ARC-21: Incentivise v2 Prism Protocol cLUNA/LUNA LP

Proposal

Incentivise upcoming v2 Prism Protocol cLUNA/LUNA liquidity pools in Astroport. The purpose of this proposal is to create a deep stableswap pool of cLUNA/LUNA on Astroport to support Prism Protocol’s assets.

The proposed alloc_points for cLUNA/LUNA is 15k.

Background

Prism Protocol is a Terra native derivatives protocol that allows users to refract digital assets into two distinct parts: a yield component & principle component. This allows users to access the utility of its individual parts separately. With over $500mil locked in Terra v1 pre-LUNA crash, Prism Protocol has indicated a massive relaunch with a new roadmap with a renewed focus on fixed term Prism assets.

Motivation

With over $500mil TVL locked in Terra v1, Prism Protocol was a blue chip protocol that amassed its own community, sustainable revenue fee generation with a stable 20% APR on its own governance token. In the recent Emergency LUNA allocation to Terra builders proposal, Prism Protocol has indicated that they’re relaunching on Terra v2 after accepting the emergency LUNA allocation.

The motivations to incentivise the cLUNA/LUNA pool were:

  1. Incentivise Prism Protocol to utilise Astroport’s stableswap pools as its default pools for future Prism assets like fixed term LUNA (eg. 12month yLUNA).
  2. Leverage on Prism Protocol’s strong community following on Discord, Twitter & Telegram.
  3. Bring about higher swap volume due to the speculative nature of fixed term assets.

With several protocols deciding against launching on Terra v2, this allows Astroport to solidify its position as the default DEX and its role to support one of the key protocols on Terra v2. An incentivised cLUNA/LUNA LP will ensure that a deep liquidity is built on Astroport from the get-go.

Benefits for xAstro holders:-

  1. Higher swap volumes due to the speculative nature of Prism assets.
  2. Higher swap volumes translates to higher buyback on ASTRO tokens, which equates to higher APR for xASTRO holders.
  3. Disincentivising Prism to be sniped by orderbook protocols launching throughout the Cosmos ecosystem.

Benefits for LUNA ecosystem:-

  1. Increasing diversity of validators & voting power of delegated LUNA by implementing proxy governance on Prism Protocol rather the inaction of liquid staking protocols to implement proxy governance.
  2. Establishing an innovative protocol on Terra that isn’t seen on other chains.

Should this proposal be passed, the cLUNA/LUNA stableswap pool will be incentivised with 31.5k ASTRO tokens daily (~$1,256/daily, assuming ASTRO = $0.0399).

At an average of LUNA staking of 12.7% APR, we will see no less than $3.6mil TVL on the cLUNA/LUNA stableswap pool. This builds up a deep liquidity pool on Astroport for lending protocols to utilise the TWAP of cLUNA directly from Astroport.

Copyright

Copyright and related rights waived via CC0 1.

[End Proposal]


5 Likes

I’ll vote YES if PRISM holders will receive their tokens 1:1 back on Terra V2 or any other blockchain.
Until today this is still unclear. If PRISM holders don’t get their tokens back after investing in the forge and buying on the market then what’s the point of believing in a future? Incentivizing such a project doesn’t feel right when people are left out because of the Luna crash. As an ASTRO and PRISM (on LUNC) holder I’ve seen with ASTRO how to relaunch a project. I hope (and think) everyone understands this. But again, if it’s done right I’m definitely voting YES for this proposal.

2 Likes

Astro v2 needs more trade volume. The Prism Swap AMM on Terra Classic was attracting significant trade volume that would greatly benefit ASTRO holders on v2 from a fee generation perspective. I think it should be a priority for Astroport to bring the prism derivatives trade volume and liquidity to help bolster the Astroport AMM.

Whilst I’m not convinced that the cLUNA/LUNA pool will bring huge volume, as we can see with the LUNAX/LUNA, STEAK/LUNA & ampLUNA/LUNA pools, the potential for Prism asset pairs is exponentially greater than these competing pools & thus should be incentivised accordingly.

