ARC-3: LunaX<>Luna Pool Addition to Astroport with Dual Incentives

Hi everyone, hi @vbrpm,

Quick disclaimer: I work at Lido, so my opinions may be biased. I am not writing on behalf of Lido, though, and the following opinions are my own only.

I’ll keep it short, IMO:

  • Migrating the LunaX <> Luna pool from Terraswap to Astroport and enabling dual rewards is beneficial to Stader, Astroport and to the user. I fully support this.
  • The current terms are far from palatable, for the reasons @cryptoc20 and @SunnySolutions presented. @vbrpm’s latest response relies on numerous hypothetical developments.
  • The proposal should be revised to lower ASTRO emissions, and to a shorter term. Incentives should be increased later, as liquidity and trading volume and fees start to pick up.

Happy to discuss further,
Spaydh

6 Likes

I think the Dual Incentives for the Lunax-Luna pair are very welcome because it’s doing a high volume compared to its TVL. But, I don’t understand why the Stader rewards need to be lower compared to Astroport rewards. Especially, if you take into account the tokonomics for both tokens I believe the demand for ASTRO is much bigger compared to SD. So, the rewards should at least be 1:1.

2 Likes

Hey folks!

Disclaimer: I hold sizeable LDO, and xASTRO, medium sized bag of SD

TLDR:
LunaX should get ~7-8% of Astro emissions inline with the nearest comparable, stLuna.
LunaX gets Astro about ~$160M TVL & has higher utility than stLuna (which we ought to consider). IMO, LunaX with similar incentivization as stLuna will achieve better returns to Astro holders than stLuna currently does. While we are at it, stader should increase their rewards to at least match Astro numbers to show their commitment to Astro pool.
Overall leaning towards favoring this proposal. I see this proposal as undoing the harm we have done to Astro holders by overly incentivizing stLuna pool.

Details:

  • For comparison today, stLuna gets 10x rewards from Astro than from Lido! Check image for reference. This provides more benefit to Lido than to Astro. Normalizing stLuna rewards by giving SD about an equal/fair share because they are bringing on a similar TVL is probably going to be the fair way to approach this dynamic until gauge weights go live.

  • I do not agree with @cryptoc20’s assessment of revenue accrued to Astro because we are doing worse with stLuna than numbers show.
    “Take stLuna-Luna for comparison- pool size on Astro is significantly larger ($234m~ vs. $140m~) and generating roughly 3x the daily fees for xASTRO stakers”
    This statement is misleading at best. Why will there be more stLuna <> Luna swaps if stLuna has lower utility than LunaX? stLuna’s only utility is on Edge today and the pool size there is a paltry $1M. The reason swaps seem higher is because we have overly incentivized this pool with people wanting to get exposure to stLuna. With similar incentivization, LunaX should be generating higher yields than stLuna purely as a function of their higher utility. @cryptoc20, you can choose to go against this proposal but I would consider that a short-sighted move for all of us here. If anything, we need to allocate more rewards to higher utility liquid tokens :slight_smile:

  • I am purely concerned about Astro’s best interests here and believe that to attract a ~160M TVL into Astro, we have to shell out proportional rewards to what stLuna pool gets today. I would definitely suggest that Stader add as many rewards as we do to commit to our combined cause here. All said and done, it is our (as Astro token holders) responsibility to make sure we incentivize “a fair share” of rewards to attract this TVL that’s across Terraswap and Loop into Astro.

  • 100% agree with the spirit of this proposal. Irrespective of LunaX/StLuna volumes, Stader team has undoubtedly shown they can deliver. I cannot think of another protocol that has been rolling out products at their pace. IMO, we need to encourage them to keep building and attracting more TVL to Astro and Terra than to roll out unfavorable terms compared to other pools.

Regards,
Zorro

@stefan @JonathanE Could one you please approve my earlier message? Not sure what it is about but looks like a staff member needed to clear it.

