Summary
This proposal recommends a substantial reduction in ASTRO emissions by 72.94%, based on the following considerations:
- The recent market dynamics of ASTRO have led to an over-incentivization of liquidity pools. This imbalance means the protocol will soon be unsustainably releasing more ASTRO via emissions than it buys back with fees.
- A significant portion of the existing liquidity in Astroport’s pools was sourced through strategic partnerships and business development initiatives. These avenues generally necessitate lower incentives compared to those required for regular retail liquidity providers.
Abstract
In light of the recent fluctuations in ASTRO’s market performance, Astroport contributors have run an analysis on the protocol’s existing emissions schedule. Assuming protocol fees do not change, Astroport will begin emitting more ASTRO than it generates in fees should the token hit $0.30 or higher. This would result in some liquidity pools yielding a negative return on investment (ROI) when comparing the cost of emissions to the protocol’s fee revenue.
Currently, the fees-to-emissions ratio is ~1.12, which means overall revenue is still higher than the cost of emissions. But when we only account for protocol revenue (subtracting LP fees) this ratio is only ~0.43.
Furthermore, it is important to recognize that a significant portion of the liquidity has been established through strategic partnerships and business development initiatives. Consequently, the need to further incentivize this liquidity with emissions is markedly reduced.
The process of adjusting emissions on Astroport has historically been complex and prone to stale schedules. This often results in the protocol inappropriately allocating emissions to pools that no longer meet the eligibility criteria.
Additionally, the upcoming launch of vxASTRO will enable rapid emissions changes through bi-weekly Curve-style voting by vxASTRO stakers. Temporarily reducing emissions until vxASTRO arrives should help prevent any emission misalignments.
In light of this, we propose the following emissions schedule:
Under the revised emissions schedule, the allocation of uASTRO per block would be adjusted as follows:
- On Neutron, it would decrease from 1,984,587 to 468,810 uASTRO per block, reflecting a reduction of 76.38%.
- On Terra, it would decrease from 3,283,350 to 450,245, reflecting a reduction of 90.16%.
- On Injective, it would decrease from 78,162 to 7,692, reflecting a reduction of 86.29%.
Overall, these adjustments would effectively lower the total daily emissions of ASTRO from 110,328.5999 to 29,852.57178, culminating in an overall reduction of 72.94%.
This would also adjust the fees-to-emissions ratio to ~4.15 and the protocol fees-to-emissions ratio to ~1.61.
Methodology
In anticipation of the new vxASTRO mechanism, we have tailored the proposed emissions schedule to better align with the upcoming structure for allocating emissions in two-week epochs.
Our approach involved analyzing the revenue generated by all incentivized pools with the aim of reducing emissions to account for a potential increase in ASTRO’s price. This should ensure the protocol does not inadvertently release more ASTRO via emissions than it buys back with fees.
We also factored in the variety of pool types and their respective risks of impermanent loss, striving to balance these considerations in the emissions distribution.
Moving forward, our goal is to maintain emissions at a level that does not negatively impact the protocol’s financial stability, thereby ensuring stakers are not diluted.
All calculations were based on ASTRO trading at $0.25, the price at the time of this writing.
Executable Messages
The executable messages for this proposal looks as follows.
Part one applies all the changes to the Terra Generator:
[
{
"wasm": {
"execute": {
"contract_addr": "terra1ksvlfex49desf4c452j6dewdjs6c48nafemetuwjyj6yexd7x3wqvwa7j9",
"msg": "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",
"funds": []
}
}
},
{
"wasm": {
"execute": {
"contract_addr": "terra1ksvlfex49desf4c452j6dewdjs6c48nafemetuwjyj6yexd7x3wqvwa7j9",
"msg": "eyJzZXRfdG9rZW5zX3Blcl9ibG9jayI6eyJhbW91bnQiOiI0NTAyNDUifX0=",
"funds": []
}
}
}
]
Part two applies all the changes to the Neutron Generator:
[
{
"wasm": {
"execute": {
"contract_addr": "neutron1jz58yjay8uq8zkfw95ngyv3m2wfs2zjef9vdz75d9pa46fdtxc5sxtafny",
"msg": "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",
"funds": []
}
}
},
{
"wasm": {
"execute": {
"contract_addr": "neutron1jz58yjay8uq8zkfw95ngyv3m2wfs2zjef9vdz75d9pa46fdtxc5sxtafny",
"msg": "eyJzZXRfdG9rZW5zX3Blcl9ibG9jayI6eyJhbW91bnQiOiI0Njg4MTAifX0=",
"funds": []
}
}
}
]
Part three applies all the changes to the Injective Generator:
[
{
"wasm": {
"execute": {
"contract_addr": "inj1z354nkau8f0dukgwctq9mladvdwu6zcj8k4928",
"msg": "eyJzZXR1cF9wb29scyI6eyJwb29scyI6W1siaW5qMWo4amRyZWNhNTZ6ZXk3ODRzNDNqcXFzZ3AyMjR1bGhxeHlnc21wIiwiOTIxIl0sWyJpbmoxaHhxNXE4aDdkOHVwNmo0amNteGplNDJ6cGt6cjQwOWo2YXk0d3UiLCIzNTU0Il0sWyJpbmoxZDdkODNna3RwZGxxMHcweTB3dHE2cWQ2eXpwNWp2NzRneHV3NjAiLCIyMDI3Il0sWyJpbmoxZTJ1YzJwMjY1MDlndG5ydjJnajg4MzJma3F4NzB2dDBkbXY2ZWgiLCIyMDY1Il0sWyJpbmoxZXV4MDc2NHQwNWhtbXlma3NqbXdoYWhxOWtoM3lxNHN0Y2cwcnMiLCI2MzYxOCJdLFsiaW5qMXdlYTZlbXN2Z3J4bnNnMDd3c2Y5a3g1ZGpuMnI0ZnlxenN4Y2phIiwiMjc4MTUiXV19fQ==",
"funds": []
}
}
},
{
"wasm": {
"execute": {
"contract_addr": "inj1z354nkau8f0dukgwctq9mladvdwu6zcj8k4928",
"msg": "eyJzZXRfdG9rZW5zX3Blcl9ibG9jayI6eyJhbW91bnQiOiI3NjkyIn19",
"funds": []
}
}
}
]
LAST MINUTE EDIT (2024-01-03): Neutron with the latest upgrade has improved their block time from around 3.1s to 1.8s, so numbers for Neutron have been adjusted accordingly.
