Prop 158: Stride Redemption Rate Staleness Parameter Update

mrc: 65 title: Stride Redemption Rate Staleness Parameter Update authors: Delphi Labs forum-url: https://forum.marsprotocol.io/t/1123

Summary

The objective of this proposal is to increase the staleness parameter for Stride redemption rate-based price feeds from 22,200 seconds (roughly 6 hours and 10 minutes) to 43,200 seconds (12 hours).

Motivation

Currently Mars uses the Stride redemption rate within two price feeds: stATOM and stOSMO. Under normal circumstances, Stride should update this parameter every 6 hours. That’s why the current staleness parameter is set to 6 hours and 10 minutes. If an update hasn’t happened before 6 hours and 15 minutes after the previous update, the feed is frozen. This mechanism is used as a security measure to avoid accepting stale prices for stATOM and stOSMO.

While the need for a staleness parameter is evident, we believe the current setting is too aggressive. It’s already been the case that the update hasn’t happened within the staleness window (due to relayer issues and other non-critical reasons), leading to frozen markets and bad UX. This is why, after consultation with Stride, we propose to increase the parameter to 43,200 seconds. We believe this new setting will allow the protocol to offer better liveness guarantees without significantly sacrificing protocol safety.

Risks

Increasing the staleness period might increase the window of opportunity for attackers to exploit the protocol. This can be particularly important when Stride halts a market for security reasons. Previously, whenever this happened the protocol would be aware of the issue at T + 22,200 seconds (T being when the previous update happened). Now the protocol would only be aware of the issue at T + 43,200 seconds.

While this is a large increase, we believe the risk is mitigated by the fact that the oracle doesn’t just blindly accept the redemption rate as the fair price of these assets. Instead, Mars uses a custom price feed where both the redemption rate and the market price of the asset are used as follows:

• stTKN = Min(stTKN/TKN Redemption Rate, stTKN/TKN TWAP) * TKN/USD
  • Where TKN is either ATOM or OSMO.

What this ultimately means is that if there’s an emergency halt on Stride that negatively impacts the market price of the asset, Mars would be aware of the situation and would price the asset accordingly, independent of the redemption rate of the asset.

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, stOSMO, ATOM, stATOM and Stride/STRD. 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.