Try Quests to earn AXLAxelar - 1. Do incentivized wAssets impact transfer volumes on Axelar?
How do incentivized wAssets on Osmosis impact token transfer volumes for Axelar?
** \n **
Background: Most "wrapped" assets (WETH, WMATIC, WBNB, WAVAX, etc.) arrive on Osmosis via the Axelar bridge. Osmosis governance decides how to incentivize liquidity pools containing these assets. In the past two months we have seen incentives pass for wMATIC, wBNB, and wAVAX.
** \n **
Task: Examine the impact of “bootstrapping” proposals on Axelar bridge volumes and fees paid. Did they sufficiently incentivize users to transfer external assets into Osmosis via Axelar’s bridge, or were the assets deposited into the respective pools already on Osmosis. Analyze the results in aggregate and by asset.
** \n **
Goal: Identify if Axelar should work with Osmosis to incentivize more wrapped assets, in order to increase volume over Satellite and Squid.
Introduction
What Are Wrapped Tokens?
Wrapped tokens allow unsupported assets like bitcoin and ether to be traded, lent and borrowed on DeFi platforms.
Osmosis
The Osmosis automated market maker (AMM) affords users the ability to create new and unique liquidity pools that are controlled and voted on by participants. The Osmosis token (OSMO) is used to vote, stake, and provide liquidity throughout its pools. Superfluid staking, a process novel to the Osmosis protocol, allows users to stake assets to secure the network while simultaneously providing assets in a liquidity pool.
The Cosmos Ecosystem
Osmosis is a decentralized exchange (DEX) and automated market maker (AMM) protocol for the Cosmos ecosystem. To understand the specifics of Osmosis, it’s helpful for you to know the context of the Cosmos ecosystem upon which and for which it is built. Cosmos is an overarching ecosystem of blockchain networks that can connect with one another as part of Cosmos’ mission to build an “internet of blockchains.” Interoperable decentralized applications (dApps) on these various networks communicate with each other and send tokens and data back and forth via Cosmos’ Inter-Blockchain Communication (IBC) Protocol.
The Cosmos Hub is the mainchain that serves as the central ledger and primary blockchain protocol to connect with other blockchains in the Cosmos Network. It is a Proof-of-Stake (PoS) blockchain built by the Ignite team and uses ATOM as the native token for voting, staking, and transactions. Cosmos also provides a software development kit (SDK) to enable projects and teams to build on its network. Now that we have a surface-level understanding of Cosmos and how it operates, we can dive deeper into Osmosis.
The Osmosis AMM
Osmosis is a DEX protocol, which means it uses smart contracts to determine the price of digital assets, to produce liquidity via a peer-to-peer (P2P) methodology, and to exact trades between users. This approach to an exchange platform is known as an AMM — a DEX protocol that prices crypto assets in liquidity pools. Contributing tokens to these pools helps foster decentralized liquidity, which is then used to facilitate trades on the exchange. Participating as a liquidity provider (LP) can earn you both trading fees and newly minted LP tokens as incentives for participation.
The Osmosis AMM is unique in that it affords users the ability to create their own liquidity pools, or to duplicate existing ones with their own unique parameters. Because Osmosis is built on the Cosmos ecosystem, users are able to natively trade assets from more than 47 different chains within Cosmos.
While most AMMs today are fairly efficient at providing liquidity in a decentralized manner, they still operate as service-based products: the platform creates pools that are free to join. In the dynamic landscape of decentralized finance (DeFi), this can arguably compromise the efficiency of the liquidity pools available for use. To help solve these issues, the Osmosis AMM was conceived as a “serviced infrastructure” that provides users the ability to tweak the values of tokens and the supply, therefore lowering the barrier to creating custom-built AMMs.
Two primary concepts that drive the Osmosis protocol are sovereignty and heterogeneity. To that end, Osmosis makes use of self-governing liquidity pools. These liquidity pools that exist in Osmosis are not hard-coded and users can use the native Osmosis token (OSMO) to vote on pool parameters and protocols, provide liquidity, and stake. Essentially, it allows holders of the token to decide the make-up of specific liquidity pools, in addition to playing a central role in wider Osmosis protocol governance.
