Hello dear readers and intrepid pioneers,
This is the first newsletter publication for Angel City Stakes, and as such is considered to be a “alpha” version as we test our platform provider (Substack), distribution dynamics, and content design and presentation.
If you are reading this email, it’s because you’re one of the early adopters who has worked with me to set up your liquidity mining pools and token stakes on Osmosis. For this first publication, I will keep it brief with only the highlights. My goal is to include more relevant content for each subsequent newsletter as I iterate on the process and develop a standard framework for distribution.
Osmosis Zone Highlights
1.) Osmosis v7 “Carbon” upgrade is live and introduces Superfluid Staking
2.) New Token Listings
3.) Notable Pool Highlights
Osmosis Upgrade and Superfluid Staking
One of the biggest and most important upgrades for Osmosis codebase, “Carbon” introduces Superfluid staking and increases network speed and efficiency.
Superfluid staking is available on 14-day bonded LP shares, and only for select pools (at time of this writing, March 2022, there are only three pools offering the superfluid option). Superfluid allows users to stake LP shares (I.e. if you already have 14-day bondings in the selected pools, you can stake these) with a validator in order to earn additional return drawn from the standard OSMO staking process.
Normally, you would either stake OSMO with a validator outright (simple stake), or you would add OSMO and another token as part of a liquidity pair for a pool, and then bond your LP tokens. Now with Superfluid, it is essentially another level of staking applied to the LP tokens themselves. So now when add liquidity and bond your LP tokens as part of pool, you can go a step further and then stake the bonded LP tokens to a validator.
Available Pools
There are three currently available pools, although we expect this to change over time (as with all things Osmosis, the platform is designed for rapid experimentation).
Pool #1 OSMO/ATOM
Pool #560 OSMO/UST
Pool #561 LUNA/OSMO
These pools have a rainbow-colored ring around them from the Pools page in Osmosis:
Superfluid Staking Rules
- You can only choose one validator per pool
- You will lose your voting rights on superfluid staked LP shares, and the validator will gain voting rights of your shares
- You cannot redelegate from one validator to another instantly, as you can in standard staking. You must undelegate, wait for the unstaking period, and then delegate to a new provider if you wish to change.
- As is the case in standard staking, and staked shares are subject to a 5% slashing penalty if the validator is not performing or signs bad transactions. The 5% penalty would apply to all superfluid LP shares.
- You earn the Osmosis stake APR on 50% of your OSMO assets. In a pool with 50% OSMO and 50% alternate token, you earn the equivalent of the OSMO APR on 25% of the total.
- For more, see the Carbon Upgrade notes: https://medium.com/osmosis-community-updates/osmosis-v7-0-0-carbon-upgrade-85611a0b2c34
- Superfluid will likely change over time based on community governance proposals and implementations
Superfluid Analysis & Thoughts
If you have a long-term investment horizon and are already in 14-day LP bondings in pools with Superfluid staking available it makes sense to capture the additional APR, assuming the validator you select can be trusted to perform and has a track record of doing so. At ACS we have never experienced slashing in any of the validators we’ve staked with, but it has been known to happen by the community from time to time, although generally it is rare. Enabling Superfluid Staking will slightly raise your risk.
We suspect that proposals to enable additional pools with Superfluid staking will be passed. We believe this will have the following effects:
- Decrease OSMO standard stake APR more rapidly
- Increase voting rights and power of validators
- Reduce 1 and 7-day APR rates for pools with Superfluid
- Increase price stability and Osmosis Zone liquidity as more people lock their capital for longer
- Increase the chances of having funds slashed for users that enable Superfluid
It is possible that voting rights may be retained in the future, but the dev team will need to implement this functionality. It sounds like the loss of voting rights is more a technical limitation rather than a conscious decision. The same applies to selecting one validator and not being able to redelegate. Given the strength of the community I suspect these and any other concerns to be addressed and resolved, but it will require monitoring of the situation to verify that progress is being made in the right direction and not at the expense of individual stakers.