1 Like

Quick disclaimer: I work at Lido, so my opinions may be biased. I am not writing on behalf of Lido, though, and the following opinions are my own only. xASTRO represents ~15% of my portfolio.


Hey @Zorro, I disagree with this statement.

**TL;DR: On the contrary,

stLuna/bLuna, which is the same product, has the highest utility of any Luna liquid staking derivative on Terra.**

You see, stLuna is not a standalone product, it is one of two possible representations of Luna staked with Lido. Let me explain quickly: any Luna staked with Lido gets sent to a smart contract called “the Hub”, which delegates it to a whitelisted validator and mints one of two liquid staking token for the user: either bLuna or stLuna.
Because they both represent the same staked Luna, albeit with different reward handling systems (one swaps rewards for UST, the other auto-compounds them), they are freely and losslessly interchangeable at the smart contract level. stLuna is simply burned to mint an equivalent value of bLuna, or vice-versa, with no slippage nor trading fee. You can test it out for yourself here: https://terra.lido.fi/convert.
Because stLuna and bLuna are fundamentally the same thing, represented differently, the utility of both has to be taken into account: they can be provided in Astroport, Terraswap, Loop, Anchor, Nexus, Edge, Mars, Apollo, etc… without ever having to do a swap.


Astro rewards are paid out to LPs, not to traders. They incentivize liquidity, not volume, at least not directly. Also, “people want[ing] to get exposure to” something is aka organic demand, isn’t it?


Making the mistake twice is not the same as fixing a mistake.
If the Astroport community thinks that it is overpaying for stLuna - Luna liquidity, then the proper way to solve the problem is to pass a governance proposal to reduce the pool’s reward allocation.


I think that would be fairer.


Anyway, as I said previously, as long as the parameters are sensible, I’m 100% in favor of dual incentives for the LunaX - Luna pool on Astroport.

2 Likes

Thanks a lot for sharing your thoughts about the proposal. After hearing Astro community’s feedback, we are revising the proposed Stader and Astro emissions as detailed below:

  • Bumping up SD token rewards by 60% to ~12000 SD tokens/ day
  • Reduced proposed Astro emissions by 40% to ~16500/ day (makes Alloc_pointer ~66650)
  • Makes the rewards composition 1:1 from SD and Astro emissions

Updated the same in the proposal too. Happy to hear any thoughts/ suggestions from the community.

5 Likes

All in with this proposal. LunaX-Luna is one of the best LP. If we can get this, it will be very positive to our rewards

Hey @vbrpm,

Thank you for taking feedback into account, the updated proposal is much more palatable.

When do you plan to release the proposal with updated parameters to governance?

The executable message that uses the latest parameters looks like this:

[
   {
      "order":"1",
      "msg":{
         "wasm":{
            "execute":{
               "contract_addr":"terra1zgrx9jjqrfye8swykfgmd6hpde60j0nszzupp9",
               "msg":"eyJhZGQiOiB7ImxwX3Rva2VuIjogInRlcnJhMWs3bGV4eDM1djRsdXRuZmRmN243bHVmM2htdDJ3cGhuNjMzZmF1IiwiYWxsb2NfcG9pbnQiOiAiNjY2NTAiLCJyZXdhcmRfcHJveHkiOiAidGVycmExOWs4Y3RqNzA4bXNobmxsZ2EyZzU1YXNnYW5xejh1eHBsdnM3aGoifX0=",
               "funds":[
                  
               ]
            }
         }
      }
   }
]

The value in msg is the base64 encoded version of:

{"add": {"lp_token": "terra1k7lexx35v4lutnfdf7n7luf3hmt2wphn633fau","alloc_point": "66650","reward_proxy": "terra19k8ctj708mshnllga2g55asganqz8uxplvs7hj"}}
2 Likes

I hate to gush, but this type of conversation and interaction was a strong pull on me to Terra.

1 Like

Completely agree.

@vbrpm Our group is on board with the changes and signal our support for voting yes when you submit the new proposal to governance.