I’d also like to see some commitment from Prism that they will add dual incentives once they launch their own token.

Definitely a NO because they have not committed to airdrop old PRISM holders tokens 1:1 back on Terra V2 or any other blockchain.
Until today this is still unclear. If PRISM holders don’t get their tokens back after investing in the forge and buying on the market then what’s the point of believing in a future? Incentivizing such a project doesn’t feel right when people are left out because of the Luna crash. As an ASTRO and PRISM (on LUNC) holder I’ve seen with ASTRO how to relaunch a project. I hope (and think) everyone understands this. But again, if it’s done right I’m definitely voting YES for this proposal.

1 Like

@8punt6 , @carlicahn73 , while Prism did not agree to an airdrop in their latest Medium post, I’d like to iterate they did not confirm that they will not be doing the airdrop too. Even if an airdrop is done right now, there isn’t any revenue to Prism until they launch the protocol, the token will just be dumped on the open market. I would much rather have a token with value accrual rather than some useless token that’s inflated.

As this proposal is targeted for Astroport, I’m raising this proposal with the hopes that, one, Prism uses Astroport as the main DEX for their token launches, including fixed term. @AstroMan , if I’m not mistaken, the cLUNA/LUNA LP pair is needed for them to issue fixed term assets, as cLUNA is the combined token for yLUNA & pLUNA, therefore, its a pre-requisite. Also, cLUNA stands to have higher utility vs their LSD counterparts which are predominantly used only for lending protocol collaterals.

3 Likes

@MaxCallisto Surely PRISM can at least announce publicly they will issue equal tokens to PRISM users after it launches?

Astroport gave its tokens to users in V2.
Stader had an ERC20 compatible token, so folks still have it despite LUNC crash.

Prism was a large protocol in LUNC and it would be a shame for PRISM not to support their forge backers. Probably use LUNC data, but I would prefer to see airdrops from PRISM. Given the low utility of LSDs so far, I don’t see a reason to push hard on this proposal. Overall, supportive, but PRISM protocol needs some community building.

2 Likes

I know Prism didn’t confirm anything yet and I do agree with you that they should first have some revenue (to avoid token dumping) before relaunching their token.

But restraining from commenting on the future of the PRISM token is not fair to PRISM V1 token holders and investors. And I don’t see it as something like an airdrop because that’s commonly associated with free tokens. I rather think it’s a normal relaunch of the token from Terra V1 to V2. Almost every project which continued did this in some kind of similar form.

2 Likes

will Prism Protocol not have their own Swap? I remember in V1, Prism got your own swap, and swap fees going to PrismX staker.

Just trying to understand what it means-

  1. Incentivise Prism Protocol to utilise Astroport’s stableswap pools as its default pools for future Prism assets like fixed term LUNA (eg. 12month yLUNA).

With the recent relaunch of Prism Protocol’s cLUNA on Terra, this marks the return of one of Terra’s bluechip protocol.

In the renewed vision of Prism Protocol, Prism Protocol will focus on fixed term principle & yield assets.

What does that mean?

  1. Depositors are able to sell their 6-month or 12-months staking yield for a slight discount to obtain liquidity upfront.
  2. On the other flipside, users are able to purchase a 6-month or 12-months yield for a slight discount by paying upfront.

cLUNA is the first iteration of a cross-chain refraction of Prism Protocol assets. We will potentially be able to see more refracted assets such as yATOM, yKUJI, yOSMO in the future, each with its own fixed maturities.

So how does this benefit Astroport?

  1. Initially there will be just cLUNA but overtime, there will be many more principle and yield refracted assets of different maturities which as we saw with v1 will generate significant arbitrage volumes. This will highly benefit the Astro stakers due to the higher amounts of fees generated from these volumes.
  2. cLUNA code is open source & has a slashing methodology unlike other LSDs which could require external bailout for slashing.
  3. It’s better for Astroport to capture this cLUNA liquidity compared to Prism Swap.
  4. cLUNA will be interchain so cross-chain arbitrage flows generate volume for Astroport.

