Prop 532: Supercharged Liquidity Pools Rollout

This proposal authorises the mechanism and process of the deployment of Supercharged Liquidity pools on Osmosis.

This proposal authorises the following:
* Bonded Classic pool liquidity positions may be migrated to Supercharged Full Range liquidity pools, maintaining the existing bonding status, after a governance proposal establishes a link.
* Creation of a DAI/OSMO Supercharged pool as part of the V16 Software upgrade.
* With a migration link to the classic DAI/OSMO Pool 674.
* Spending up to 20 OSMO from the community pool to form initial liquidity.
* Spot price established at the time of software upgrade.
* Enables Superfluid Staking on this pool
* Supercharged pool creation will be permissioned through governance at launch.
* Permissionless creation will be proposed when all incentivised classic curve pools have migrated to Supercharged pools.
* Permissionless creation will be restricted to a whitelist of quote assets, managed through governance.
## Details
Supercharged Liquidity has completed both internal and external audits and the module is ready for deployment as part of Osmosis V16 “Magnesium”.

This module drastically improves the efficiency of liquidity on Osmosis by concentrating a liquidity provider’s tokens around any chosen finite token ratio rather than evenly allocating it infinitely in classic pools or providing a bias around a set ratio point as with the Stableswap pools.
## Migration of Existing Liquidity

Supercharged Liquidity pools are a new pool type on Osmosis and so liquidity must be actively moved to the new pool. Users will be able to perform a transaction that migrates their liquidity into a new position in the Supercharged Liquidity pool without undergoing the 14 day unbonding period. This migration also preserves Superfluid staking status and is also possible during the unbonding period.

Each Supercharged pool can be linked to a classic pool by pool ID by governance. Migration will convert any bonded or unbonded pool, with respective Superfluid status, into a full range liquidity position on the Supercharged pool. Linked pools will be considered as the same liquidity for purposes of incentivisation.

The full-range Supercharged liquidity position will receive the same incentives rate as the classic pools did before the deployment. Classic pools have a discount rate parameter on incentives weight, set to 5% at launch, to encourage migration to occur. This will cause liquidity that does not migrate to receive 5% fewer incentive rewards than liquidity that has performed the migration transaction.

Supercharged pool positions may only have Superfluid enabled for full-range positions at this time. Any position that is unbonded in order to concentrate to compete for a greater share of swap fees or LP incentives will not be eligible for Superfluid staking and so users must decide whether they wish to participate actively in liquidity providing, or passively via full range Superfluid positions.
## Initial Supercharged Pool
While this module has undergone significant auditing and testing, the immediate migration of all liquidity on Osmosis is an unnecessary risk and so migration is proposed to be staggered.

This proposal authorises the creation of a DAI/OSMO Supercharged pool as part of the V16 Software upgrade.
* With a migration link to the classic DAI/OSMO Pool 674
* Spending up to 20 OSMO from the community pool for initial liquidity.
* Spot price established at the time of software upgrade.
* Enables Superfluid Staking on this pool

The DAI/OSMO pool has been chosen as the initial pool as it has significant volume and liquidity whilst not representing a large proportion of total liquidity on Osmosis. As an added benefit, the DAI/OSMO pool should have only one side that is volatile, allowing users to interact with the new Supercharged Liquidity interface and learn how to use it in a more controlled manner.

In order to launch with Superfluid, liquidity and spot price must be established at the time of upgrade. The upgrade handler will purchase 1 DAI at a spot price within 0.1% of Pool 674’s spot price at the time of upgrade using community pool funds, capped at 10 OSMO for safety reasons. This will then be paired with that same number of OSMO to form the initial liquidity.

Liquidity providers in the DAI/OSMO pool will immediately be able to migrate their positions after the software upgrade completes.
## Permissioned Creation
To prevent multiple Supercharged pools from being created for each asset causing liquidity fragmentation, suboptimal parameters being selected or over-complication of migration linking by having multiple migration options, pool creation for Supercharged pools will be permissioned during the migration period.

This will allow a controlled rollout of Supercharged pools by only allowing creation through governance.

The chosen pool(s) and parameters willl be posted on the governance forums for review three days in advance of loading to chain. Concentrated liquidity pools are normally formed with no liquidity and so this pool can be created by governance proposal at no additional cost to the community.

Once the Supercharged pool is created, governance will be further used to form a migration link to the pool and to enable Superfluid on the pool if previously present. The intended migration links and Superfluid statuses will also be specified in the same forum thread.

This means that concentrated liquidity migration will require 13 days to be implemented on a pool and there is no need to unbond in advance unless a user wishes to concentrate their position to less than a full range position.
## Permissionless Creation
Once all incentivised classic pools have been linked, the permissionless creation of Supercharged Pools will be proposed to governance.

To keep routing simple, it is proposed that a whitelist of quote assets be used as standard for Supercharged Pools. At launch the whitelist will consist of OSMO, USDC and DAI, more may be added at the time of permissionless creation enabling.

Commonwealth Thread: https://commonwealth.im/osmosis/discussion/11640-supercharged-liquidity-pools-rollout