1- wAVAX
About AVAX
**AVAX is the native token of the Avalanche platform and is used to secure the network through staking, pay for fees, and provide a basic unit of account between the multiple subnetworks created on the Avalanche platform. wAVAX is the wrapped version of AVAX that enables use on the Avalanche network. Website: **
PROPOSAL 408
Signalling Proposal for OSMO/AVAX (#899) incentivised pool
-
Proposer
-
Initial Deposit
400.000000OSMO
-
Total Deposit
1,600.000000OSMO
-
Voting Start
2023-01-25 17:39:29
-
Voting End
2023-01-30 17:39:29
-
Details
This is a signalling proposal to include the AVAX pool OSMO/(w)AVAX (#899) into the set of assets that receive OSMO liquidity incentives.
After this proposal has passed governance, pool #899 will be added to the regular incentives program of Osmosis.
\
Final Status : Passed
PROPOSAL 409
Add AVAX to the list of Major category assets
-
Proposer
-
Initial Deposit
400.000000OSMO
-
Total Deposit
1,600.000000OSMO
-
Voting Start
2023-01-25 17:39:48
-
Voting End
2023-01-30 17:39:48
-
Details
This proposal would add AVAX to the list of assets that Osmosis recognises as strategically important for growth, increasing the incentives allocated to it.
Details
AVAX is currently the rank 18 cryptocurrency by marketcap with a valuation of around .4 Billion, 12 times higher than Osmosis. wAVAX is the wrapped version of this able to be used across Avalance Network DeFi, for the purposes of bridged assets to other chains these are treated the same. The majority of trade volume happens on alternative decentralised exchanges for wAVAX and centralised exchanges for AVAX, not on Osmosis. This proposal asks if Osmosis has a strategic interest in attracting more liquidity of AVAX and so will enable it to access a greater proportion of liquidity incentives.
Final Status : Passed
PROPOSAL 410
AVAX Bootstrapping liquidity incentives
-
Proposer
-
Initial Deposit
400.000000OSMO
-
Total Deposit
1,600.000000OSMO
-
Voting Start
2023-01-25 18:13:34
-
Voting End
2023-01-30 18:13:34
-
Details
This proposal would add OSMO incentives directly to the OSMO/(w)AVAX pool (#899) consisting of 0.5% of liquidity incentives and maintain this for a period of 4 routine incentive proposals.
Details
The normal signalling proposal to allocate incentives would go into effect at the next routine incentives proposal providing some incentives on the 5th February 2023. This proposal would provide initial incentives on the 31st January by actioning the following:
- Directly allocating 0.5% of incentives to the OSMO/(w)AVAX pool (#899)
- Set Minimum incentives for the OSMO/(w)AVAX (#899) pool of 0.5% for 4 routine proposals to retain this level of liquidity incentives while liquidity is built.
Bootstrapping incentives indicate that Osmosis stakers wish to quickly establish functional liquidity of AVAX to facilitate trading and liquidity flow between Avalanche and Osmosis via the Axelar bridge.
Final Status : Passed
Findings
- Proposal no.408== indicates the pool #899 will be added to the regular incentives program of Osmosis. According to the results, this proposal has been passed by 96.5% of “YES” votes.
- Proposal no.409== presents the adding AVAX to the list of assets on the Osmosis and strategy of Osmosis network in attracting more liquidity of AVAX into the network. Based on the results, this proposal has been passed with near 97% of votes.
- Proposal no.410== demonstrated the add OSMO incentives directly to the OSMO/(w)AVAX pool (#899). Also, this proposal enables the Osmosis Stakers to set functional liquidity of AVAX and flow between Avalanche and Osmosis by Axelar bridge. This proposal has been passed with near 96% of votes during its voting period.
Findings
· According to the table provided in this investigation, the source of wAVAX on Osmosis is Axelar and about 7146 wAVAX have come into the Osmosis by 159 unique senders.
· The highest volume of wAVAX come on the January 30 with over 83k USD volume by 44 unique receivers.
**the impact of proposals which were issued on the 2023.01.25, is pretty clear !**
1-2. Receivers
1-3. What they do with their wAvAX
Its important to determine the behavior of wAVAX receivers on the Osmosis network. If their received wAVAX was their first transaction, then considered it as new wallets otherwise considered as old wallet. Most of the wAVAX receivers experienced their first receive action with wAVAX and the highest count of new wallets occurred on January 30 with 41 unique receivers.
· The distribution of wAVAX receivers reveals that most of the receivers have been received less than 10 wAVAX, accordingly.
Findings
According to the consequences of the previous parts, the activity of wAVAX liquidity pool (pool #899) and the behavior of its liquidity providers has been analyzed. The summary of outcomes are as below:
· After passing proposal no.408 and adding pool #899 to the regular incentives program of Osmosis, the activity of this pool experienced sudden jump accordingly.
