Prop 154: TIA Cap Increase - Osmosis Outpost

mrc: 61 title: TIA Cap Increase - Osmosis Outpost authors: Delphi Labs forum-url: https://forum.marsprotocol.io/t/1116

Summary

The objective of this proposal is to increase the deposit cap for TIA from 25,000 to 200,000 TIA. When the TIA listing proposal was written, the liquidity of TIA was unknown and as a result the proposed deposit cap was overly conservative. This proposal seeks to adjust the deposit cap to better reflect the now known liquidity conditions of the asset.

Motivation

The initial deposit cap proposed for TIA was overly conservative. This could unnecessarily restrict usage of TIA within Mars. This proposal aims to fix this by increasing the deposit cap to a level that better reflects the real liquidity conditions of the asset.

Risks

The Red Bank deposit caps serve two main purposes:

1. They limit the exposure to any single token. This is important to mitigate idiosyncratic risks specific to any particular token and to mitigate liquidity risk, which may impede proper functioning of the liquidations system and could ultimately lead to bad debt.
2. They mitigate looping attacks in which attackers are able to generate artificially large positions of certain tokens with the purpose of subsequently manipulating their price and effectively stealing assets from the protocol.

As the caps increase, so do the risks explored above. At the end of the day, a right level of the caps should strike the right balance between risk aversion and protocol usefulness. In this sense, we believe that while the proposed cap does increase risk for the protocol, it is still conservative given the high liquidity levels of the asset. At the same time, we believe this increase could allow the protocol to serve a larger segment of users.

Implementation

This is a signaling proposal, not an executable proposal.

The Mars smart contracts on the Osmosis chain are currently controlled by the Builder Multisig address. If this proposal passes, the builders will utilize their multisig to make the necessary parameter changes.

Copyright

Copyright and related rights waived via CC0.

Disclaimers/Disclosures

This proposal is being made by Delphi Labs Ltd., a British Virgin Islands limited company. Delphi Labs engages in incubation, investment, research and development relevant to multiple ecosystems and protocols, including the Mars Protocol. Delphi Labs and certain of its service providers and equity holders own MARS tokens and have financial interests related to this proposal. Additionally, Delphi Labs is one of several entities associated with one another under the “Delphi Digital” brand. Delphi Digital’s associated entities and/or equityholders or service providers of such entities may hold MARS and may have financial interests related to this proposal. All such entities, service providers, equity holders and other related persons may also have financial interests in complementary or competing projects or ecosystems, entities or tokens, including Osmosis/OSMO and Celestia/TIA. Delphi Ventures, a related company, is an investor in rights to receive TIA. These statements are intended to disclose relevant facts and to help identify potential conflicts of interest, and should not be misconstrued as a complete description of all relevant interests or conflicts of interests; nor should they be construed as a recommendation to purchase or acquire any token or security.

This proposal is also subject to and qualified by the Mars Disclaimers/Disclosures. Delphi Labs may lack access to all relevant facts or may have failed to give appropriate weighting to available facts. Delphi Labs is not making any representation, warranty or guarantee regarding the accuracy or completeness of the statements herein, and Delphi Labs shall have no liability in the event of losses or damages ensuing from approval or rejection or other handling of the proposal. Each user and voter should undertake their own research and make their own independent interpretation and analysis of all relevant facts and issues to arrive at their own personal determinations of how to vote on the proposal.