osmosis

Prop 983: Remove Out-of-Range ETH Pair Liquidity Positions

This proposal withdraws community pool liquidity from the OP/ETH, ARB/ETH, and SHIB/ETH pools. These positions, deployed in Proposal 802, were intended to bootstrap liquidity but have since fallen out of range and failed to attract additional participation, resulting in inactive markets.

Background

In Proposal 802, the community pool provided $80,000 worth of liquidity each into several new ETH pair pools to establish trading venues for these assets on Osmosis.

Since deployment:

  • OP/ETH has declined in value to ~$47,000
  • ARB/ETH has increased in value to ~$83,000
  • SHIB/ETH has increased in value to ~$86,000

All three positions are currently out of range, resulting in non-functional markets with no meaningful market depth. These bootstrapping allocations have not achieved their intended effect of attracting further organic liquidity.

By contrast, other allocations from Proposal 802 have performed well despite also not attracting external liquidity:

  • LINK/ETH is now worth ~$161,000
  • PEPE/ETH is now worth ~$124,000

These remain active and in range, and are therefore not included in this withdrawal proposal.

Subsequent bootstrapping proposals have shifted towards larger $150,000 deployments and vault-based strategies which have proven more effective at attracting additional liquidity and generating volume.

Proposal

This proposal would:

  • Withdraw the OP/ETH, ARB/ETH, and SHIB/ETH liquidity positions from their respective pools.
  • Return all ETH obtained from these withdrawals directly to the community pool. (~0.48 ETH)
  • Convert OP, ARB, and SHIB into USDC via limit orders and return the proceeds to the community pool. (~216k USDC)

This proposal transfers the community pool liquidity positions to the Osmosis Liquidity subDAO, which will execute the above actions.

Rationale

  • Inefficient capital: The positions are out of range, providing no useful market depth.
  • Non-functional markets: No external liquidity has joined, meaning the pools do not serve active trading. Due to this, restoring the liquidity for these markets is not proposed. Trading these assets on Osmosis is still possible via limit orders.
  • Redeployment of funds: Returning ETH and USDC to the community pool for redeployment in more effective strategies.

Forum Post: https://forum.osmosis.zone/t/remove-out-of-range-eth-pair-liquidity-positions/3890