Try Quests to earn cryptoIntroduction
Osmosis: One of the main DEXs in the Cosmos Ecosystem is Osmosis. Users can natively trade assets from more than +30 different chains within the Cosmos Ecosystem, and it performs cross-chain between sub-chains in the Ecosystem.
Superfluid Staking: Superfluid Staking is the latest innovation on Osmosis. The release of Superfluid Staking will allow token holders from these +30 networks to contribute their assets to a liquidity pool and to simultaneously stake those liquidity provider tokens (LP tokens), earning rewards for both forms of participation. (Read More)
Slashing event: Most Proof-of-Stake blockchains have reward and penalty mechanisms. Good behaviors are encouraged through rewards. On the flip side, bad behaviors, inactivity, and dishonest validations are subject to a penalty called slashing. This mechanism is designed to discourage malicious validator behavior and to incentivize network participation, as well as node security and availability. (Read More)
Objective
There are 16 SuperFluid Staking pools currently available on Osmosis
(1, 678, 704, 712, 674, 722, 9, 604, 497, 812, 584, 3, 481, 42, 463, 15)
- What impact would a slashing event have on the OSMO liquidity of these pools?
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Analyze the distribution of superfluid-staked OSMO across these pools.
- Which validators have the most SFS OSMO in total, and per pool?
Approach
Timeframe:
- From the last week of February until today
Sections:
- Impact of a slashing event on the OSMO liquidity of SFS pools?
- SFS pools, Distribution of superfluid-staked / Stakers / Validators / Staking Transactions
- SFS pools overtime , Distribution of superfluid-staked OSMO across these pools
- Validators, SFS OSMO and Pools
Related Flipside tables:
osmosis.core.fact_superfluid_stakingosmosis.core.fact_msg_attributes
SFS pools, Distribution of superfluid-staked / Stakers / Validators / Staking Transactions
Findings:
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In the first pie chart, we can see the distribution of superfluid-staked $OSMO in the Osmosis SFS pools. Pool #678 which belongs to USDC/OSMO pair, has the highest staked $OSMO so far with more than 39.9% share of total SFS $OSMO in the Osmosis chain. Pool #712 (WBTC/OSMO) and Pool #722 ( EVMOS/OSMO) are the second and third pools with the highest amount of SFS $OSMO in the Osmosis chain. These 2 pools have 22.9% and 12.1% share of the total $OSMO. These top three pools have around 75% share of total SFS $OSMO in the Osmosis blockchain.
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On the delegator side, 23.1% of delegators have participated in Pool #722 (EVMOS/OSMO). Pool #1 (ATOM/OSMO) and Pool #678 (USDC/OSMO) are the second and third pools with the highest number of stakers in the Osmosis chain with 21.3% and 19.3 shares in total SFS stakers. As you can see the number of stakers in these three pools is close to each other. Pool #722 has 4918 unique stakers, Pool #1 has 4530, and Pool #678 has 4103 unique stakers. These three pools have 13551 stakers in total and more than 63.7% share of the total SFS stakers in the network
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Among validators, Pool #678 (USDC/OSMO), Pool #722 (EVMOS/OSMO) and Pool #1 (ATOM/OSMO) are at the same level in terms of the number of validators in each pool. All three pools include 156 validators and a 10.8% share for each pool in total validators. Almost the top 10 pools with the highest number of validators are at a close range in the numbers of validators and distribution is quite good from the decentralization point of view
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If we look into the number of staking transactions we can see that Pool #722 (EVMOS/OSMO) has the most staking-related transactions with more than 40760 transactions so far. This is around 31.1% of all staking-related transactions in the SFS $OSMO category. The 2nd and 3rd pools with the highest number of staking-related transactions are Pool #678 (USDC/OSMO) with a 21% share and 27426 transactions and Pool #712 (WBTC/OSMO) with a 12.5% share and 16417 transactions. The top three pools are the reason for +64.5% of all SFS $OSMO transactions
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Comparing all this information we can see 4 Pools as the main active pools in the Osmosis chain. Pool #678 (USDC/OSMO), Pool #722 (EVMOS/OSMO), Pool #712 (WBTC/OSMO), and Pool #1 (ATOM/OSMO) are the most active pools based on the Distribution of superfluid-staked, Stakers, Validators and Staking Transactions
SFS pools overtime , Distribution of superfluid-staked OSMO across these pools
Findings:
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In the bigger picture and considering all SFS pools we can see that the highest weekly distribution in SFS pools has been in the last week of May 2022. From another point of view, we can see an uptrend from the last week of February till the last week of May 2022. Since that we have been in a slice downtrend in the $OSMO SFS.
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Pool #678 (USDC/OSMO) as one of the most active pools in Osmosis Has seen its peak of $OSMO in the last week of May 2022. After 2 weeks we have seen a sharp decline in staked $OSMO in pool #678 but since then a slice uptrend can be seen that lasted til November 2022.
