Prop 655: Deposit 350K OSMO to the Levana Osmo Liquidity Pool
This onchain proposal is based on the following offchain proposal:
https://forum.osmosis.zone/t/deposit-350-000-osmo-token-into-the-osmo-xlp-pool-on-levana/430
Governance Proposal - Deposit 350K OSMO to the Levana OSMO xLP Liquidity Pool
Scheduled to be published on chain October 12th, 2023
Proposal Summary
This proposal seeks approval from the Osmosis community to deposit 350,000 OSMO tokens into the Levana xLP pool. The initiative aims to enhance financial profitability of the community pool, support the Levana protocol, signal to other Dapp builders that the Osmosis community supports projects built on Osmosis and enable more active leverage trading on the Osmosis blockchain by providing additional liquidity.
What is Levana?
Levana is a decentralized leverage trading platform deployed on Osmosis since July of 2023. It allows traders to engage in leverage trading across various crypto assets while ensuring solvency through its uniquely designed perps system.
Trade on Levana’s OSMO market here: https://trade.levana.finance/osmosis/trade/OSMO_USD
Read more about the Levana design here: https://medium.com/levana-protocol/introduction-to-levana-perps-v2-5cfb3df7a770
Read and watch more about Levana’s growth since launch here:
Fee Analysis - https://twitter.com/ario_57_/status/1707023000040575092
User retention - https://twitter.com/Abbas_ra21/status/1707324929501180323 https://x.com/Abbas_ra21/status/1707664235147194400?s=20 https://twitter.com/0xham3d_eth/status/1708226803599302906
Trader Behavior - https://twitter.com/Abbas_ra21/status/1706986083018293693
Scaling Perps - https://x.com/Cryptodreams8/status/1707710200126284255?s=20
Open interest analysis - https://x.com/ario_57_/status/1708173902013194452?s=20
General Performance Overview - https://twitter.com/ario_57_/status/1706355915350217049
Youtube Interview with Jack Zampolin - https://www.youtube.com/watch?v=8F5fRMBw990
MetaMask Snaps Spaces - https://x.com/Mystic_Labs_/status/1707062448203726895?s=20
Interview with The Interop - https://twitter.com/TheInterop/status/1707748120573219139
Levana’s Metrics on Osmosis to Date
-Levana users have deposited over $3.6 million into Levana. https ://defillama.com/protocol/levana-perps
-Roughly $150k of which is deposited into $OSMO LP
-Over $175 million worth of volume has been traded https://trade.levana.finance/stats
-Levana LPs have earned almost $200,000 since its inception of which $14,800 has been earned in the $OSMO LP specifically https://trade.levana.finance/stats?network=osmomainnet1&market=osmo_usd
How Does Levana’s LP Pools Work?
Levana’s liquidity pools (LP) historically have out performed the risk free rate of staking on validators or into DEX’s.
The Levana OSMO LP pool, albeit smaller, has been generating roughly 15-25% APR in real yield.
The LP pools, while lucrative, carry risks, including platform risk and potential loss due to trader wins. Additionally, Levana’s Perps system ensures solvency and supports high leverage trading across numerous crypto assets.
Single Sided Deposit
The Levana OSMO pool does not use stable coins. It is a single sided deposit and there is no impremenant loss.
Read the whitepaper
https://docs.levana.finance/whitepaper
xLP vs LP
The xLP pools earn more yield but have a 45 day linear unbonding period which occurs on a block by block basis. xLP tokens during unbonding earn at the yield of LP tokens.
Risks of Being an LP
Platform Risk: Possibility of smart contract vulnerabilities or platform failures.
Trader Win Risk: LPs may incur losses when traders secure significant wins.
Learn more about LP Risks https://docs.levana.finance/position-size-locked-collateral
Technical Documents and Security
Levana’s smart contracts are open-source, and comprehensive documentation is available, facilitating easy integration via API trading modules or custom front ends. The platform operates permissionlessly, without necessitating centralized, off-chain mechanisms like order books or sequencers.