· Osmosis is a liquidity tool that provides incentives to users who trade on the Avalanche platform after bridging their assets into the Osmosis. It is powered by wAVAX and provides several incentives for users who participate in the pool. By providing liquidity, users can earn rewards in the form of trading fees and staking rewards. The platform also allows users to trade with lower fees, more liquidity, and faster transactions.
·
PROPOSAL 384
Signalling Proposal for OSMO/WMATIC(#789) incentivised pool
-
Proposer
-
Initial Deposit
400.000000OSMO
-
Total Deposit
1,600.000000OSMO
-
Voting Start
2022-12-14 17:26:19
-
Voting End
2022-12-19 17:26:19
-
Type
Text
-
Submit Time
2022-12-14 17:19:56
-
Deposit End Time
2022-12-28 17:19:56
-
Details
- By voting YES on this proposal, OSMO stakers voice their support for adding OSMO incentives to the OSMO/WMATIC(#789) on Osmosis.
- By voting NO on this proposal, OSMO stakers voice their dissent in adding OSMO incentives to the OSMO/WMATIC(#789) on Osmosis.
Details This is a signalling proposal to include the WMATIC pool OSMO/WMATIC(#789) into the set of assets that receive OSMO liquidity incentives. After this proposal has passed governance, pool #789 will be added to the regular incentives program of Osmosis.
PROPOSAL 385
Add WMATIC to the list of Major category assets
-
Proposer
-
Initial Deposit
400.000000OSMO
-
Total Deposit
1,600.000000OSMO
-
Voting Start
2022-12-14 17:27:24
-
Voting End
2022-12-19 17:27:24
-
Type
Text
-
Submit Time
2022-12-14 17:22:19
-
Deposit End Time
2022-12-28 17:22:19
-
Details
- By voting YES on this proposal, OSMO stakers voice their support for adding WMATIC to the list of assets that receive incentives as a Major token.
- By voting NO on this proposal, OSMO stakers voice their dissent to adding WMATIC to the list of assets that receive incentives as a Major token.
Details MATIC is currently the rank 10 cryptocurrency by marketcap with a valuation of around $8.2 Billion, 16 times higher than Osmosis. WMATIC is the wrapped version of this able to be used across Polygon Network DeFi. The majority of trade volume happens on alternative decentralised exchanges for WMATIC and centralised exchanges for MATIC, not on Osmosis. This proposal asks if Osmosis has a strategic interest in attracting more liquidity of WMATIC and so will enable it to access a greater proportion of liquidity incentives.
PROPOSAL 386
WMATIC bootstrapping liquidity incentives
-
Proposer
-
Initial Deposit
400.000000OSMO
-
Total Deposit
1,600.000000OSMO
-
Voting Start
2022-12-14 17:33:22
-
Voting End
2022-12-19 17:33:22
-
Type
UpdatePoolIncentives
-
Submit Time
2022-12-14 17:26:06
-
Deposit End Time
2022-12-28 17:26:06
-
Details
- By voting YES on this proposal, OSMO stakers voice their support for bootstrapping WMATIC liquidity by manually allocating 0.5% of liquidity incentives to the OSMO/WMATIC pool (#789)
- By voting NO on this proposal, OSMO stakers voice their dissent to bootstrapping WMATIC liquidity by manually allocating 0.5% of liquidity incentives to the OSMO/WMATIC pool (#789)
Details The normal signalling proposal to allocate WMATIC incentives would go into effect at the next routine incentives proposal providing incentives on the 25th December. This proposal would provide initial incentives on the 20th December by actioning the following:
- Directly allocating 0.5% of incentives to go to OSMO/MATIC (#789)
- Set Minimum incentives for the OSMO/MATIC (#789) pool of 0.5% for 4 routine proposals to retain this level of liquidity incentives while liquidity is built.
Bootstrapping incentives indicate that Osmosis stakers wish to quickly establish functional liquidity of WMATIC to facilitate trading and liquidity flow between Polygon and Osmosis via the Axelar bridge.
Findings
- Proposal no.384== a signalling proposal to include the WMATIC pool OSMO/WMATIC(#789) into the set of assets that receive OSMO liquidity incentives. After this proposal has passed governance, pool #789 will be added to the regular incentives program of Osmosis. According to the results, this proposal has been passed by 96.8% of “YES” votes.
- Proposal no.385== This proposal asks if Osmosis has a strategic interest in attracting more liquidity of WMATIC and so will enable it to access a greater proportion of liquidity incentives. Based on the results, this proposal has been passed with near 96.8% of votes.
