Proposal #570

Allow Bonded Positions to convert to Staked Positions

Exec Legacy Content
passed
Expected result
Passed
Turnout / Quorum
69.21% / 20.00%

Voting period

Voting ended100.0%
Voting start 2023.07.30 at 11:47:11
Voting end 2023.08.04 at 11:47:11

Vote distribution

95.38%
136 851 378 osmo
Yes
0.39%
553 869 osmo
No
0.00%
1 200 osmo
Veto
4.24%
6 079 734 osmo
Abstain

Details

logo
Proposer
-
Total deposit
1 600 osmo
Submit time
2023.07.30 at 11:37:55
Deposit end time
2023.08.13 at 11:37:55

Description

This proposal is for a feature to allow users to seamlessly and instantly transition their bonded liquidity from all pool types into a fully staked OSMO position, bypassing any lock period present. \n\n## Background \nOsmosis has historically implemented a 14-day lock period for staking and liquidity provision. \n\nFor staking, this gives the chain the ability to slash malicious actions if they are discovered after the fact by other validators. \n\nFor liquidity provision, the bonding period was initially intended to improve liquidity stickiness during volatile periods, which has been unpopular with liquidity providers and has resulted in emergency unbonding proposals such as Proposal 226 during the UST depeg event and drafts being raised during subsequent USDC and WBTC minor depegs. \n\nWith the introduction and rollout of Supercharged Pools, the bonding period has been removed for standard liquidity provision in these pools. The lock period is still in place for Superfluid staked positions due to the same requirement as Staked OSMO. \n\nUsers who wish to transition their liquidity from a Superfluid staked pair, whether in a Classic pool or a Supercharged pool, to full OSMO Staking must first unbond their liquidity, wait for the 14-day lock period to expire while not receiving staking rewards, swap to OSMO, and then stake. \n\n## Proposal \nThis proposal asks that a feature be implemented that allows a bonded position to be migrated to a fully staked OSMO position without undergoing an unbonding period. \n\nThis feature would take the form of an on-chain message that breaks any current bonds (including superfluid), swaps all assets involved to OSMO, and stakes this. As the same bonding period would exist in both the start and end states of this message, there would be no way for staked value to become fully unbonded by a bad actor through this to avoid slashing. \n\nEnabling this message would reduce friction for the transition of liquidity to a staking position by minimizing the time taken for this user flow and maintaining staking rewards during the process. \n\nThis user flow results in more OSMO being staked that otherwise may only be staked at a superfluid discount which improves the security of the chain. \n\nAs well as the specific user flow this smooths, this mechanism allows users to instantly freeze impermanent loss on a bonded liquidity position by moving entirely into an OSMO staking position. This ability may make liquidity provision on non-Supercharged pools, which may be more sustainable than Supercharged pools for highly volatile tail assets or have long-term external incentives already in place, more attractive. This also reduces the impermanent loss risk still present in full range, Superfluid staked, Supercharged pools, which now consist of the only bonded liquidity in Supercharged pools by allowing these to switch to the single asset staked position at will. \n\nThis feature would be implemented during a future software upgrade proposal.\n\n Forum Thread: https://forum.osmosis.zone/t/allow-bonded-positions-to-convert-to-staked-positions/137

Votes

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Proposal #570: Allow Bonded Positions to convert to Staked Positions - Osmosis (OSMO) Mainnet Explorer