Read the source code
https://docs.levana.finance/source-code
Read the audit reports from Peckshield and Fyeo
https://docs.levana.finance/audits
Read the high level overview
https://docs.levana.finance/high-level-overview
Benefits to the Osmosis Community by Voting Yes:
-Financial Profitability Potential: The community pool may profit financially, akin to how depositors have profited to date (note: the pool could also lose money during this time, understanding the risks is important).
-Supporting Levana: To affirm the Osmosis community’s commitment to supporting a robust ecosystem of successful DApps and demonstrating solidarity with Levana.
-Enhanced Leverage Trading for Osmosis Users: Enabling larger and more active leverage trading on the Osmosis blockchain by mitigating liquidity issues currently hindering users from opening substantial positions on Levana.
-Levana will also continue to create blog posts, tweet threads and instructional videos to help educate Osmosis users how to safely and effectively use the features of Levana alone and in collaboration with other services on Osmosis.
Levana Airdrops as a reward to Osmosis community members
Levana does not currently have a token. However, should this proposal pass, Levana commits to allocating 400,000 LVN [Levana Tokens] during a future token generation event, to be distributed among Osmosis users who have traded on the Levana platform on Osmosis. The distribution of these tokens would be decided based on two variables:
1)The amount of fees you paid to LPs on Levana’s Osmosis dapp
2)How active you have been on Osmosis historically
The exact method of calculating the airdrop distribution would not be published until a later date to help prevent airdrop hunters from gaming the system, but general principals would focus on
-Creating a minimum amount of tokens distributed to each trader
-Creating a smoother distribution system via capping the amount whales can receive
-Filtering suspected bot accounts
It is worth noting that geofencing will be applied to airdrops and USA persons and potentially other persons will not be eligible for airdrops.
Learn more about the Levana Token via a draft (subject to change) of the Levana token primer
https://perp-1551-token-primer.levana-docs.pages.dev/lvn-token-primer
Note: Due to the risks associated with leverage trading, many countries do not permit their citizens to use perps dex’s. The Levana foundation’s front end is geoblocked from the USA and other nations. You can learn more about eligibility to use Levana in the Terms of Service
https://trade.levana.finance/legal/terms-and-conditions.pdf
Reasons to Vote Yes
-Potential Profit: The community pool stands to gain financially if the pool does well.
-Support for Builders: Demonstrate support for developers on Osmosis.
-Enable Leverage of OSMO: By increasing the liquidity pool of OSMO on Levana, Osmo holders will have a useful tool to leverage the asset onchain on Osmosis.
-Unlock 400K Levana Tokens: For Osmosis traders on Levana, subject to a future token generation event.
Steps to take if the proposal passes
-
350K OSMO would transfer from the community pool to a wallet controlled by a multisig of community Osmosis community members
-
These members would deposit into the Levana pool located at: https://trade.levana.finance/osmosis/earn/OSMO_USD
At a future date when another governance vote happens to remove either the principle or rewards (assuming they exist) these multi sig holders will perform whatever action is requested by future governance (ie, withdrawal)
Actualizing this proposal if it passes:
A multisig account was created at the osmosis address:
osmo1qzm2kyesqqpu4d7uaskkf023t4husm6vaan2gkc2xru0xcvzx23qq5f5c7
The multisig is managed by members from the following teams, all public validators of the Osmosis network
*Layer Zero X *Levana *Crypto Assassin
This multisig will have the authority to -Deposit Osmo tokens into the xLP Osmo pool on Levana -Reinvest any yield earned back into the xLP Osmo pool on Levana
Withdrawal, transfer and other actions will be subject to further approval of the Osmosis community.
The following actions have been tested with a small amount of funds to ensure that there will be no technical challenges with actualizing this proposal
Transferring OSMO out of the DAO DAO multi sig Depositing OSMO to the xLP OSMO pool on Levana Unbonding the OSMO in the xLP Pool Withdrawing OSMO tokens from the LP Pool Reinvesting yield Withdrawing yield back to the multisig
Learn more about Levana, Join our Discord and play with the dapp here https://linktr.ee/levanaprotocol
Conclusion This proposal not only seeks to enhance the profitability of the community pool but also to fortify the symbiotic relationship between Osmosis and Levana, thereby fostering a more robust and thriving ecosystem for all stakeholders involved.