1050

This proposal withdraws the four static concentrated liquidity positions the community pool holds directly at time of posting, together with the NTRN/OSMO position funded under [Hidden link]. The recovered OSMO is burned, the ETH is returned as-is, and the other recovered assets are converted to BTC and returned to the community pool.

Background

PEPE/ETH ([Hidden link]) and LINK/ETH ([Hidden link]) were deployed in [Hidden link] to bootstrap ERC-20 markets. [Hidden link] removed the out-of-range positions from that initiative and kept these two, as they were still active at the time.

The stOSMO/OSMO backstop ([Hidden link]) was repositioned in [Hidden link] as a below-market standing bid: 8,000,000 OSMO placed to buy stOSMO in the event of a depeg, so that liquidations of stOSMO used as lending collateral could always clear.

stSTARS/STARS ([Hidden link]) is a liquid staking pair from earlier Cosmos LST support.

NTRN/OSMO ([Hidden link]) was funded from the community pool under [Hidden link] and is held by that proposal's multisig.

Current positions

Together the community pool's four positions hold about $418,000, most of it the 8,000,000 OSMO in the backstop. After this proposal, the community pool holds no static liquidity positions directly.

Rationale

• The positions no longer do their job. PEPE/ETH and NTRN/OSMO are out of range and hold a single asset. stSTARS/STARS supports a pair with no meaningful market.
• LINK/ETH is not a market the community pool needs to hold. It was a bootstrapping position. Its external liquidity has not developed, and the community pool's position is the only one in the pool.
• The backstop has outlived its purpose. The lending markets it protected are no longer active on Osmosis: Mars has set borrowing limits on every asset to effectively zero, Levana's stOSMO market holds no liquidity, and the remaining stOSMO posted as CDT collateral is worth a few dollars.
• Stride is winding down. Stride has [Hidden link] of its chain. Under that plan, stOSMO redemptions on Stride stop after 12 October and resume on Osmosis around 20 November. If stOSMO trades below the backstop range during that pause, the community pool would buy stOSMO whose redemption depends on the wind-down completing. Withdrawing now ends protocol-owned LST peg support cleanly, rather than leaving it to be drawn down part-way through.
• Simplicity. The OSMO in these positions has been out of circulation since it was allocated from the community pool; burning it on recovery makes that permanent. The remaining proceeds return as reserve assets the community pool can hold or redeploy deliberately.

Proposed actions

1. Transfer the five positions (Pools 1397, 1388, 2182, 2184, and 1252) to the [Hidden link], which will withdraw them and collect accrued fees.
2. Convert the PEPE, LINK, NTRN, stSTARS and STARS to BTC on a best-effort basis. Anything that cannot be converted at a loss of less than 50%, or through limit orders filled within 3 months, is burned.
3. Convert any recovered stOSMO, whether from fees or from the backstop being filled before execution, to OSMO by swapping or redemption on a best-effort basis.
4. Burn all recovered OSMO, including the 8,000,000 OSMO from the backstop, by sending it to the null address osmo1qqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqmcn030.
5. Return the BTC proceeds and the ETH to the community pool.

Execution via the Liquidity SubDAO 4/6 multisig.

Risks

• stOSMO exit liquidity. This removes the standing bid that would have absorbed stOSMO selling during Stride's redemption pause. Holders can redeem on Osmosis once this resumes.
• Thin markets on Osmosis. PEPE, LINK, STARS and NTRN are converted best-effort or via limit orders; nothing is force-sold, and residual amounts that cannot be converted are burned.
• Multisig execution. Standard Liquidity SubDAO 4/6 intermediary risk.

Forum Post: [Hidden link]