- Proposal no.386== Bootstrapping incentives indicate that Osmosis stakers wish to quickly establish functional liquidity of WMATIC to facilitate trading and liquidity flow between Polygon and Osmosis via the Axelar bridge.. This proposal has been passed with near 96.9% of votes during its voting period.
Findings
· According to the table provided in this investigation, the source of MATIC on Osmosis is Axelar and about 592k wMATIC have come into the Osmosis by 943 transfers.
· The highest volume of MATIC transferred in on december 19 with over 152k (132k$) volume by 82unique receivers.
**the impact of proposals which were issued on the December 14, is crystal clear !**
2-2. Receivers
2-3. What they do with their wMATIC
Its important to determine the behavior of wMATIC receivers on the Osmosis network. If their received wMATIC was their first transaction, then considered it as new wallets otherwise considered as old wallet. Most of the wMATIC receivers experienced their first receive action with wMATIC and the highest count of new wallets occurred on December 19 with after proposals was passed.
· The distribution of wMATIC receivers reveals that most of the receivers have been received less than 10 , accordingly. but after the proposals passed , the share of 10-100 and 100-1000 group increased significantly.
Findings
According to the consequences of the previous parts, the activity of wMATIC liquidity pool (pool #789 ) and the behavior of its liquidity providers has been analyzed. The summary of outcomes are as below:
· After passing proposals no.384-385-386 on 2022-12-19 and adding pool #789 to the regular incentives program of Osmosis, the activity of this pool experienced sudden jump accordingly.
· After passing proposals no.384-385-386 on 2022-12-19 , it can be seen that, the trading volume of wMATIC on Osmosis had been increased dramtically.
·
PROPOSAL 358
Signalling Proposal for OSMO/WBNB incentivised pool
-
Proposer
-
Initial Deposit
400.000000OSMO
-
Total Deposit
1,600.000000OSMO
-
Voting Start
2022-11-09 01:33:49
-
Voting End
2022-11-14 01:33:49
-
Type
Text
-
Submit Time
2022-11-09 01:31:09
-
Deposit End Time
2022-11-23 01:31:09
-
Details
- By voting YES on this proposal, OSMO stakers voice their support for adding OSMO incentives to the OSMO/WBNB (#840) on Osmosis.
- By voting NO on this proposal, OSMO stakers voice their dissent in adding OSMO incentives to the OSMO/WBNB (#840) on Osmosis.
Details This is a signalling proposal to include the WBNB pool OSMO/WBNB (#840) into the set of assets that receive OSMO liquidity incentives. After this proposal has passed governance, pool #840 will be added to the regular incentives program of OSMO.
PROPOSAL 359
Add WBNB to the list of Major category assets
-
Proposer
-
Initial Deposit
400.000000OSMO
-
Total Deposit
1,600.000000OSMO
-
Voting Start
2022-11-09 18:08:53
-
Voting End
2022-11-14 18:08:53
-
Type
Text
-
Submit Time
2022-11-09 18:05:19
-
Deposit End Time
2022-11-23 18:05:19
-
Details
- By voting YES on this proposal, OSMO stakers voice their support for adding WBNB to the list of assets that receive incentives as a Major token.
- By voting NO on this proposal, OSMO stakers voice their dissent to adding WBNB to the list of assets that receive incentives as a Major token.
Details BNB is currently the rank 4 cryptocurrency by marketcap with a valuation of around 8 Billion, 80 times higher than Osmosis. WBNB is the wrapped version of this able to be used in Binance Smart Chain DeFi. The majority of trade volume happens on centralised exchanges and not on Osmosis. This proposal asks if Osmosis has a strategic interest in attracting more liquidity of WBNB and so will enable it to access a greater proportion of liquidity incentives.
PROPOSAL 360
WBNB bootstrapping liquidity incentives
-
Proposer
-
Initial Deposit
400.000000OSMO
-
Total Deposit
1,600.000000OSMO
-
Voting Start
2022-11-09 18:09:46
-
Voting End
2022-11-14 18:09:46
-
Type
UpdatePoolIncentives
-
Submit Time
2022-11-09 18:08:21
-
Deposit End Time
2022-11-23 18:08:21
-
Details
- By voting YES on this proposal, OSMO stakers voice their support for bootstrapping WBNB liquidity by manually allocating 0.5% of liquidity incentives to the OSMO/WBNB pool (#840)
- By voting NO on this proposal, OSMO stakers voice their dissent to bootstrapping WBNB liquidity by manually allocating 0.5% of liquidity incentives to the OSMO/WBNB pool (#840)
Details The normal signalling proposal to allocate WBNB incentives would go into effect at the next routine incentives proposal providing incentives on the 20th November. This proposal would provide initial incentives on the 15th November by actioning the following:
- Directly allocating 0.5% of incentives to go to OSMO/WBNB (#840)
- Set Minimum incentives for the OSMO/WBNB (#840) pool of 0.5% for 4 routine proposals to retain this level of liquidity incentives while liquidity is built.
