ARC-18: Incentivize STEAK-LUNA liquidity

UPDATE: The alloc_point LunaX-LUNA is proposed to be 66,650, not 105,000 which was incorrectly referenced in the text. This has been corrected.

References

Summary

Add STEAK-LUNA pool to Astroport and reward LPs with ASTRO incentives.

Abstract

Steak is a Luna liquid staking protocol similar to Lido and Stader. Users stake Luna to mint STEAK token, which represents their ownership of the staked Luna and can be used in DeFi applications. As staking rewards are accrued, the exchange ratio between STEAK and Luna changes, with each STEAK becoming worth more Luna.

Compared to other liquid staking protocols, Steak has the following characteristics:

  • Zero fee or commission: no useless governance token to siphon value from users;
  • Zero money raised from VCs: developers worked completely voluntarily, paying for expenses out of their own pockets;
  • Committed to support non-institution, community-based validators, especially those who contribute to open source projects, run self-hosted servers (instead of cloud-based ones), and provide crucial infrastructure services for the Cosmos ecosystem (e.g. IBC message relaying).

Motivation

We believe a healthy competition between multiple Luna liquid staking tokens is crucial for our network’s economic security. Having a big proportion of staked Luna controlled by only one or two protocols is dangerous, especially if such protocols: 1) are not subject to the governance of Luna holders, and 2) are under heavy influence of VCs and institutions.

Further more, Steak will help empower validators who contribute value to our network, instead of many of the institutional validators who do not participate in governance, do not engage with the community, do not contribute to the growth of Terra DeFi, most often pumped to the top of the validator leaderboard through the not-so-transparent election process of certain liquid staking protocol(s).

Therefore, we believe it is highly beneficial for Terra, and hence for Astroport as well, to incentivize STEAK liquidity, which increases its utility and adoption in Terra DeFi.

Specification

We propose that the Astral Assembly rewards the STEAK-LUNA LPs with an alloc_point value of 94,000 in the Generator contract, which results in 20,399 ASTRO tokens per day or 7.45M ASTRO per year.

This is comparable to the level of incentivization given to stLUNA-LUNA (alloc_point of 94,000) and LunaX-LUNA (alloc_point of 66,650 proposed).

The estimated APY is shown below for various levels of liquidity.

Liquidity in STEAK-LUNA ASTRO APR
$50,000,000 44.2%
$100,000,000 22.1%
$150,000,000 14.7%
$200,000,000 11.1%
$250,000,000 8.8%
$300,000,000 7.4%

Note that the above calculation assumes:

  • a year has 365 days
  • block time of 6.8 seconds
  • ASTRO price of $2.97

Copyright

Copyright and related rights waived via CC0.

4 Likes

Not commenting on the proposal itself but LunaX-Luna LP pair’s alloc_point which was passed is 66650 not 105,000. The 105,000 proposal failed. And the second 66650 one passed.

1 Like

Thanks, updated the text.

1 Like

A decentralized economy needs decentralized staking derivatives!

2 Likes

i support Larry’s initiative to make LUNA derivatives less centralized. His newest staking deriv helps us achieve this new paradigm . Larry is an insane builder , and I support him

3 Likes

Allways in full support of Larry.
Super confident that he’s not going to start shilling random token rewards at STEAK holders to mask high platform fee’s and less-than-optimal staking rewards being autompompounded . Also confident in the MVP Validator list that he’s handpicked!
Let’s do our part and help make STEAK the biggest, Luna staking derivative out there :stuck_out_tongue_winking_eye:

2 Likes

Looking forward for incentives on Steak/Luna pool

2 Likes

The benefits to STEAK are obvious. What are the benefits to Astroport? Why should ASTRO holders invest ~$60,000 per day in STEAK-LUNA LPs?

1 Like

My opinion is that Astroport benefits from a decentralized Terra blockchain. More decentralization => higher investor confidence => more investments => more users for Astroport.

