Proposal #390
Passed on 26 Dec 2022 with 83.7% of the votes for yes.
Yes
83.7%
99.0% without abstain
Veto
0.3%
of votes cast
Ended
26 Dec 2022
83.71%
of votes cast
15.43%
of votes cast
0.61%
of votes cast
0.25%
of votes cast
By voting YES on this proposal, OSMO stakers voice their support for a staged reduction of emitted OSMO incentives to the Major/OSMO and Stable/OSMO to defer inflation as outlined below.
By voting NO on this proposal, OSMO stakers voice their dissent to a staged reduction of emitted OSMO incentives to the Major/OSMO and Stable/OSMO to defer inflation as outlined below.
Previous incentive reduction proposals have reduced the emitted quantity of OSMO to all pools. [Hidden link] put this staged reduction in to the hands of a working group who have continued to reduce emissions down to 50% of standard. This was carried out slowly as the required hurdle rate of pools adjusts with market and liquidity changes. Several of these pools, notably the WETH, WBTC, CRO, USDC and DAI pools have had high incentives compared to their hurdle rate and have never been a factor in choosing whether to proceed with the reduction due to being excessively incentivised compared to comparable rates.
Monitoring the OSMO/MAJOR and OSMO/STABLE pool GAMM levels shows that very few liquidity providers have left these pools, however new liquidity providers are not being attracted. Meanwhile, the high inflation of Osmosis is causing token value to be diluted resulting in impermanent loss in all pools as can be seen by the paired tokens in the pools decreasing faster than the GAMM tokens representing liquidity provided.
[Hidden link] vs [Hidden link]
[Hidden link] vs [Hidden link]
[Hidden link] vs [Hidden link]
[Hidden link] vs [Hidden link]
This proposal aims to set the incentive rate for all established Major and Stable pools to be approximately the comparable staking rate of each half of the pools, or the OSMO staking APR, plus a 5% premium to account for impermanent loss, at the current liquidity levels.
This aims to be a preliminary step to reduce inflation of the OSMO token until target liquidity levels can be set and further measures to reduce overall inflation can be implemented.
This results in only significant changes to the OSMO/MAJOR and OSMO/STABLE categories with the following estimated effect on APR: [Hidden link]
Which compares to the comparable staking rate as follows: [Hidden link]
Community pool share of OSMO LP Incentives: 50% Leaving 50% emitted to Liquidity Providers - 123,288 OSMO/day
Current category shares
These are further normalised to 100%
Current Minimums
Current Maximum
Community pool share of OSMO LP Incentives: 70% Leaving 30% emitted to Liquidity Providers - 73,973 OSMO/day
Proposed category shares These are normalised to 100% if the Stable/Stable allocation is not used:
The OTHERS Category is being voted on removal in [Hidden link]. If this proposal was to be rejected then the 2% allocation would retain the OSMO proportionately according to the category shares. However, this change is modelled with that proposal succeeding.
Proposed Minimums:
Proposed Maximums
This proposal is an incentive adjustment proposal with the listed new Minimums, an increase in the Maximum for Pool 1 to 30%, an increase of the Community Pool Share of incentives to 60% and the ratio of category changes halfway implemented.
The second increase of the community pool, final category rebalances and the other changes to Maximums would be implemented in the routine incentive proposal dated the 26th December 2022, taking effect on the epoch of the 1st January 2023.
Commonwealth Thread: [Hidden link]