CosmosHub: AMENDMENT TO #956 - Update the Hub’s stATOM/ATOM POL on Osmosis

NOTE

This proposal is an amendment to Proposal #956. The amendment is to remove the suggestion of increasing Quasar’s vaults allocation and solely focus on updating the range of the static position.

We recommend that everyone votes No on Proposal #956 and cast their vote on this proposal instead.

Summary

As stATOM redemption rate continuously increases (currently at 1.415 ATOM which surpasses the upper bound of the initial range), the POL position is currently out of range and not earning any swap fees.

This proposal seeks to:

update the liquidity range for the Hub’s POL of stATOM/ATOM on Osmosis from the previously set range of [1.0, 1.35] to a new range of [1.1, 1.45].
Give the custodians of the position the power to update the position in the future if it goes out of range again.

These changes aim to ensure the efficiency of the Hub’s liquidity in the pool.

Background

In the original proposal #858, the Cosmos Hub community approved the allocation of 900k ATOM to provide liquidity in the stATOM/ATOM pool on Osmosis, with 90% of this liquidity placed within a static range of [1.0, 1.35].

This range was chosen to provide liquidity mostly below the redemption rate of stATOM, which at the time was 1.228.

The rationale behind the initial range was that liquidity is more effective below the redemption rate. However, a buffer above the redemption rate was included to accommodate the continuous increase.

Rationale

As of now, the redemption rate of stATOM has increased to 1.415 ATOM and surpassed the position’s upper range of 1.35. Making the position Out Of Range, which means all assets parked in the pool are in $ATOM ( approx 811,060 $ATOM) and not earning any fees from swaps.

To address this, we propose

adjusting the range of the remaining liquidity to [1.1, 1.45]:

This range will accommodate for the rate increase, maintain most of the liquidity below Stride’s redemption rate all while earning swap fees for the Hub’s liquidity.
Give the POL’s custodians the power to update the the position if it goes out of range again:

This will make sure the position never stays Out Of Range by allowing the custodians to move quickly and eliminating the waiting period of 28 days ( at least) of waiting period associated with governance.

→ Note: This power only concerns performing updates to the range when it’s out. It doesn’t allow any other updates.

→ Note: For records sake, Johnny Wyles will update the community about these updates if/ when they happen by commenting on this discussion/ the initial discussion.

Proposed Implementation

The position is managed by a 3/5 multisig on Osmosis with Zaki Manian, Valentin Pletnev, Joni Z, Masha and Johnny Wyles as signers.

If the proposal passes, signers will have the discretion to implement the suggested changes in order to maximise safety and avoid any sort of market manipulation.

This is in regard to the timeline, number of transaction and size when performing the updates suggested.

Note: Plans to re-route POL deployments through Hydro are currently being voted on. In case the plans are finalized before a favourable outcome to this proposal, the implementation of this proposal will be managed by the Hydro committee.

Voting Options