Thanks for the open communication with the community!

2 Likes

Hey, they resubmitted the proposal with the new changes yesterday.

Could you kindly get your group to vote yes? I would love to add some liquidity to astroport in this LP.

@Spaydh I am with you for supporting bLuna LP. It does deserve what Astro had offered because of it’s huge TVL.
However, I am not going to agree with you on stLuna. Tell me one reason why anyone would want to hold stLuna today? There is 0 utility for this token apart form “converting” it into a “utility” token called bLuna.

Have you wondered why people would swap to StLuna without any real usecase for stLuna? My educated guess is because the Astro APR is juicy. Essentially what I am saying is that Astro community is growing Lido’s stLuna at its cost. I wouldn’t say the same about bLuna because bLuna fees accrued are significant for Astro.

Just because bLuna is convertible to stLuna does not mean stLuna needs 10x more rewards from Astro than from Lido. If anything, we have to take a wait & see approach for stLuna.
We shouldn’t incentivize all forms of staked luna without a demand. stLuna hasn’t shown any demand yet. For example, if Lido were to roll out a third liquid staking derivate, Astro should not incentivize the new pool in the “hope” that the new pool will gain traction. It’s a chicken and egg problem. Lido should bear the initial brunt of rewards so the pool grows & gains swap fees for its LP holders. Astro incentives should only be the icing on the cake, not the cake itself.

This is not a mistake. There’s no rolling back Lido’s rewards for stLuna until gauge weights go live. Plus there is no ETA for gauge weights rollout. This generous approach is letting all liquid staking pools get the same treatment as stLuna until ve wars can kick in. Overall, the total amount of Astro that would be doled out is going to stay the same but there is a semblance of fairness in this approach compared to “no other similar volume liquid staking derivate ought to get as many Astro rewards as stLuna” whether or not stLuna numbers are a mistake.

Hey @Zorro,

Here are three:

  • Holding stLuna provides exposure to Luna + auto-compounding staking yield (~7%).

  • Providing stLuna to a liquidity pool lets you earn trading fees, incentives and staking yield:
    On Astroport (stLuna-Luna 15% APR, weLDO-stLuna 60%) but also on Loop (stLuna-UST 48% APR, stLuna-Luna 23% APR) and Terraswap (stLuna-Luna, 12% APR with 0 incentives).

  • Providing stLuna as collateral on Edge Protocol, and soon on Mars Protocol lets you earn lending yield and borrow other assets while earning staking rewards

Your argumentation is based on the premise that stLuna has no utility. I believe that’s not a fair statement today, and that it will be even less accurate as time passes and stLuna gradually replaces bLuna in Anchor, integrates with Nebula, Mars and its Fields, etc.

Afaik, this statement is not accurate. The set function of a generator could be called via governance to modify a generator’s alloc_point and thus its rate of reward (source). @stefan please correct me if I’m wrong.

Long story short, I think we can agree to disagree :slight_smile:

If these are reasons to incentivize stLuna as much, there are more reasons to incentivize LunaX (as LunaX is also live on Mirror today apart from the three you mentioned) as of today. You cannot take a stance of “wait & see” approach for LunaX while wanting “forward looking” stance on StLuna, right? We have been excessively generous to Lido or unnecessarily stringent with Stader.

I understand each of us can vote to our own liking but as early members of the Astro community we also have a responsibility to be fair to all protocols.

@cryptoc20 They updated the proposal, get your group to vote yes!

Hi @cryptoc20 Thank you, community feedback is a top priority for us, now that we have revised the proposal, would love to have your vote on the new proposal.

@Zorro You specifically asked for reasons to hold stLuna. I agree on the responsibility to the Astroport protocol.

Anyway, @vbrpm you got my vote already :slight_smile:

When will the proposal be executed?

Currently the LP can’t be staked. Will there be a delay between having the staking ability & rewards go-live or does this happen at the same time?

Hey after proposal passes it takes 2 days to execute on chain.

1 Like