ARC-32: Dual Incentive Proposal RED <> LUNA

Summary

Add dual incentives to the RED<>LUNA pool on Astroport ($RED & $ASTRO token emissions). The purpose of this proposal is to receive feedback from the community about this idea and gather thoughts regarding the rewards before putting up a poll.

Abstract

Redacted Money is a trustless Zero Knowledge protocol that exists to bring you an easy to use way of securing your transactions from prying eyes and will empower the Terra network with privacy. Our biggest goal is to revitalize the Terra ecosystem by providing a cosmos-wide privacy solution, thereby driving greater user adoption and growth for Terra.

$RED (Launched 08-15-2022) provides both utility and serves as a governance token. Our goal for $RED is a long lasting worth with incentive so that it may scale with it’s users. Holders have the opportunity to own a piece of Redacted Money by receiving a monthly share (50%) of all fees collected by Redacted Money. All protocol generated fees end up directly in the wallets of $RED stakers. In future, it will also be possible to determine the token of the payout here.

Read more on Redacted Money at our docs here.

For more details about $RED´s Tokenomics, please refer to the docs here.

Motivation

To reduce price impact and volatility for $RED and ensure that its not subject to price manipulation, Redacted Money can provide 500,000 $RED as LP rewards, distributed over 3 years as follows: 200,000 $RED the first year, then 150,000 $RED on both the second and the third year.

Specification

In order to grow the RED<>LUNA pool and protect the Redacted Money funds, we propose a dual incentive campaign involving both $RED and $ASTRO tokens.

We propose that the Astral Assembly provides rewards equivalent to 2,740 ASTRO tokens per day (1.000.100 ASTRO per year).

Estimated dual rewards APR for the first year is shown below for various levels of liquidity.

Liquidity in RED<>LUNA pool $RED APR $ASTRO APR Total Reward APR
$100,000 100% 100% 200%
$500,000 20% 20% 40%
$1,000,000 10% 10% 20%

(estimated APR values assume that $RED = $0.50 and $ASTRO = $0.10)

4 Likes

References

RED-LUNA pair: Terra Finder

Audit: Redacted Money - Mixer Contracts - Audit Report v1.0.pdf

1 Like

LFG Ronins!

Redacted Money project deserves these dual rewards.

1 Like

Hi @w36d, thanks for the proposal, looking forward to get your pool incentivised, however, I do have a few questions on my end:

  1. How much fees does the protocol get for each transaction? Does this fee scale with the size of the trade? I believe this information is omitted from your docs.
  2. When these fees are generated, are they collected in RED and subsequently be converted to LUNA via Astroport before distribution back to your Ronin & RED holders?
  3. Do you have any estimations on the transactions going through your protocol?
2 Likes

Well deserved as Lunatic community :heart_eyes:

2 Likes

Hello @MaxCallisto happy to answer your questions.

  1. Fees at launch:

1% fee for 10LUNA

0.5% fee for 100LUNA

0,5% fee for 1,000LUNA

0,5% fee for 10,000LUNA

Fees some time after launch: (most likely)

1,5% fee for 10LUNA

1% fee for 100LUNA

1% fee for 1,000LUNA

1% fee for 10,000LUNA

After the initial phase when the fees were raised, there are also discounts of about 0.25% for Ronin, $RED & Skeleton Punk stakers.

  1. Fees will be in LUNA (since we support LUNA first) - by that I mean the fees due when mixing. From these fees $RED will then be purchased, which will then be distributed to the stakers. In the future, when we support multiple coins, I can also imagine that there will be a currency pot to the $RED, which will be distributed - similar to kujira. But this would be decided by governance. Either way, most of the fees would then (in the end) be distributed to the stakers in $RED.
    (the paragraph (2) has been changed because it was expressed in a somewhat misleading way).

  2. I can imagine around 10-20k transactions in the first year, but it always depends on the market situation. Since we are one of the few mixers, this will of course attract many to Terra. We will publish forecasts and more after launch, then you can estimate it much better.

If you have any further questions, we are available on Discord or Telegram. Socials here.

1 Like

Thanks for that, @w36d.

Should your fees be paid in LUNA, will there be a need for a $1mil liquidity to enable swaps between LUNA & RED? I would presume that if the fees are needed to be paid in RED, then a deeper LP pool will be required.

2 Likes

@MaxCallisto Somewhat misleadingly put -
the fees will be in LUNA (since we support LUNA first) - by that I mean the fees due when mixing. From these fees $RED will then be purchased, which will then be distributed to the stakers. In the future, when we support multiple coins, I can also imagine that there will be a currency pot to the $RED, which will be distributed - similar to kujira. But this would be decided by governance. Either way, most of the fees would then (in the end) be distributed to the stakers in $RED.

1 Like

Got it, thanks @w36d . I fully support your proposal. All the best.

2 Likes