Proposal Details

Proposal #159

Passed

Proposal title

stOSMO Deposit Cap Increase 1 - Osmosis Outpost

Submit time

Deposit end time

Voting start time

Voting end time

Tally result

99.94%

Proposal #159 description


mrc: 66 title: stOSMO Deposit Cap Increase 1 - Osmosis Outpost authors: John Galt forum-url: https://forum.marsprotocol.io/t/1127

Summary

This proposal aims to increase the Red Bank stOSMO deposit cap from 1.5M to 5M, on Mars’ Osmosis outpost.

Motivation

Earlier this month, Mars prop 143 approved stOSMO as collateral, with a conservative deposit cap of 1.5M. Since then, stOSMO utilization has climbed to 65%. Today’s launch of the OSMO HLS market has further increased demand to deposit stOSMO.

Since the introduction of stOSMO as collateral on Mars, the Osmosis stOSMO pool has become much deeper; in fact, it is now the deepest pool on the Osmosis DEX! This increase in depth was due to Osmosis prop 641, in which Osmosis governance approved the deployment of 20M OSMO to the stOSMO pool.

Deep liquidity in the stOSMO pool is crucial for Mars, since that pool functions as the price oracle for stOSMO. With ~25M OSMO worth of liquidity in the stOSMO pool, as well significant OSMO liquidity in other Osmosis pools and on CEXes - Mars’ Deposit Caps Methodology would deem a 5M stOSMO cap acceptable.

Indeed, a 5M stOSMO cap would still be rather conservative. But there’s no need to raise the cap higher than demand. Assuming this proposal passes and stOSMO utilization again approaches 100%, it is likely another cap increase will be proposed.

Specification

This proposal aims for the following deposit cap increase, on Mars’ Osmosis outpost:

Current Redbank Deposit CapProposed Red Bank Deposit Cap
stOSMO1,500,0005,000,000

Risks

The Red Bank deposit caps serve two main purposes:

  1. They limit the exposure to any single token. This is important to mitigate idiosyncratic risks specific to any particular token and to mitigate liquidity risk, which may impede proper functioning of the liquidations system and could ultimately lead to bad debt.
  2. They mitigate looping attacks in which attackers are able to generate artificially large positions of certain tokens with the purpose of subsequently manipulating their price and effectively stealing assets from the protocol.

As the caps increase, so do the risks explored above. At the end of the day, a right level of the caps should strike the right balance between risk aversion and protocol usefulness. In this sense, we believe that while the proposed cap does increase risk for the protocol, it is still conservative given the high liquidity levels of the asset. At the same time, we believe this increase could allow the protocol to serve a larger segment of users.

Implementation

This is a signaling proposal, not an executable proposal.

The Mars smart contracts on the Osmosis chain are currently controlled by the Builder Multisig address. If this proposal passes, the builders will utilize their multisig to make the necessary parameter changes.

Disclaimer

I am an employee of Stride Labs.

Proposal #159 overview

Total votes
350
Voters
344
Total deposit
5,000 MARS

Proposal #159 votes

#

Validator

Account Address

Options
1jabbeyYes
2Coinage x DAICYes
30base.vcYes
4Swiss StakingYes
5black lodgeYes
6White WhaleYes
7Oni ⛩️Yes
8✅ CryptoCrew Validators #IBCgangYes
9WitvalYes
10cosmosrescueYes
11Lavender.Five Nodes 🐝Yes
12Tedcrypto.io 🧸 | TedLottoYes
13Chorus OneYes
14🙏 uGaenn ⛅Yes
15QuebecYes
16ECO Stake 🌱Yes
17AllnodesYes
184719Yes
19Nuxian-LabsYes
20polkachu.comYes
21StakecitoYes
22Mewn Man EUYes
23Orbital CommandYes
24genznodesYes
25in3s.comYes
26🔥STAVR🔥 REStake ON✅Yes
27TessellatedYes
28Synergy NodesYes
29Smart Stake 📈📊Yes
30SCV-SecurityYes
31CosmosMan | AiC DAOYes
32Imperator.coYes
33PFC - The Panamanian Flower CompanyYes

View: