ACR-29: Divert ASTRO Incentives from axlUSDT-axlUSDC to ASTRO-LUNA

Proposals
1

Proposal

The axlUSDT-axlUSDC pool currently receives 14.698% of ASTRO incentives, and the ASTRO-LUNA pool receives none. I propose we shift these incentives, such that axlUSDT-axlUSDC has 9.799% and ASTRO-LUNA has 4.9%.

Motivation

Through discussion on Discord and Astroport Forum, the Astroport community has reached consensus on lowering the incentives for the stablecoin pool. Max has pointed out that the stablecoin pool generates very little fees proportional to incentives, and others have commented that USDT has no utility in the Terra ecosystem.

At the same time, many in the Astroport community are frustrated at the low liquidity in the ASTRO-LUNA pool, which currently has no incentives. Many people buy LUNA on CEXes, send it to Terra, and use it to buy ASTRO. For them, it’s inconvenient to have to swap to USDC to access the greater liquidity in the ASTRO-USDC pool. Plus, when LUNA unlocks begin in November, people will want to go straight from their unlocked LUNA to ASTRO. Deeper liquidity is needed.

Expectations

The ASTRO-LUNA pool is currently at $225,000 of liquidity. Proposed redistribution of allocation points gives the pool 4,900,000 ASTRO annualized, which, at an ASTRO price of $0.07, is $343,000 in annualized incentives. That would support $686,000 worth of liquidity with a 50% APR from incentives. Plus, there is often significant trading volume in this pool, meaning either the liquidity depth or APR from last sentence would actually be higher.

The axlUSDT-axlUSDC pool currently has $8.2 million in liquidity. Since 1/3 of incentives are being removed (and the APR from fees is negligible), depth would shrink by 1/3.

Appendix 1: The Future of axlUSDT-axlUSDC

This is a bit of an aside, but in the future I think we should take incentives from the stablecoin pool and give them to new tokens that appear on Astroport. For example, in a separate proposal I think 2,050 allocation points should be taken from the stablecoin pool and given to the new TPT (Terra Poker) pool. As new tokens appear, we should keep taking from the stablecoin pool until it has no incentives or the community shows a desire to leave it with a small amount of remaining incentives.

Appendix 2: Allocation Points Tables

docs.google.com_document_d_14yQ49vl9ddRez7dBRO2hnNifsLYUYgdjFV1DUEw9lnU_edit

docs.google.com_document_d_14yQ49vl9ddRez7dBRO2hnNifsLYUYgdjFV1DUEw9lnU_edit_pli=1

Appendix 3: Code to Execute

{
“setup_pools”: {
“pools” : [
[
“terra1khsxwfnzuxqcyza2sraxf2ngkr3dwy9f7rm0uts0xpkeshs96ccsqtu6nv”,
“10000”
],
[
“terra1fs0p7gammucw7get7mq7rzdk6rexxgszp003zr3859qyfc02ur2sdha672”,
“5000”
]
]
}
}

Pending the community’s opinion, after the required number of days I will put this up for a vote. In the meantime, please comment.

2 Likes
2

I don’t see a reason why the stablecoin pool’s allocation couldn’t decrease to 10k points as suggested above. The amount of liquidity in that pool has actually increased by ~33% as of when this was first brought up in the Discord. So, I don’t think this proposed amount of decrease would be detrimental.

axlUSDC-axlUSDT LP Liquidity 30D
axlUSDC-axlUSDT LP Liquidity 30D867Ă—253 14.8 KB

In regards to the ASTRO-Luna LP, I think that this should also be considered an onramp pool. As John mentioned, it is pretty common for users to onramp to the Terra ecosystem with Luna, at the least because it is the main gas token. To that effect, I think it could stand to get a bit more liquidity in there. Below is the liquidity chart for this pool over the same time period as the one above.

ASTRO-LUNA LP Liquidity 30D
ASTRO-LUNA LP Liquidity 30D861Ă—240 14.5 KB

As new tokens appear, we should keep taking from the stablecoin pool until it has no incentives

This part I don’t necessarily agree with, as I think we should hang on to a solid stablecoin yield until we’ve built up more pair options to trade on the DEX. I don’t think the next ~5 listings should take all allocation from this pool (if each took 2,050 from it). That does not mean the stablecoin pool’s allocation couldn’t be decreased again down the road. I just don’t think the thought process should be automated based on the next few arbitrary listings, but instead be decided on separately.

