1021

Quicksilver recently suffered an incident in which a user was able to mint qATOM and qOSMO without depositing ATOM or OSMO. Quicksilver chain has been halted before this could be redeemed.

This proposal directs the withdrawal of the community pool's qOSMO/OSMO backing liquidity from the Margined Locust vault on Pool 1590 to the Osmosis Liquidity subDAO, so the recovered qOSMO can be redeemed for OSMO once the Quicksilver chain resumes.

The qOSMO backing position, originally established in [Hidden link] and migrated into a Locust vault in [Hidden link], is now fully out of range. The Pool 1590 position holds approximately 774,098 qOSMO. Quicksilver is currently halted, and there is minimal functional liquidity of qOSMO in pools, so qOSMO is neither tradeable at peg nor redeemable, and the backing liquidity no longer serves its purpose.

Rationale

• The position is no longer functioning as backing liquidity: it is one-sided qOSMO and out of range, so it neither supports the qOSMO peg nor earns meaningful fees.
• Removing this liquidity is required for redemption and the resolution of the Quicksilver incident.
• Consolidating protocol qOSMO holdings under the Liquidity subDAO lets the subDAO manage redemption directly, returning this OSMO to the community pool.

Proposed actions

1. Send community pool's shares of the margined-locust-lsd-vault-1590 vault (osmo18vk0rsu4qwzx74g9alu2f7x5zs99sluwkuh5wp70yed2ne4pmutqf9lvdu), to the [Hidden link].
2. Unwind the underlying CL positions in Pool 1590 and recover the underlying qOSMO.
3. The recovered qOSMO is held by the Liquidity subDAO pending Quicksilver's resumption.
4. Once Quicksilver resumes, the subDAO submits redemption requests and returns the resulting OSMO to the community pool.
5. Any residual OSMO recovered alongside the qOSMO is returned to the community pool.

Forum Post: [Hidden link]