Proposal
This proposal aims to upload two contracts– 1) LiquidStakeRate Contract and 2) Osmosis-Pool-Ratesync Contract on the Osmosis chain to ensure trustless handling of scaling factors for stkToken Stableswap pools and enhance the reliability of stkToken price oracles when integrated with platforms like Levana or Mars’ protocol within the Osmosis ecosystem.
Context
The Persistence LiquidStakeRate Contract employs an on-chain module and interchain account (ICA) mechanism to facilitate the decentralized provision of redemption rates for Persistence’s stkTokens on the Osmosis chain.
The Osmosis-Pool-RateSync Contract leverages the functionality of the LiquidStakeRate Contract to streamline the updating process of scaling factors for stkToken Stableswap pools, including the stkATOM/ATOM pool. This automation eliminates the need for manual intervention and ensures trustless execution of updates, enhancing efficiency and reliability within the ecosystem.
The above contracts and the RateSync Module under these contracts are audited by Hexens.
Details
Persistence’s liquid staking mechanism operates through stkTokens, representing staked tokens managed by the Persistence Core-1 chain. Users can redeem their stkTokens for a corresponding amount of the underlying token at any given time based on the stkATOM redemption rate. This redemption rate, often referred to as the c-value, liquid-stake-rate or exchange rate, signifies the ratio at which a single stkToken can be exchanged for its underlying token. For instance, on the Persistence chain, 1 stkATOM may be redeemed for 1.24 ATOMs, indicating a redemption rate of 1.24 for stkATOM.
The LiquidStakeRate Contract leverages the Persistence LiquidStakeRate Module and ICA to relay redemption rates for Persistence’s stkTokens onto the Osmosis chain, ensuring decentralized dissemination of this critical information.
Additionally, traditional Stableswap pools maintain a fixed 1:1 ratio between the two tokens, which is suitable for USD stablecoins. However, Osmosis Stableswap pools offer the flexibility of adjusting this ratio continuously through a scaling factor. This feature is particularly relevant for stkToken Stableswap pools, where stkTokens appreciate in value relative to their underlying tokens over time.
Despite fluctuations in the market price of stkATOM relative to ATOM, the true value is determined by this redemption rate. For instance, consider the current redemption rate of stkATOM to ATOM, set at 1:1.24. The LiquidStakeRate Contract would transmit this redemption rate to Osmosis, where the Osmosis-Pool-RateSync Contract would utilize it to dynamically adjust the scaling factor or concentration ratio of the stkATOM/ATOM Stableswap pool.
Presently, updates to the concentration ratios of several stkToken Stableswap pools are managed manually through a multi-sig address controlled by the Persistence Labs contributors. The introduction of the Osmosis-Pool-RateSync Contract automates this process, ensuring timely adjustments without the need for human intervention.
We kindly request the Osmosis Community feedback on this proposal before it goes on-chain.
Next Steps
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Take community feedback into account (if any)
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Submit the Osmosis governance on-chain proposal for uploading these contracts
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If the contract upload proposal passes and after the contracts are successfully uploaded, submit another governance proposal for transferring the Scaling Factor Controller of the stkToken pool from the Persistence multisig to the Osmosis-Pool-RateSync Contract
Contract information
Code repository: Github - GitHub - persistenceOne/ratesync-contracts
Commit hash: 93a9ca2529542654e8f2799a347083499095151f
Compiler version: cosmwasm/optimizer:0.15.0
Checksum:
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LiquidStakeRate: 33d4183a9bc09e59274e83b9c9f3e8c2b58c0fdcda7e0974e375721597d6f337
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Osmosis-Pool-RateSync: 6ca74ff9e4bce522e60cd0f60f3eb67dab3e2d27ed7f768ba8ba650afa35a385
Target on-chain proposal date: March 16th