The proposed changes to the alloc_points will follow the parameters below:

Increase of cLUNA-LUNA LP allocation points
cLUNA-LUNA LP: terra1pxm9qtnrchzy90d99clpa0rkx8fyztlc67wt5t999pc8yvsrx90snpfe4v
Allocation Points: Increase from 0 to 15,000

1 Like

@MaxCallisto

  1. A large part of Terra 1.0 community doesn’t feel comfortable with Prism’s direction primarily because we feel swindled. Please CLARIFY whether V1 holders will receive the SAME prism tokens.

  2. How is PRISM rewarding this pool? How is it fair that only Astro pay for incentives here?

  3. What volumes (or swap fees) are we talking about when PRISM has $5000 in TVL? We should revisit inclusion of this pool when Prism gains more TVL.

  4. Why 15000 allocation points? I don’t see this as a favorable move for Astro even in the slightest. This number is orders of magnitude higher than necessary. Can you share some data around why 15000 was asked for?

1 Like

Hi, thanks for reply, @Zorro ,

  1. I might have to disagree a large part of the v1 Terra community doesn’t feel comfortable with the direction. A few outspoken ones, yes, but not a large part but that isn’t the point. I am myself a Prism holder in the past. I’m doing whatever I could to restart the DeFi ecosystem, and if it means I have to raise a proposal to Astroport to benefit both protocols, so be it. The primary direction of Prism in v2 was always to build the value accrual into the protocol before deciding the best tokenomics moving forward. The trouble with dropping useless tokens right now is that the devs will get the heat of “Why price down?” when the protocol doesn’t generate enough fees or value for the token.

  2. Prism has not yet released a token but it doesn’t mean that they will not incentivise the pool in the future. The point of Astroport is to ensure that Terra dApps are sufficiently supported for their swaps and rebuild the ecosystem. The current incentivised pools are quite useless due to a lack of utility. If a Terra dApp is able to bring utility to Terra, Astroport should support it.

  3. For any LSD, it’s a chicken and egg problem. It needs sufficient liquidity to build more utility on top of it. And if Astroport doesn’t support it, another DEX might snap the opportunity. In the end, the losers will be the Astro stakers for not supporting a Terra native dApp that has proven itself in v1 that they’re solid builders.

  4. The 15k allocation was to make the emissions on par with LunaX. Stader is currently not building any other functionalities, but Prism has a vibrant roadmap ahead to launch fixed maturities into Terra, bringing about higher swaps, and thus, fees. If I’d had to be honest, I think Prism is far more deserving with a more vibrant roadmap.

1 Like

Major COI on my side as I’m part of Eris Protocol.

We will support a fair share of incentives going to Prism Protocol. E.g. 7500 alloc_points for each (Stader, Eris, Prism)

Our reasoning is simple, as this will increase the competition between LSDs and our goal as community should be to improve Terra + Astroport Defi as a whole. If Terra has a great ecosystem, we will all be good.

Only stomache issue I have with Prism Protocol is Terra Classic. I also staked a lot through prism in the farms and immediately after the crash the bots were shut off, the vesting of Prism stopped. I want to see a clear vision of how the protocol users will be made whole again, and how they can move their prism tokens to Terra without diluting current owners.

1 Like

I have similar concerns regarding this proposal as I had regarding Eris’ proposal for the ampLUNA-LUNA pool.

Imo the correct process for when a project requires deeper liquidity for a pool and demand/value to Astroport isn’t obvious, should be to incentivize the pool initially themselves. Once demand is clear the project could petition the Astroport community to add dual rewards. If the project isn’t able to incentivize the pool for whatever reason. The Astroport community could consider incentivizing the pool )with a small amount) to incentivize sufficient liquidity to establish, to gauge if there’s sufficient demand to warrant further incentivization.