2 Likes
3

Hi @John_Galt , I’d like to re-iterate my points laid on Discord.

Not incentivising ASTRO-LUNA pool
We currently have both LUNA-axlUSDC & ASTRO-axlUSDC incentivised. There is no point wasting ASTRO emissions into LUNA-ASTRO since users are able to swap LUNA to ASTRO via axlUSDC which are both relatively well incentivised. Even in Terra Classic, LUNA-UST and ASTRO-UST are the only two pools incentivised, and not LUNA-ASTRO because it’ll be a waste of emissions. The current trading activity you see on LUNA-ASTRO is the result of arbing opportunities between LUNA-axlUSDC & ASTRO-axlUSDC pools. Even without incentives, this pool will be able to provide a decent APR for LPs.

Reduce emissions to axlUSDT-axlUSDC
I agree that this pool should have a reduction from their current alloc_points of 10,000 due to the lack of utility for USDT on Terra.

Incentivising a second LSD Luna token, ampLUNA
I’d like to iterate my point that we should look at decentralising the LSD derivatives on Terra from the get-go. Rather than splitting the emissions over various LSDs, I suggest we go with Eris Protocol’s ampLUNA as an alternative to LunaX. Keeping emissions to LunaX will just breed complacency, and Eris Protocol indicated that they will continue to build on Terra. This is certainly a better signal of a protocol committing itself to Terra compared to Stader Labs, which have gone radio silence since the Terra emergency grants and only markets itself as 20% returns.

Capapult is currently building a stablecoin, SOLID, on Terra & they have indicated that they will be lockdropping their CAPA tokens to LUNA LPs. The APR for the LSD pools will certainly be the main pools that they will be lockdropping to ensure there are sufficient liquidity in them. By building up ampLUNA-LUNA’s liquidity, Capapult will be able to lock ampLUNA-LUNA LPs & LunaX-LUNA LPs into Astroport & further build up the liquidity.

Other LPs for Future Considerations
The other two LPs that we could consider could be USK-axlUSDC & ATOM-LUNA. I’ve laid out the proposal for USK-axlUSDC, but due to an USK IBC error on Terra, I’m placing it on hold. ATOM is widely available in centralised exchanges & widely accepted throughout Cosmos. Having a deep ATOM-LUNA LP will allow seamless onboarding of Cosmos users.

Therefore, I’m proposing the following alloc_points adjustments.

Astroport Pools Current alloc_points Proposed alloc_points % of total emissions
VKR-axlUSDC 2,050 2,050 2%
ASTRO-axlUSDC 30,000 30,000 29.397%
LUNA-axlUSDC 40,000 40,000 39.196%
LUNA-LunaX 15,000 10,000 9.799%
axlUSDT-axlUSDC 15,000 10,000 9.799%
ampLUNA-LUNA 0 10,000 9.799%
Total 102,050 102,050
2 Likes
4

As you say, LUNA has incentives for the LUNA-axlUSDC pool and the LUNA-ASTRO pool. Think it makes sense to do the same for ASTRO. ASTRO and LUNA are both big-ticket tokens, so they should both get 2 incentivized pools. Makes sense to me.

Like your plans to incentivize other pools, especially the ATOM-LUNA pool. Would be great for Astroport. Look forward to discussing that once the pools are live.

Strongly opposed to incentivizing the ampLUNA pool. It would fragment LUNA LSD liquidity, and also Eris isn’t particularly deserving. They’re a clone of Steak, they don’t have a token, and they don’t have a compelling vision. I’m no fan of Stader, but they are the most professional LSD provider on Terra, and they already have incentives and liquidity. Don’t want to fragment that liquidity.

Other people, please weigh in on these issues.

5

John, as much as it makes sense to you, you have to look at it from the facts. Having ASTRO-axlUSDC, LUNA-axlUSDC & ASTRO-LUNA doesn’t make sense. It would be great if we have a tripool LUNA-ASTRO-axlUSDC, but currently, tripool is not an option & we only have finite amount of emissions.

As for your argument on ampLUNA, I see it being more of your opinions & feelings rather than actual facts. I don’t see a problem with being a clone or fork. Based on your comments, do Astroport or TraderJoe fall under a clone of Uniswap? Stader, is where it is, due to the fact they’ve raised millions in VC funding. Supporting a “professional” protocol just because it looks like it seems a little condescending to smaller teams.

