A Factor Reduction for xINIT-INIT Pool

Initia Governance
1

1. TL;DR

This proposal introduces updates to the following components:

Initia DEX

  • Modify the A Factor for the xINIT–INIT pool from 50 → 20.

  • Apply the change via a linear ramp over 24 hours to ensure a smooth transition and protect LP value.

2. Background

This proposal seeks to modify the A Factor for the xINIT–INIT pool on Initia DEX.

The existing parameter was set at launch to ensure price stability within the stablepool. As liquidity has grown and the system has matured, we now have an opportunity to further optimize the user and LP experience by refining this value.

Reducing the A Factor will make the pool more responsive to trades, meaning that smaller swaps will have a greater effect on restoring the peg when imbalances occur. For users, this improves the speed and accuracy of price alignment. For LPs, it allows the pool to self-correct with less external capital, helping maintain a healthier balance between assets.

3. Parameter Changes

Module Parameter Name Current Value Proposed Value
stablepool (xINIT–INIT) A Factor 50 20

All proposed changes are in accordance with Initia’s governance process and will be automatically applied by the chain once the proposal passes and the voting period concludes.

4. Rationale

This parameter change is intended to:

  • Enhance capital efficiency by allowing smaller trades to impact the peg more effectively

  • Improve responsiveness of the pool to market conditions

  • Maintain a healthy balance between assets without requiring large interventions

5. Testing

Impact on Users/Validators:
No negative impact expected. Users may notice smoother peg adjustments with less capital required.

Chain Stability Considerations:
No risks to chain performance. The change follows standard stablepool parameter logic and does not affect core consensus or infrastructure.

6. A Factor Ramping Period

Once this proposal is approved, the A Factor will be updated using a linear ramp from the current value to the new value over a period of 24 hours. This is designed to minimize any sudden price shifts and protect liquidity providers from value loss during the transition.

Governance Votes

  • :white_check_mark: YES – You support implementing the proposed parameter changes.

  • :cross_mark: NO – You oppose making these changes to the on-chain parameters.

  • :prohibited: NO WITH VETO – This proposal is spam, harmful, or violates governance principles.

  • :white_circle: ABSTAIN – You choose not to vote either for or against the proposal but want your participation recorded.

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