  • Demand for the cLUNA-LUNA pool is unknown at this point
  • I’d expect either a request for dual rewards or initially just PRISM incentives
    • Since the PRISM token isn’t live, dual rewards or PRISM incentives aren’t possible yet
    • As a sign of goodwill a pledge to provide ‘x’ dual rewards by date ‘x’, would be an option. However this has not been provided
  • As I see significant potential for the cLUNA-LUNA pool and other future Prism protocol pools to increase activity and add value to Astroport it makes sense to incentivize the pool to gauge demand.
  1. However the proposed allocation points are beyond what’s reasonable imo and I’m hesitant to support it as is. Previously 3.6M TVL was targeted for the pool, but that was when the value of ASTRO was 1/3 of what it is today. The proposed depth should be achieved with 5000 allocation points, following reasoning of the OP.
  2. I’d also like to see equal PRISM dual rewards pledged to the pool once for when the PRISM token goes live.

If the suggested changes were made, I’d be supportive of the proposal.

1 Like

I agree with @Bitcoin_Sage 's points.

Additionally, some others here have noted that the PRISM token distribution plan on Terra2 and how Terra1 PRISM holders will be treated in that plan is undetermined or unannounced at this time. I think a fully informed vote on this proposal would require clarity on the PRISM distribution plans, as current ASTRO holders who were PRISM holders on Terra1* will likely have their vote influenced by those plans.

*I am assuming there is some overlap in these two constituencies, though have not analyzed the extent of overlap.

2 Likes

With our recent announcement on the (PRISM airdrop to all cLUNA-LUNA liquidity providers)[The Prism Airdrop. 2022 has been a brutal year for… | by PRISM | Nov, 2022 | Medium], cLUNA-LUNA will be effectively be the first liquid-staked derivative to have dual incentives on LPs. This shall be commenced alongside the ASTRO incentives emitted to the cLUNA-LUNA liquidity pool.

On top of the airdrop to Astroport cLUNA-LUNA LP providers, the airdrop will cover previous Terra Classic PRISM holders, cLUNA holders & PRISM validator delegators. These will ensure a large number of community members, both original PRISM holders in Terra Classic & current Prism users covered under this airdrop. This increases the amount of airdrop going to people actively choosing to receive it.

With the recent announcement of Alliance, Terra needs a liquid staking derivative with substantial liquidity. Once Prism is live, more use cases for cLUNA will emerge as it is refracted and Astroport has the opportunity to be the defacto exchange on Terra for trading of this important asset.

Being the first dual incentivised liquid-staked derivative on Astroport, we propose the following to be discussed:

A reduction of allocation points for LUNAx-LUNA, ampLUNA-LUNA & bLUNA-LUNA LPs to 4,000 each and increase the allocation points for cLUNA-LUNA to 8,000.

Increase of cLUNA-LUNA LP allocation points

cLUNA-LUNA LP: terra1pxm9qtnrchzy90d99clpa0rkx8fyztlc67wt5t999pc8yvsrx90snpfe4v

Allocation Points: Increase from 0 to 8,000

Reduce of LunaX-LUNA LP allocation points

LunaX-LUNA LP: terra1mpj7j25fw5a0q5vfasvsvdp6xytaqxh006lh6f5zpwxvadem9hwsy6m508

Allocation Points: Reduce from 6,666 to 4,000

Reduce of ampLUNA-LUNA LP allocation points

ampLUNA-LUNA LP: terra1cr8dg06sh343hh4xzn3gxd3ayetsjtet7q5gp4kfrewul2kql8sqvhaey4

Allocation Points: Reduce from 6,666 to 4,000

Reduce of bLUNA-LUNA LP allocation points

bLUNA-LUNA LP: terra1h32epkd72x7st0wk49z35qlpsxf26pw4ydacs8acq6uka7hgshmq7z7vl9

Allocation Points: Reduce from 6,666 to 4,000

Liquidity Pool Pairs Current Allocation Points Proposed Allocation Points
LUNAx-LUNA 6,666 4,000
ampLUNA-LUNA 6,666 4,000
bLUNA-LUNA 6,666 4,000
cLUNA-LUNA 0 8,000
1 Like

note I run a validator, who I believe is part of the cLUNA validator pool, as well as in the boneluna pool.

just a FYI… the boneluna will also have a dual incentive shortly (it was due last week, and in final stages of testing), so I’m not sure how long you will actually have the dual incentive, and you might actually be the 2nd, depending on how this discussion goes, as the boneluna one shouldn’t be as big a discussion, due to it only adding rewards vs changing.

