etc.
Pretty impressive, and most important, natively in the chain which has low fees and doesnāt get more expensive because a random airdrop happens increasing the gas costs (happens on Ethereum from time to time)
Magma vaults are live and are doing pretty great atm, Iām not sure if itās āfull scale roll out readyā , but itās certainly being well tested atm.
I actually think the dev team over the last few months has been pretty active on X, still maybe not one of the more active teams, but itās been an effort that David G has been pushing.
Price sentiment is definitely down which effects everyone in the ecosystem, many say āToken Price is the best marketingā, but with that reality acknowledged, volumes and Bitcoin pushes are still doing great with some additional stuff in the works as well.
I think no one cares about EURe is the main thing here, while at the same time Iām not actually sure whoās liquidity is sitting there out of range (might be noble or the monerium team, or a random person?)
Thereās been a bit shift wrt Bitmosis, the logic here is that Bitcoin trading will have many homesā¦ Osmosis is well suited to be one of the primary homes. This is difficult to pull off since cosmos ecosystem isnāt the most leveraged to gain large BTC tradersā¦ but, it is working. BTC volume on Osmosis has only been growing and itās all organic
Magma is currently in invite only beta for managers. However, any user/protocol can deposit into existing vaults: https://app.magma.eco/
There are a decent amount of vaults currently and Iām happy to create vaults that people might want to deposit into (there will be a 10% admin fee on generated fees).
Eventually I think Magma would be a great place for protocols to deposit semi-static positions into and have manager(s) paid a fee to ensure itās managed well. You could split between multiple managers or move between them easily.
The main focus is on attracting users into vaults as currently I think a lot of users refuse to use CL as their positions often go out of range (they set too tight). Whereas vaults will have better (multi-position) ranges which should ensure liquidity stays in range and users generate fees.
Work on liquidity ā Maybe increase swap fees for more APR? If I loose 3% due to slippage I could also pay 0,5% more fee if I get less slippage
Of the existing pools? Nothing stops new pools from being established, which is permissionless if there is such volume demand that they would still see trade. This is particularly relevant for the less liquid assets. If someone is willing to provide at a higher spread, they can do so.
The main obstacle here, in my opinion, is that these opportunities for appropriate spread fees and liquidity deployments need to be made more visible for liquidity providers rather than each one having to use their own tooling.
There are some fantastic opportunities on Osmosis right now, and I think Magma managers will be finding those, but a common analytics suite would make this far more competitive.
I think this combines with the other point:
Solution to manage CL liquidity efficiently - do not outsource it, make it Osmo branded on app.osmosis.zone
Weāve got a decent interface for manual LPs, but the other strategy providers (Magma & Margined) could do with being fully integrated into the main site. This is on the to-do list, but getting Polaris over the line has been a huge effort.
What Iād like to see, post-Polaris launch, is the Osmosis frontend becoming more specialized towards facilitating liquidity provision with better analytics.
Just so show what I mean, 200k liquidity sitting in the pool - mostly unusable
This was basically the trigger for me to write this post. 35$ costs to swap 750 Eur
This is an example of what happens when liquidity is managed as an aside rather than by a dedicated manager. Since there is 0 EURe in there now, it canāt go back into range without accepting a loss, and this should be managed more regularly with a variety of ranges rather than set-and-forget being applied to a narrow banding that it has been. I will follow up again with the LP; I have nudged them a few times before, but fixes seem temporary.
Some cents from my side:
I think in essence the biggest question involves the focal point of Osmosis. Does it need to be a very good DEX or does it need to have all kind of fancy features?
I think the main line of reasoning now is to become the interchain DEX where literally every chain can be traded on, hence the focus also on the alloys and get them working. Polaris can also expedite this process.
I do think it would be good to have some kind of roadmap-like item where it is clear where is being worked on and why.
We also do have to understand that we in crypto tend to think that we need much much more information than the ānormalā world. I mean, there are often hunches where big tech companies are working on, but they often do not communicate before there is anything to present.
And investors are ok with that.
But in crypto people always scream about exact dates and roadmaps, complete transparency and the ability to be involved in literally anything. That is also quite counterproductive I would say. Just look at the state of mind around the ICF and the Hub in general.
My critical side; Osmosis does need to step up a bit. In the end we need traction and usage, which is quite hard in this violent market at the moment. But in general exchanges always win and that is the state in which Osmosis must place itself (just look at Binance for example, in every market they make tons and tons of money). And Binance has reached that point through being on the right place at the right time, but also through smart moves with respect to marketing.
I appreciate all your answers @aaronxkong & @JohnnyWyles
I am sorry my answer is so late but I wanted to take my time to write an adequate message.
To expand on my example with EURe. You are right that itās probably not a main focus point for liquidity providers. But from the Osmosis perspective itās pretty important to have the liquidity in range. But I need to check magma out before continuing on that topic. I really hope they will do better than Quasar though - and if they make it work it would be a great addition to the UI imo.
I think the integration with Bitcoin is awesome. And I am well aware itās hard technically - I am actually surprised it even works, for me Bitcoin was the most basic chain that is possible. What I am wondering about, and that is something that I was thinking of for a long time. Maybe itās just me whoās thinking that.
But Bitcoin users are probably the most conservative people when it comes to DeFi. ANd if I visit the Osmosis page thereās so much going on, stuff that is loading, features, charts, etc. Also the design looks more like a game than like a exchange platform where I can trade millions of dollars.
Now I am fully aware that crypto platforms have that branding. And that this is just a random opinion on a osmosis forum made by some random guy. And people always post opinions and in most of the cases thereās a good reason things arenāt made that way.
But I think Osmosis should also focus on the Osmosis frontend a bit more with those integrations coming. Itās often just faster to use skip to deposit funds to Osmo than going through the frontend.
Wouldnāt it maybe make sense to clean up the frontend a bit? If needed Iād love to help out with the feedback we get at ISG.
My main issue from a user perspective with CL is that I have no clue how to set my range.
I think liquidity is pretty static, like staked funds. Take those 200k EURe. I donāt think there are many people having Eure so there is probably someone with a 5-6 digit sum not checking on the liquidity. And I think thatās how it works very often.
Now CL as feature somehow suggests me as user to set a narrow gap. Especially as I can see the potential high APR directly on the frontend. Psychologically I am motivated to make a small gap and maximise APR. Basically FOMO.
Rationally youād need to set it to somewhere safe to not re-balance too often.
But then crypto is very volatile. Not checking a position for a week means the funds can do easily +_20%.
Thatās why I am mentioning those automated providers. If we want to get liquidity from people with small-mid sized amounts you need to give them something automated. And let them actually find and use these easily.
Iād expect bigger liquidity providers to run their own tools. But I have no clue how Osmosis liquidity is structured. How many users provide liquidity and what is the average/median amount.
