Prop 1005: Alloyed BTC: Increase WBTC Variant Caps to 75%

This proposal would increase the maximum allocation cap per WBTC variant within the Alloyed BTC asset to 75%.

The change is intended to allow variants of WBTC to be more readily exchanged within the Alloy, as they have consistently been close to the limit since the previous reduction, resulting in the Alloy being less liquid for intra-alloy swaps, particularly when withdrawing one WBTC variant in exchange for another.

Background

WBTC variant caps were lowered in Proposal 963 to reduce exposure to WBTC within the Alloy, which led to routing issues through the Alloy, prompting a partial reversion of that reduction in Proposal 966.

Eureka-based variants have seen increasing adoption and stable usage patterns across all alloys, with variant caps recently increased for ETH and USDT in Proposal 1001. However, the current caps limit the Alloy’s ability to reflect user preferences, increasing friction during use.

Proposal Details

Details on current liquidity, composition, and cap levels can be found on the Alloyed Asset Dashboard

Risk Considerations

• A 75% cap still prevents a single variant from achieving full dominance in the event of an issue with one variant. IBC rate limits are also applied to all WBTC variants as an additional security measure.
• Relative exposure to Eureka is increased. No incidents have occurred during Eureka’s operation to date, and caps remain under governance control should conditions change. A moderation subDAO may also temporarily freeze movements in and out of the Alloy while a security issue is assessed.
• Exposure to both Axelar and Native WBTC increases under this proposal; exposure was previously at these levels before the reduction in Proposal 963, without incident.
• Total WBTC exposure in the Alloy is already effectively 100%; this proposal redistributes variant limits rather than introducing new asset exposure.

Forum Post: https://forum.osmosis.zone/t/alloyed-btc-increase-wbtc-variant-caps-to-75/3990