Increase the max spread of stkATOM/ATOM pool on Dexter from 2% to 5%

Summary

After careful analysis and consideration of market dynamics and user feedback, Dexter contributors propose to increase the max_allowed_spread parameter of the stkATOM/ATOM metastable pool from 2% to 5% to improve liquidity utilization and enhance trading opportunities of stkATOM.

This proposal is aligned with Dexter’s commitment to providing a robust and efficient exchange for trading Liquid Staked Tokens.

Rationale

Dexter has a parameter called max_spread for swaps in stableswap and metastable pools. It indicates the maximum acceptable variance from the market peg price for a trade that the user is willing to accept. In the stkATOM/ATOM metastable pool, the peg price is determined by the redemption rate (c-value) of the pStake protocol, ensuring optimal prices.

Additionally, in the Dexter protocol, there’s a global parameter called max_allowed_spread currently set at 2%, limiting the max_spread for trades to avoid rates drastically worse than the peg. This parameter is configurable by the governance process.

Increasing it has following advantages:

1. Improved Liquidity Utilization: An increased max_allowed_spreadwill allow for more flexible and efficient use of Dexter’s liquidity. It will enable a wider range of stkATOM trades to be executed (increased liquidity usage) without triggering unnecessary restrictions from the protocol’s end..

2. Enhanced Trading Environment: A higher max_allowed_spreadmeans traders can capitalize on a broader scope of stkATOM arbitrage and trading strategies (increased trading volume).

Conclusion

This proposal aims to adapt Dexter’s trading environment to the evolving needs and strategies of traders and liquidity providers. By increasing the max_allowed_spread parameter as proposed, the stkATOM pool will be able to offer a more flexible and engaging trading experience on Dexter.

Voting

• By voting YES, you agree with the proposed increase of the stkATOM/ATOM pool’s max_allowed_spread parameter on Dexter.

• By voting NO, you disagree with the proposed increase of the stkATOM/ATOM pool’s max_allowed_spread parameter on Dexter.

• By voting NO WITH VETO, you think this is a SPAM proposal, and the proposal’s creator should lose their deposit.

• By voting ABSTAIN, you choose not to participate in this proposal’s voting; however, you contribute to the quorum.