Bootstrapping incentives indicate that Osmosis stakers wish to quickly establish functional liquidity of WBNB to facilitate trading and liquidity flow between Binance Smart Chain and Osmosis via the Axelar bridge.
Findings
- Proposal no.358== This is a signalling proposal to include the WBNB pool OSMO/WBNB (#840) into the set of assets that receive OSMO liquidity incentives. After this proposal has passed governance, pool #840 will be added to the regular incentives program of OSMO. According to the results, this proposal has been passed by 97.1% of “YES” votes.
- Proposal no.359== This proposal asks if Osmosis has a strategic interest in attracting more liquidity of WBNB and so will enable it to access a greater proportion of liquidity incentives.. Based on the results, this proposal has been passed with near 98.3% of votes.
- Proposal no.360== Bootstrapping incentives indicate that Osmosis stakers wish to quickly establish functional liquidity of WBNB to facilitate trading and liquidity flow between Binance Smart Chain and Osmosis via the Axelar bridge.. This proposal has been passed with near 97.7% of votes during its voting period.
3-2. Receivers
3-3. What they do with their wBNB
Findings
According to the consequences of the previous parts, the activity of wBNB liquidity pool (pool #840) and the behavior of its liquidity providers has been analyzed. The summary of outcomes are as below:
· After passing proposals no.358-359-360 on 2022-11-14 to 19, and adding pool #840to the regular incentives program of Osmosis, the activity of this pool experienced sudden jump accordingly.
· After passing proposals no.358-359-360 on 2022-11-14 to 19, it can be seen that, the trading volume of wBNB on Osmosis had been increased dramtically.
·
Its important to determine the behavior of wBNB receivers on the Osmosis network. If their received wBNB was their first transaction, then considered it as new wallets otherwise considered as old wallet. Most of the wBNB receivers experienced their first receive action with wBNB and the highest count of new wallets occurred on NOVEMBER 14 with 90 unique receivers.
· The distribution of wBNB receivers reveals that most of the receivers have been received less than 1 wBNB , accordingly.
**It can be seen that , after proposal was passed , the share of 1-10 BNB transfers has been increased.**
Findings
- Looking at the charts which are providing general performance of Osmosis chain (in terms of IBC in transactions) in a daily basis, it is clear that, around the proposal days, the performance of the network had been increased significantly. because, people try to provide liquidity to Osmosis and use new passed proposals to get more profit.
Findings
· According to the table provided in this investigation, the source of BNB on Osmosis is Axelar and about 3152 wBNB have come into the Osmosis by 554 transfers.
· The highest volume of BNB transferred in on November 14 with over 284k $ volume by 99 unique receivers.
**the impact of proposals which were issued on the 2022-11-09, is crystal clear as well !**
- Osmosis is a platform that provides incentives to users who trade on the other platforms after bridging their assets into the Osmosis. It is powered by wAssets and provides several incentives for users who participate in the pool. By providing liquidity, users can earn rewards in the form of trading fees and staking rewards. The platform also allows users to trade with lower fees, more liquidity, and faster transactions.
- In all reviewed cases, in the days related to the approval of the proposals and after, we saw a very significant increase in the dollar value of the input to Osmosis and an increase in the number of transactions. Also, the approval of the proposals had a positive effect on the amount of transferred tokens per user. In general, the extraordinary effect of such actions in significantly increasing the performance in Osmo network and also increasing the use of Axelar Bridge in the transfer of assets to Osmosis is evaluated as quite tangible and positive, and such actions are suggested for other assets as well.
The effects of the examined proposals on the overall performance of the Axelar network - transfer out to Osmosis
Findings
- Investigations in the Axelar network show that during the approval period of the examined proposals, simultaneously with the increase in the value of outgoing transactions towards Osmosis, as well as the increase of other relevant metrics, the production FEE in the network has increased significantly.
- But it is interesting that the median fee on the days related to the approval of the proposals was a little lower than other days.