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Pool #722 as one of the other active pools has seen a Sin wave in the weekly staked $OSMO. An increase till the second week of August then a downtrend till the first week of October and then another uptrend till the second week of November which shows activity impulses in this pool very well
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Pool #712 is another top active pool that has seen its peak activity in the first week of this period the last week of May 2022. Since then we can see an obvious downtrend in the amount of $OSMO staked in this SFS pool.
Impact of a slashing event on the OSMO liquidity of SFS pools?
Participants are expected to act responsibly for the benefit of the ecosystem as a whole under the Proof of Stake consensus method. Blockchains penalise validators for improper validation by reducing the value of their staked tokens and/or rewards in an effort to promote responsible behaviour. Double-signing and going offline and being unavailable when the validator should be online to confirm a new block are the two most frequent offences.
Depending on the intensity, a slashing incident will burn a percentage of the validator's stake. A portion of a validator's stake gets burned every block if they are offline for an extended period of time. A double-signing validator is harshly punished and permanently removed from the active set.
If a validator does not engage in consensus for more than 28,500 consecutive blocks, Osmosis charges downtime (approx. 48 hours). The validator is detained and taken out of the running set for one minute. The validator can then submit an un-jail transaction to re-join the active set after this.
Double-signing is severely punished because it has a considerably higher potential to harm the network. A validator that double-signs loses 5% of its entire stake and is tombstoned, meaning that it will never again be able to sign transactions. Following the slicing incident, any delegates to the tombstoned validator immediately unbonded.
Superfluid staking liquidity pools appear to feature a variety of validator sets and very suitably distributed stakes, which may be viewed as evidence that the system is stable and secure. Since a slash event is defined as a loss of 5% of the stake And based on the results in the next charts of this analysis we can see the largest validators in the biggest pools control less than 40% (in Pool #678), less than 23% (in Poll #712), less than 12.1%(in Pool #722) of the total stake in the pool, the maximum proportion of the biggest pool that a validator might be at danger of loss through a slash event (5%) is less than 2% (for Pool#678), less than 1.1% ( for Pool #712) and less than 0.6% (for Pool #722) of the total staked $Osmo in an SFS pool. This means that the risk of a slash event having a significant influence on a pool's liquidity is quite low even for the biggest validators..
Validators, SFS OSMO and Pools
Findings:
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The validator with the address “osmovaloper1clpqr4nrk4khgkxj78fcwwh6dl3uw4ep88n0y4” has the highest number of unique stakers and the highest number of staking transactions. This address is the third largest validator based on the amount of SFS $OSMO too and can be labeled as the most active validator in the Osmosis chain. This validator has recorded more than 17830 staking transactions by 2379 unique stakers so far
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The validator with the address “osmovaloper15urq2dtp9qce4fyc85m6upwm9xul3049wh9czc” has the highest amount of SFS $SOMO. Interestingly this validator has a very low number of stakers; only 49 stakers did 319 staking transactions to make this validator the biggest SFS $Osmo validator
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Another interesting data from this chart is the address “osmovaloper1ej2es5fjztqjcd4pwa0zyvaevtjd2y5w37wr9t” which is the second largest validator in terms of the number of stakers and staking transactions while it has very low amount of $OSMO staked
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The fact that can be concluded from these comparisons is that a large pool in terms of $OSMO staked necessarily does not mean it has the highest number of stakers and the highest number of staking transactions and vice versa. A large pool in terms of staked $OSMO might have been by a few stakers and vice versa
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Validator address “osmovaloper1clpqr4nrk4khgkxj78fcwwh6dl3uw4ep88n0y4” is the largest single validator with the highest amount of SFS $OSMO. This validator is the largest validator of pool #9 which is the CRO/OSMO pair
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This validator (osmovaloper1clpqr4nrk4khgkxj78fcwwh6dl3uw4ep88n0y4) is the bigest validator in other pools like Pools #1, #722, #712, #704 too
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Other Pools in Osmosis each have a unique validator as the validator with the largest amount of staked $OSMO.
Conclusion
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When we compare all of this data, we can observe that the primary active pools in the osmosis chain are 4 Pools. According to the Distribution of superfluid-staked, Stakers, Validators, and Staking Transactions these pools are: Pool #678 (USDC/OSMO), Pool #722 (EVMOS/OSMO), Pool #712 (WBTC/OSMO), and Pool #1 (ATOM/OSMO) are the most active
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A massive pool in terms of $OSMO staked does not necessarily imply that it has the most stakers or the most staking transactions, and the opposite is also true. A small number of stakers may have controlled a large pool in terms of staked $OSMO, and vice versa.
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In Pools #9, #1, #722, #712, and #704 the largest single validator with the most SFS $OSMO is "osmovaloper1clpqr4nrk4khgkxj78fcwwh6dl3uw4ep88n0y4"
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A loss of 5% of the stake is referred to as a "slash event." And according to the dashboard statistics, the largest validators in the largest pools may be at risk of losing money due to a slash event (5%) because they represent less than 2%, 1.1%, and 0.6% of the total $Osmo staked in an SFS pool, respectively, for Pool #678, Pool #712, and Pool #722. This indicates that even for the largest validators, the likelihood of a slashing event having an significant impact on a pool's liquidity is quite low.