The biggest drawback to superfluid staking is the fact that users will earn additional APR on only 25% of their holdings, but risk 100% of the superfluid total to the 5% slash penalty. Despite this concern, Angel City is proceeding with enabling Superfluid stakes in available pools.
Click the link to our Dropbox share for detailed instructions on how to enable Superfluid Staking
New Token Listings
Several new tokens have been launched on Osmosis. Remember, Osmosis is a decentralized exchanged (DEX) and as such welcomes all tokens to list on its platform, assuming they are Cosmos Hub ecosystem tokens and compatible with interblockchain (IBC) transfers. We bring this up to suggest caution with any new token listings and corresponding pools. Tokens without prior price, volume, or liquidity metrics are difficult to analyze. As such Angel City takes a cautious approach to new tokens and may invest only after performing due dilligence.
Some items to look for include:
Strength of project team
Strength and number of community (Twitter activity/followers, Discord activity/members, Reddit, etc.)
Price action (price stability is key, gradually declining prices are a red flag)
“Tokenomics” - Token distribution schedule, lockup expirations schedule, etc.
Trading metrics - Long-term rising or falling of liquidity and volume, overall size of project and liquidity
The newly listed tokens are listed below, taken from the Osmosis Community Update:
MARBLE — Marble is the first community-driven DAO on Juno.
CTK — CertiK is a leading security-focused ranking platform to analyze and monitor blockchain protocols and DeFi projects.
PSTAKE — pSTAKE is a liquid staking solution that allows users to mint pegged ERC-20 tokens representing staked proof-of-stake assets.
DEC — Decentr gives surfing the internet a payable value by facilitating the extraction of economic value from user data into fiat or digital currency.
UMEE — Umee is a cross chain DeFi/Lending platform, utilizing bridging solutions towards interconnecting blockchains and encouraging better capital efficiency.
GRAV — Gravity Bridge is an Ethereum to Cosmos bridge, allowing Cosmos SDK projects to access ERC-20 assets via IBC, and create ERC-20 representations of Cosmos SDK assets.
DARC — Konstellation is a decentralized cross-chain capital markets protocol built on Cosmos.
Upcoming Token Listings
EVMOS — Evmos is the first IBC-compatible EVM-based chain, bringing composability, interoperability, and fast finality to Ethereum.
FET — Fetch.ai creates AI platforms and services that let anyone build and deploy AI services at scale, anytime and anywhere.
SWTH — Switcheo Labs is a creative and experimental think tank that nurtures ecosystems which form the foundations of a new decentralized world.
INJ — Injective Protocol is a decentralized cross-chain derivatives exchange protocol.
Notable Pool Highlights
In the future ACS may offer analysis and insights into pool metrics, pool forecasts, and pool properties including any potential or upcoming changes.
At this time we would like to note expiring external incentives, a potential “Last Call”.
This is the FINAL MONTH of external incentives for the following pools:
Pool #497 & #498 - JUNO pools with OSMO or ATOM - 29 remaining epochs
Includes internal incentive match (both external and internal APR will take a hit after the incentive period expires)
Pools #560 & #562 - UST pools with OSMO or LUNA - 24 remaining epochs
Pool #560 will also lose internal incentive match
External incentives for both pools are minimal, some might even say trivial, so there should not be much fallout with expiration on these
Pools #604 & #611 - STARS pools with OSMO or ATOM - 30 remaining epochs
Includes internal incentive match (both external and internal APR will take a hit after the incentive period expires)
Pools #573 & #574 - BTSG pools with ATOM or UST - 15 remaining epochs
Includes internal incentive match (both external and internal APR will take a hit after the incentive period expires)
Pools #641, #642, & #643 - UMEE pools with OSMO, UST, or ATOM - 22 remaining epochs on UMEE/UST, ATOM/UMEE, and 15 remaining epochs for the UMEE/OSMO pool
Does not include internal incentive match (there is no match)
Pool #648 - PSTAKE/OSMO - 23 remaining epochs
This is actually a new pool that had only one month of external incentives
Thank you for reading and please feel free to share any thoughts or request info you would like to see for next time.
Cheers,
Crypto Mike, Angel City Stakes