Also worth pointing out is that this proposal does not require Astroport to invest $60K/day extra outside of what it is already spending now. It’s simply for diverting $60K out of the $718K/day it is already spending on other pools to Steak-Luna.

Emissions being zero-sum doesn’t mean ASTRO isn’t being spent. The ASTRO would be diverted away from actual fee-producing pools like LUNA-UST and bLUNA-LUNA.

I’m all for decentralization, but I see a proposal for almost 10% of emissions to be diverted to a days-old staking derivative with $30k of liquidity and I feel like I’m taking crazy pills.

The proposed alloc_point is the same as Lido’s because I believe the two projects have the same quality. The incentivized liquidity of Steak will help its integration into dapps which means the pools will start generating incomes soon.

Hi Larry, first up, nice work on creating the Steak protocol, I’m happy to see that the protocol is up in such a short time and pushing for better decentralisation.

While I’m planning to stake some of my LUNA into the protocol, I am mindful that the protocol is new & there aren’t too much utility for Steak (yet). Lido, Stader & Prism have all been launched for months and has somewhat battle-tested. LSDs like bLUNA (collateral in Anchor & Edge), stLUNA (collateral in Edge & upcoming collateral in Mars), LUNAx (collateral in Edge), cLUNA (yLUNA used in Prism farm, pLUNA used in OnePlanet) have all built some utility around their LSDs that will increase the trading volume.

I know that you’re building up the utility for Steak, but perhaps we could start with a lower alloc_points before scaling it up when the utility builds up?

1 Like

Current total supply of $STEAK is 2281.793106 according to the token query. Is this proposal seriously asking for an amount of $ASTRO equivalent to stLUNA and much bigger than Lunax. Those projects hold millions of staked Luna and are also providing rewards in their own coins.

The reality is that it is impossible to get any dapp integration without deep liquidity, and it’s impossible to get deep liquidity without incentivization.

Lido/Stader/Prism can incentivize liquidity by printing their tokens out of thin air, or simply asking their VC overlords for help. These options are not available for Steak.

I am applying for the same alloc_points as what stLuna-Luna is getting because I think my project has the same quality as Lido, and will be highly beneficial for the Terra ecosystem if it picks up speed. Astroport benefits from a more decentralized Terra. I hope $ASTRO holders would agree.

1 Like

Please see my reply to Max above ^

Now that Astroport has relaunched on Terra2 and Lido decided that stLUNA will not be relaunched on Terra2 (Snapshot), the Astroport LunaX-LUNA is currently the only stableswap LUNA pool incentivised.

It is prudent that the Terra community has multiple options for LUNA liquid staking derivatives, the other two possible liquid staking derivatives will be: STEAK & ampLUNA.

The current fee structure for STEAK-LUNA is on a xyk pool, which is unfavourable for lending protocols due to the high slippage when swapping, hence, a stableswap pool should take precedence. With the upcoming protocols coming to live in Terra2, it is imperative that we have sufficient liquidity in Astroport for these LP pools. With Steak protocol audited by SCV (PublicReports/St4k3h0us3 - Steak Contracts Audit Review - v1.0.pdf at main · SCV-Security/PublicReports · GitHub), I proposed the following:

  1. Recreate a stableswap (0.05% fee) STEAK-LUNA LP.
  2. Allocate equal alloc_points to STEAK-LUNA LP as LunaX-LUNA LP.
  3. Replace both stableswap LunaX & STEAK stableswap pools with metastable pools, developed by Lido Finance for Astroport (Discord). For context, read @Archkiwi’s post here.

With the allocation, the incentivisation will create a deep liquidity of STEAK as an alternative to LunaX, in place of stLUNA, for upcoming lending protocols like Edge Protocol.

3 Likes

I concur and will vote in favor of a proposal to assign STEAK-LUNA the aforementionned alloc_points.

2 Likes

It sounds like a reasonable diversification for Astroport.

And fair to give equal chance to every liquid staking protocol.