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Cosmos-based decentralized exchange Astroport is set to deploy its passive concentrated liquidity (PCL) pools on Osmosis, the largest Cosmos-based DEX by volume, following successful governance votes on both platforms. This move marks an alignment between two of the most active DEXes in the Cosmos ecosystem, aiming to improve the overall trading experience and capital efficiency for users.
PCL pools, which aim to provide the benefits of concentrated liquidity without requiring active management, will be offered alongside Osmosis’s existing “supercharged liquidity” pools. Astroport’s pools utilize an advanced repegging algorithm that automatically concentrates liquidity around the exponential moving average of ongoing trades. As Astroport core dev Andre Sardo explained,
“With PCL pools, you go and LP in a pool, and you can leave your tokens there for days, months or years, and have it automatically adjust to market conditions. Impermanent loss gets minimized, and fees get maximized.
And because your liquidity is passive, it’s truly programmable or composable. It can be tapped by apps and vaults and aggregators anywhere in the Cosmos.”
The deployment of Astroport’s PCL pools on Osmosis is expected to benefit both protocols. Standard PCL pool fees will flow back to xASTRO stakers, while all trades routed through Astroport’s PCL pools on Osmosis will generate a 0.1% fee for Osmosis, to be split between the Osmosis community pool and the OSMO staking pool. This move is anticipated to expand Astroport’s reach, grow its global trading volume and fee generation, and attract more passive liquidity to Osmosis.
Sunny Aggarwal, Co-Founder of Osmosis Labs, predicted the move could lead to record volumes within the first month.
“Competition is good, but aligning for the benefit of the greater community is even better — so it’s very exciting to see Astroport and Osmosis joining forces here… Only time will tell, but I predict that the Astroport deployment on Osmosis will become one of the biggest by volume within a month or so of the launch.”
While supercharged liquidity and PCL pools may appear to be competitors, the teams believe they are better viewed as complementary offerings catering to different types of LPs. Supercharged liquidity pools are best optimized by professional market makers and active LPs who run their own algorithms and programmatically readjust their liquidity to match market conditions. In contrast, PCL pools cater to more casual LPs who prefer a “deposit and chill” approach, according to the teams, allowing the pool’s algorithm to concentrate their liquidity automatically.
According to Jose Maria Macedo, Founder and CEO of Delphi Labs, this alignment between Astroport and Osmosis is a significant development in the Cosmos ecosystem. Macedo stated,
“It’s two massive DEXes that outsiders look at as rivals coming together and assimilating. And they’re doing it in ways that benefit both protocols. They’re leaning into their strengths and combining to improve liquidity for the entire Cosmos ecosystem.”
Further, Astroport core developer Donovan Solms highlighted the portability of Astroport’s codebase, comparing it to a “magic suitcase” that can be deployed on any Cosmos chain. Solms explained,
“We can go wherever there’s a need for liquidity in the Cosmos. And thanks to IBC, each deployment is interconnected. It’s part of a bigger whole, which is this backend layer of truly passive, truly infinite liquidity.”
Preparations for the deployment are underway, with PCL pools expected to go live on Osmosis in the coming weeks. This historic alignment between Astroport and Osmosis is poised to improve capital efficiency for those who swap or have trades routed through Osmosis while also potentially “defragmenting” liquidity spread across other automated market makers throughout the Cosmos ecosystem.