Before deciding, I suggest everyone reaching out to Phillip from Eris Protocol which you can find him on Discord. Speak to him on his vision, and determine if the alternative should be ampLUNA or another staked version before you decide to keep the entire emission for LSD to Stader.

6

Max makes some good points here. I think this makes sense given the current APR from fees alone. I think my previous thoughts were misguided with the motives of thinking everything paired with axlUSDC is not necessarily a great thing, but that is something that could be tackled later separately once other options are abound.

That said, I think the proposed decrease in allocation for axlUSDT-axlUSDC makes sense, and we should table the other items discussed in here regarding incentivizing other pools (like LSDs and future LPs) to their own respective ARCs, so this one can progress as intended.

1 Like
7

Hi all,

we just looked through some old astroport posts and saw your post @John_Galt about The Future of Astroport: Liquid Staking DEX

This is exactly something that we can and want to provide to the community.

The only difference to Quicksilver, Stride (and Stader) is, that our focus is 100% on Terra being our main base of operations and we want the liquidity be on the Terra Chain, for us also building products around yield. I totally understand your reservations about us being a small new and unknown team.

Let’s setup a small astroport community call where we can talk about our vision, possibilities, what we are working on, what is possible and for you and the community to know us a little bit better.

There is a unique opportunity right now, that we would love working on together with astroport community and capapult:

  • Bring ampLuna as collateral for SOLID
  • Bring in new amp* liquid staking derivates (or other steak forks) from all or many cosmos chains
  • Pair all of them directly with astro (reduced fee to 0.2%), so any swap will go like ampOsmo → ASTRO → axlUsdc
  • We are also working on bringing the people from classic (after IBC) → Perfect onboarding experience is possible. They already learn about providing in astro classic, and as soon as IBC is open, we will allow the move of ampLunc to Astroport on Terra 2. Based on our contract volume and interaction, there are a lot more people using Classic than there are on Terra 2.
  • Bring the full DEFI around LSDs natively on Terra
  • Make Astroport the central liquidity hub for LSDs and also Cosmos DEFI.

Stride had the possibility to launch on Astroport, but chose Osmosis.
Stader is doing other things on other chains and incentivizing there.
We can’t incentivize, as we think product market fit first before tokenomics, but will provide the products, dev power and focus.

Sorry to extend in this topic here, but right now the discussion is fragmented.

Best Philipp

8

This conversation seems to be fragmenting into two separate convos. To address them both:

It does make sense to incentivize the ASTRO-LUNA pool. When swap fees alone provide a decent APR, that’s not a good thing. That shows that the pool needs much deeper liquidity. LUNA and ASTRO are by far the two biggest tokens on Terra right now. LUNA is the gateway into Terra, and ASTRO is the biggest thing to buy on Terra. For these two reasons, it does make sense to incentivize the pool. The 24 hour volume in the ASTRO-LUNA pool sometimes exceeds the liquidity depth. When that happens, you know you need deeper liquidity.

I’m just saying we should incentivize pools that people actually use. People like the ASTRO-LUNA pool, so we should deepen liquidity there so people can use it more efficiently.

And remember, on November 24th 540,000 LUNA will begin unlocking per day. And that unlock rate will INCREASE in May of 2023. We should make it as convenient as possible for that liquidity to go to ASTRO, which means having a deep ASTRO-LUNA pool.

With regard to the LSD conversation, yes I did have that idea for Astroport to be a Cosmos LSD hub. Your ideas are interesting, and I do dislike Stader for neglecting Terra. I just feel uneasy providing incentives to a project that doesn’t have enough conviction in itself to launch a token. If you believe in “real yield,” then why do you need incentives from Astroport? But I am sympathetic to Eris, and I do like the Terra-centric approach. Will look into Eris some more.

9

Hey John, seems that we do have consensus in one area along with the forum community members which is to reduce the incentives for axlUSDT-axlUSDC pool.

I suggest we go ahead by executing the first adjustment from 15,000 alloc_points to 10,000 alloc_points. This will in essence reduce the total alloc_points to 97,050.

We can split the other conversations to its own separate ARCs:

  1. Incentivise ASTRO-LUNA LP
  2. Incentivise ampLUNA-LUNA LP
10

Thanks for the comments, @Philipp. I agree that a community AMA call with make more sense to share your vision to the Astroport community.

1 Like
11

Appreciate you comments and ideas @Philipp
I’d like to get in touch with you to discuss how we can support a community event. Please send me an invite or open a ticket in our Discord.