I mention this, as I’m not sure we need to take into the dual incentive part in the allocation weightings. as people staking will be getting ASTRO as well as their cLuna/boneLuna tokens.

1 Like

Thanks for your comment.

$cLUNA should already be the highest APY $LUNA LSD given it is:

(1) 0% fees, and
(2) delegates to validators charging <=5% commission.

(1) & (2) already make $cLUNA the highest yielding LSD but in addition to this $cLUNA holders will be eligible for an airdrop of Prism tokens during weekly snapshots. These tokens will earn revenue as per below.

In Prism v1 the real staking yield was consistently over 25% and protocol revenue was annualising ~$15m per year after only 3 months. Prism v2 will have significantly improved revenue capture and the native token holders can choose how that revenue is spent including: distributed to stakers, buyback & burn, buyback & distribute or transfer to community pool.

Unlike general purpose blockchains that only make revenue from network transaction fees, Prism will have multiple sources of revenue including:

1. Network transaction fees
2. Fees from Prism’s native AMM
3. Percentage of yASSET yield
4. Protocol transaction fees
5. MEV capture

As far as I am aware Stader is the only LUNA LSD owner with a governance token (which isn’t being used to dual incentivise) and the other LSDs (Eris and Backbone) are simply proposing redistribution of fees they are deducting from the staking rewards. Doing this drastically reduces the APY of those LSDs and means users doing simple staking would receive a much higher APY.

There are some misconceptions regarding ampLUNA. ampLUNA APY is increased by the revenue generated from other products ERIS protocol provides, so it is not just redistributing staking rewards. Based on our APY tracking the APY of ampLUNA is the same to a 0% reward fee LSD and we plan to reduce it further.

I think it would be better supported by having the same Astroport incentives for cLUNA and you can still reach a deeper liquidity pool by providing additional dual rewards. This would keep the competition on Astroport up, forcing each LSD to provide the maximum value for LPs.

Before having a known token value, a tokenomics, how much is shared with Astro LP or the dual incentives are set up, I am against incentivizing the pool.

1 Like

Firstly, I want to say that I am a big prism supporter. I was in terra1, and will continue to be as they move to their own chain. I have delegated to prism validator, and minted cluna as well.

However, asking for 2x the emissions as the other lsdLuna is a bold ask. I agree with Phillip in that I’m not sure you can even call it dual incentivized because the token does not exist nor do we know how it will be valued, or when it will be released. I don’t think it’s fair to use the promise of a future air drop to justify 2x the emissions of other lsd projects that are currently building on terra2- especially when prism is set to have their own chain.

My question is what will prism bring to terra2 other than a cluna/luna LP in astroport? When that question is answered, I would happily vote yes to give equal emissions to the cluna-Luna pool.

Lastly I want to clarify (to the best of my ability) what looks like a misconception about the functionality of bluna and the fee redistribution. 70% of Bluna fees will be redistributed to the bluna/luna astroport lp. Your comment regarding fee distribution would be correct if 100% of the bluna was contained in the LP. As use cases for bluna expand, there will be more fees generated, and thus rewarding Lp providers, and when there are at least 30% bluna minted and used elsewhere, LP providers will be at par with normal (no lsd fee) staking returns. Any more than 30% total bluna used in other places, the LP providers would be rewarded more than regular staking, without taking into consideration astro emissions.

1 Like

@MrRefractor Asking for emissions with the promise of a new token even before it is launched (w/o price discovery) is just an overreach. Please launch your token, let the price discovery happen & let’s revisit this discussion. Also, please answer the following -

  1. Why should Astroport give Prism more rewards than the other LSDs?
  2. Why should Astroport give Prism equal rewards as other LSDs, given that cLuna marketcap is relatively tiny?
  3. What will Prism bring to Terra 2.0 & Astro in particular for it to deserve these incentives? Can we see a roadmap?
1 Like