Withdraw Community Pool Liquidity from the Magma BTC/USDC Vault

Proposal Discussion
1

This proposal withdraws the community pool’s BTC/USDC position from the Magma vault on Pool 1943 and recovers the underlying assets, approximately 3.15 BTC and 55,000 USDC, redeploying them into an equivalent CL position.

Background

Magma Vaults are a fork of Charm.fi Alpha Vaults used to automatically manage concentrated liquidity positions. Magma was whitelisted for deployment on Osmosis in Proposal 876.

Proposal 949 deployed 200,000 USDC and 2.0 BTC of community pool holdings into a wide (+50%/-33%) Magma vault on the 0.01% BTC/USDC pool, executed by the Liquidity subDAO. The vault shares were deposited directly to the governance module account (osmo10d07y265gmmuvt4z0w9aw880jnsr700jjeq4qp), keeping the position under direct governance control.

In March 2026, the Neutron team, which had taken over custody and maintenance of Magma in August 2025, announced the deprecation of Magma Vaults. The vaults are no longer actively maintained or supported.

Current position

Vault contract :osmo1eh2735el04mkw724pefa0vmxhvm2z3vmhckz4hcngng876l3v4fsh3e8cl
Target pool: 1943 (allBTC/USDC, 0.01%)
Governance-held shares: 177,389,073,871 of 177,389,095,315 total (>99.99%)
Underlying: ~3.150 BTC + ~55,345 USDC
Indicative value: ~$253k
Position held: One ~$100k position at ~$45k-$100k position and one out of range position from ~$67k to ~$161k

Rationale

  • No offsetting benefit. Holding liquidity in an unmaintained vault contract carries smart contract and operational risk with no rebalancing benefit in return.
  • Redeployment. This liquidity is useful to Osmosis to facilitate BTC trading and will be maintained as a CL position.

Proposed actions

  1. Transfer the vault shares held by the governance module account to the Osmosis Liquidity subDAO. Recovery of funds deposited to the governance module address was tested as part of the original deployment design.
  2. Withdraw the underlying BTC and USDC from the vault.
  3. Deploy funds into the same, 0.01% BTC/USDC pool (1943) as a single position from $40k to 160k.
  4. Return the position and any excess BTC or USDC from the deployment ratio to the Osmosis Community Pool.

Target onchain date: 22 July 2026

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