Osmosis v14.0.0 — Neon Upgrade

RoboMcGobo
Osmosis Community Updates

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Happy new year Osmonauts! Fresh and rested from their holiday break, the Osmosis developers have been hard at work preparing the v14.0.0 Neon upgrade. While not as exciting as the v13.0.0 upgrade (jokes about inert gasses were definitely made — IYKYK) Neon contains a number of important enabling upgrades for upcoming Osmosis integrations like Mars Protocol and cross-chain swaps.

The upgrade is scheduled to take place at block height 7937500, which is estimated to occur on Monday January 23rd, UTC 16:00. Be advised that because block times are variable, the upgrade may take place up to a few hours before or after the scheduled time. You can view a real-time countdown to the upgrade height on Mintscan.

Note: During the upgrade, you will be unable to use the Osmosis DEX. Staking and governance features will also be unusable until the upgrade is complete. A full changelog of upgrade features can be found here.

Geometric TWAP

You may remember from a previous article that Osmosis implemented Time Weighted Average Pricing as part of the v12 upgrade. The TWAP implementation enabled by the v12 upgrade utilizes arithmetic mean pricing, a method of averaging that is less sensitive to downward price manipulation relative to spot pricing or other methods of averaging.

However, when utilizing Osmosis liquidity pool TWAP pricing as an oracle for a lending protocol (as is the plan for the upcoming Mars Protocol integration) the oracle needs to take into account upward price manipulation as well. To stave off liquidity attacks utilizing upward price manipulation, geometric mean pricing is far superior and results in a higher overall cost to manipulate prices on Osmosis.

The Neon upgrade will allow Osmosis liquidity pools to expose both arithmetic and geometric pricing mechanisms, so that protocols building on Osmosis may choose which pricing mechanism best suits their individual usecases. This should also be relevant for the upcoming concentrated liquidity implementation, as it will make pricing ticks more efficient (more on concentrated liquidity in a subsequent article).

Downtime Detection Module

Another enabling change for Mars, the Neon upgrade adds a module that detects if Osmosis is recovering from downtime, and exposes that data as a contract query.

This is helpful in preventing a liveness failure on Osmosis from causing improper liquidations on Mars or other lending protocols that rely on Osmosis pricing data. In the event that Osmosis halts for any reason, asset prices on Osmosis will fall out of parity with prices of the same assets trading off of Osmosis. When the Osmosis chain resumes block production, arbitrage will begin to equalize these prices.

This takes time, however. In that time, oracles relying on Osmosis pricing data will return inaccurate prices, resulting in an increased potential for wrongful liquidation of lending positions. The downtime detection module solves this by allowing for oracles to query the module and determine how long the chain has been recovering from a downtime. The operator of the oracle can then choose a time period post-restart after which it can resume returning Osmosis pricing data.

IBC v4.2.0 Upgrade and Wasm Hooks

As part of the Neon upgrade, Osmosis will upgrade its IBC implementation to v4.2.0.

Among other things, this upgrade will unlock the ability to make cross-chain wasm hooks reusable. This is a requirement to allow Osmosis to launch outpost dexes on other chains to make cross-chain swaps using Osmosis liquidity.

Outpost dexes will allow for any chain that supports cosmwasm to have access to Osmosis liquidity without needing to transfer funds to Osmosis in a separate step. For example, a user on Juno can initiate a trade from the Juno chain, and the contract will automatically send the assets to Osmosis, make the swap, and return the output assets to the Juno chain. More to come on this exciting feature in a subsequent article.

What’s Next?

It was important to get this upgrade deployed quickly, as the Mars Protocol launch is imminent, and a launch announcement is expected from Mars very soon.

With these enabling upgrades out of the way, Osmosis developers can shift focus back to features like concentrated liquidity and the protoRev module, both presumed to be slated for launch with v15.0.0 (assuming all goes smoothly). Keep an eye out for further announcements on these in the weeks to come!

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