Prop 249: Update Oracle EMA Config (Osmosis Noble USDC)

Summary

Oracle market data price feeders are a critical component of the Nolus core architecture, leveraging its proprietary Oracle system. Each price feeder operates as an independent, lightweight, off-chain module that sources prices from a predefined set of price providers for specific currency pairs. Those price providers are the integrated decentralized exchanges which are currently the Osmosis DEX on Osmosis and Astroport on Neutron. To calculate prices, the Oracle uses a modified version of the Exponential Moving Average (EMA) algorithm, allowing for more weight to be given to recently observed prices within a defined time period. The Oracle's current observable period for the EMA algorithm spans 10 minutes in total, with 12 samples taken at intervals of 50 seconds. The discount factor is set to 65%, which means the latest price has a weight of 65%, while the price from the previous sample has a weight of 35%. This results in earlier prices having less influence on the overall calculation.

By voting "YES" on this proposal, you agree to adjust the parameters of the EMA algorithm used by the Oracle instance for the Osmosis Noble USDC integration. The proposed adjustments are as follows:

• Reduction in Discount Factor: The discount factor will be reduced from 65% to 40%, giving more weight to earlier prices. This adjustment further reduces the effect of rapid and significant price dips which immediately get arbitraged, contributing to a more stable price calculation and reducing the likelihood of sudden disruptions. The trade-off of having such a discount is that when price moves suddenly in an upwards direction, it takes slightly longer for the prices in the system to catch up to the spot prices on the Osmosis DEX. Based on historical liquidation events so far, the above trade-off seems justified for Margin Long markets.