Current liquidity of $DYDX token on Osmosis is pretty low, just ~165k based on Defillama stats https://defillama.com/protocol/dydx.
As a token holder, I do believe in be-able-to-exit at anytime right, but thin liquidity means less attractive to users to buy/sell $DYDX token.
How can we solve it? I think DYDX foundation should lead the discussion to increase $DYDX liquidity pool, something similar to MakerDAO team that supply MKR liquidity by using Uniswap pool, by that they created the confidence to token holders and got extra income from swapping fees.
Welcome all for your comment/feedback on it.
It might be good to explore dYdX providing liquidity indeed, or thinking about a swap with the community pool (although there needs to be a strong case for it to make it really happening)
On behalf of the PRO Delegators’ validator, we want to express our full support for this proposal. We are willing to contribute to determining appropriate amounts to better balance the liquidity situation between Ethereum and Cosmos. To accurately assess the current scenario, it would be beneficial, if the foundation agrees, to disclose their approximate current position in various liquidity provisions on decentralized exchanges (DEXes). We understand the need for non-disclosure regarding existing centralized exchange (CEX) positions.
If the foundation prefers to keep all information private, we suggest considering a ratio approach. Assuming an expansion into Cosmos and a one-sided bridging operation, we recommend the foundation adjust their provisions between the two ecosystems, targeting a 4:1 ratio of Ethereum to Cosmos. This adjustment would not only enhance liquidity in Astroport and/or Osmosis but also maintain a secure position in Ethereum, where the majority of the trading volume currently takes place.
Data to assess that decision:
- Liquidity on Osmosis: 157k$ / daily volume (20d avg.): 300k$
- Liquidity on Astroport: 1,04m$ / daily volume (20d avg.): 100K$
- Liquidity on Uniswap: 2,5m$ / daily volume (20d avg.): 1,22m$
It may also be important to contact both Osmosis and Astroport to discuss potential liquidity agreement based on one sided liquidity provision. This would greatly enhance the ability to solidify the Cosmos liquidity without necessarily having to reduce existing Ethereum engagement.
Thank you for reading,
i agree with @nguyenhd2107. Something should be done about liquidity in Cosmos.
Right now after season 1 traders will receive 1,7M dydx tokens from Chaos labs program. They should have a choice to sell or stake and hold.
Any possible listings on CEXes at least?
A CEX listing with OKX was just announced this morning!
Re: bootstrapping on-chain liquidity, I’m very supportive of this. Will work on a reply with some possible suggestions on how to do this shortly
Following up here! I’ve checked in with a few stakeholders in the Osmosis community, and I feel that Osmosis would be extremely eager to build additional liquidity for DYDX on its dex via a treasury swap between the two protocols. Here’s how something like this might work:
Quick conflicts disclosure: I am a member of both the Osmosis and dYdX Grants Programs
Proposals would go up on both the dYdX chain and on Osmosis (after sufficient forum discussion with both protocols) to send an equivalent USD value of DYDX and OSMO tokens to a multisig on each chain. The multisigs would ideally be composed of prominent and trusted community members from both chains.
If approved on both chains, the multisig on dYdX chain would IBC transfer its DYDX tokens to the Osmosis multisig. The Osmosis multisig would then add this liqudiity at a conservative range to the concentrated liquidity DYDX / OSMO pool on Osmosis. Note that liquidity in this pool is currently very thin. The Osmosis trading router allows for split-trade routing, meaning that this liquidity will help open up another pool to route trades through, allowing for far better total trade execution on Osmosis’s trade router. See the below screenshot for an example of how this works with a $100k ATOM swap.
After the LP position has been added to Osmosis, the Osmosis multisig will receive LP tokens representative of the position.
From here, we have two options. Option 1 would be for the dYdX multisig members to spin up their own Osmosis multisig, where they can receive the funds and custody them. Option 2 would be for the funds to be transferred to an interchain account on Osmosis that is directly controlled by DYDX governance or the community pool. The reason for this is that Osmosis Concentrated Liquidity LP shares cannot yet be transferred via IBC, so these cannot be returned to dYdX’s community treasury. This will not always be the case, and the two solutions presented here would be temporary.
Multisigs would be relatively easy to spin up on both chains thanks to the new Keplr multisig UI (funded by dYdX Grants ^.^)
I’d love to hear feedback from the community on this idea. If there’s interest broadly, I can create a new forum post with the proposal fully fleshed out!
Any option to expand liquidity on dydx/usdc pool via Osmosis instead?
Either Osmosis or dYdX would have to provide the USDC, and AFAIK neither protocol’s community treasury has sufficient USDC to do so.
The benefit of a swap to OSMO is that Osmosis has it in abundance in their treasury, obviating the need to have dYdX provide 100% of the liquidity.
After native dydx was added to okx I don’t think adding liquidity is needed. When “arbitrage” opportunity exists usdc will be added by arbitrageurs
Sounds good, Binance should support it as well but not sure why they dont/havent yet.
Be able to deposit $DYDX from dydx chain and usdc from noble chain are great to users, Binance is slow on it meh.
For the Neutron <> OSMO proposal we have had the conversation on the forum what both parties would gain.
I see the liquidity for OSMO/DYDX is very thin at this point in time, but is there for example a similar demand for higher liquidity for being able to trade OSMO on dYdX? Otherwise we end up in the same situation, but where Neutron failed and dYdX may potentially succeed. Which would be kinda weird to me if there is no clear reason to expand liquidity on dYdX
If it looks right now, there is no market for OSMO trading at all, would that need to be part of the deal?
In the current form it feels like the real only player winning in this would be Osmosis, since it will be able to potentially attract more trading for DYDX as an asset, but without benefitting trading on dYdX as an exchange much.
@nguyenhd2107 since you started the topic; what is your vision here? Would a mutual benefit be preferred in similar scenarios? Or is this truly and only focussing on increasing DYDX liquidity on various places in the Cosmoverse?
dYdX is aiming to have 500 markets live by the end of the year.
I think it’s very likely that we’ll see a market for OSMO included as one of those markets given the depth that it has on various CEXs (the Market Maker proposal recently approved by Osmosis governance will help with this even more).
But tbh unlike the Neutron proposal, Osmosis stands to gain a lot more from a liquidity relationship with dYdX. I don’t see any issue getting a community pool spend approved on Osmosis’s end. Attaching extra conditions for dYdX would add extra friction, imo
Personally I would not go with DYDX/OSMOS pool, what I prefer is something similar to MakerDAO that supply the liquidity via Uniswap V2 MKR/DAI pool Uniswap Info.
Thats something I think DYDX Foundation should think about thorougly, they can seed DYDX/USDC pool on Osmosis + implement buyback mechanism using a fraction revenue of trading fee (10%-20% you name it), but I’m not sure if any constraints that prevent DYDX Foundation to do it, need their feedback on this topic.
Integrating to other CEX is nice to have but we should not depend on that to exit.
Isn’t it all pep market? How its useful to me to exit spot $DYDX if needed.
It wouldn’t be. I think @LeonoorsCryptoman was just thinking of ways to help sweeten the pot for Osmosis to approve a community pool spend.
Note that because of Osmosis’s split routing feature, a DYDX / OSMO pool would still help improve liquidity for people trying to sell their DYDX tokens. You wouldn’t have to let the funds settle in OSMO either. There is a decent sized OSMO / USDC pool with Concentrated Liquidity on Osmosis that can be used to automatically route the trade through from OSMO to USDC.
On the user-facing end, you could simply swap DYDX to USDC and all of the routing would occur on the back-end (similar to uniswap).
Can you elaborate a bit on this one?