152

Voting YES for this proposal indicates acceptance of measures to restrict volume manipulation on Osmosis as well as the use of the linked new Master Incentive sheet.

Voting NO for this proposal indicates that volume manipulation should not be restricted by Osmosis governance and/or disapproval of the new linked Master incentive sheet.

Background

Osmosis determines how much it it spends on a pool's incentives based on the swap fees generated in order to encourage liquidity to the most useful pool. Wash Trading is the practice of swapping tokens within a pool for the sole purpose of artificially increasing the volume traded within that pool. Wash Trading is therefore a dishonest way of increasing the incentives allocated to a pool which does not need additional liquidity to cater for genuine traders.

Proposal

This proposal has 3 linked parts.

1. Agreement that Wash Trading will be penalised by Osmosis Governance in forms such as, but not limited to:

• Early completion of the onboarding period to limit the effectiveness of any wash trading
• Manual fixing of a pool's incentives to be in line with its TVL
• Full removal of incentives from a pool.

2. Reduction in the effectiveness of Wash Trading by limiting the Swap Fee used in the subsidy model to 3x the average swap fee across Osmosis

• This limits the APRs caused by irregular trading whilst also still maintaining high APRs in genuinely popular pools.

3. Adoption of a new Incentive Master sheet with an improved layout

• No changes to how incentives are calculated beyond the addition of the swap fee cap in Column Y
• Overview page to see at a glance APR changes
• Layout change of Calculations with notes to help better explain why changes are happening.
• External incentives now pulled in from chain data
• Maturity based on a start date of incentives rather than manual adjustment

Proposed Spreadsheet is here: [Hidden link]

Commonwealth Discussion here: [Hidden link]