ARC-139: Reduce PCL pool fee range

Proposals ARC (Astroport Request for Comments)
1

Summary

This proposal aims to update the default parameters for Astroport’s Passive Concentrated Liquidity (PCL) pools to optimize price execution in light of recent declines in volume. By lowering the fee spread, the proposal seeks to strike a balance between incentivizing trading and maintaining LP profitability. The new parameters will be applied as the default for all PCL pools moving forward, including the top 15 TVL PCL pools with a minimum of ~50k$ liquidity on Neutron and Terra, and will align with the optimized fee structure previously used on the Osmosis deployment.

Motivation

The current PCL fee parameters are effective when there is significant volume and liquidity, but with the recent lack of trading volume, the yields have become less appealing. Lowering the fee spread can incentivize trading by offering better price execution, which in turn can drive higher volumes and improve fee accrual for LPs.

Applying the concept of the Laffer Curve, we intend to adjust for an optimal balance between fees and volume where the most revenue can be generated. By adjusting the fee parameters, Astroport can find this sweet spot and maximize protocol efficiency. Additionally, the proposed changes align with the fee structure previously implemented on Osmosis (0.05% - 0.2% fee) that kept PCL pools competitive in the face of the additional fees applied on top of PCL fees.

Implementation

  1. Update Default PCL Parameters:
    • Replace the current default PCL parameters with the new values:
      • Amp: 10
      • Gamma: 0.00018125
      • Mid Fee: 0.0005
      • Out Fee: 0.002
      • Fee Gamma: 0.00023
      • Profit Threshold: 0.0000002
      • Min Price Scale Delta: 0.000146
      • MA Halftime: 600
  2. Apply New Parameters to Top 15 TVL PCL Pools:
    • Update the fee parameters for the top 15 PCL pools by TVL with a minimum of ~50k$ liquidity to reflect the new default values.
  3. Monitor Performance:
    • Track trading volume, LP profitability, and fee accrual after the changes to ensure the new parameters achieve the desired balance between trading incentives and LP returns.
    • Adjust further if necessary based on performance data.

Conclusion

Reducing the PCL fee range will make Astroport’s PCL pools more competitive in the current market environment, improving price execution while maintaining LP profitability. By applying the optimized fee structure to the top 15 TVL PCL pools with a minimum of ~50k$ liquidity and setting it as the default for all PCL pools, Astroport can adapt to changing market conditions and maximize protocol efficiency. This proposal ensures Astroport remains competitive and responsive to its ecosystem’s needs.

Executable messages

To be done via Builder MS.

Neutron

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NTRN - dATOM - neutron1ke92yjl47eqy0mpgn9x4xups4szsm0ql6xhn4htw9zgn9wl5gm0quzh6ch
USDC - NTRN - neutron18c8qejysp4hgcfuxdpj4wf29mevzwllz5yh8uayjxamwtrs0n9fshq9vtv
USDC - dTIA - neutron1awgqp5ma90qy0ecezzf6ghple8mpgtlv8z3kez065z7x5fprd4qs7vz4dc
USDC - dNTRN - neutron1hme8vcsky2xeq4qc4wg3uy9gc47xzga6uqk8plaps8tvutjshuwqajnze6
NTRN - ATOM - neutron145z3nj7yqft2vpugr5a5p7jsnagvms90tvtej45g4s0xkqalhy7sj20vgz
USDC - DYDX - neutron1j4xpv03fw664mvntlhqnzp5hjqk2nfw00vrgx9qlq97rxc9fu3lqvmszl2
USDC - wstETH - neutron1tsek896ppwh9zmvx2kcck60ewrng4arxnc2e2ykf6pr2un0c3c9s8mehm8
WBTC.axl - USDC - neutron194s05vry4v7hd6hj23dhd349dyuevpys42gth6l7qsxw8phu7vyqahk5qn
NTRN - AXL - neutron194f0u63jenquqvxr5hj2glq4sdhx60arn8y86299c8qme6pspjesv444yd
ASTRO - USDC - neutron1fqthra23dvgcnd6v4t98wzllvpvt6chn5tk34v0pgy8f8hhlwufs9rnf02
NTRN - dTIA - neutron1hljhz97ng9guyqzpelkvphaky0gnav7wt8jmkr7n497wek8373dqgv8tdp
USDC - wBTC - neutron18axthrskdcthkcmca8a9mmkanhkmwzsysqyypvzx7gu345ngtfhq6lzpg5
dTIA - dATOM - neutron1djs222dtwf3pw5h474fm68wc72ter5y4zftd36ugjs5e069hwqaq79pnrt
STARS - NTRN - neutron15th0f33w9rq35la0aqe66w8hmlr07wy5arap736x4rv836pddn0s8322fg
MARS - NTRN - neutron1cksweytzs7uhasle6638f77ej3rzndcekedc90w9gr9r05qzhreqsfreg4

Terra

LUNA - USDC - terra1v3lqxl0eyte9x3nhdgcj8hwvjq76aupnnzz0yll8mxs5cckc29pqvg2scu
ASTRO - USDC.axl - terra1pcge26n2f7p8cwuk42ehj2mqp52ps5dnssd94655elp0gz97u36se894z8
ROAR - LUNA - terra189v2ewgfx5wdhje6geefdtxefeemujplk8qw2wx3x5hdswn95l8qf4n2r0
LUNA - EURe - terra1vhxl8ggscmhae3muvwvs2vs8ppprzqf07xngcdp798fwnrcksjxszqfa8n
CAPA - LUNA - terra183wqgrwa2k0uvlz99j57c496gfuwgtaccrhv4stcjzv3ydacl9zq0hmf25
LUNA - USDC.axl - terra13cw46g72kwtgln0540j9cqa79ham5k86jlx34e2pqukww6v0v3yseakged

1 Like
2

Appreciate another well-thought-out proposal. Looking forward to seeing the positive effects of the changes!