ARC-41: Handle ASTRO Rewards on Multiple Chains

Proposals ARC (Astroport Request for Comments)
1

Summary

This post proposes an addition to the Astroport Incentive Framework so that the community can make decisions on incentivizing Astroport pools on other chains besides Terra 2.

Goals

  • Detail how to approach ASTRO incentives on a brand new deployment (on a new chain)
  • Detail how ongoing emissions should be handled on a new chain

Abstract

The Astroport Incentives Framework is currently lacking any guidelines to incentivize pools on new chains where Astroport might be deployed. Specifically, the Framework should detail the steps to be taken in order to:

  • Decide on which and how many pools should be incentivized on the new Astroport deployment
  • Decide on the total amount of ASTRO to use to incentivize the new deployment
  • Decide on which deployments should receive less emissions so that the overall ASTRO inflation does not increase
  • Decide on how to judge and adjust the effectiveness of the incentives on the new Astroport deployment

Choosing Which Pools to Incentivize

We propose that each new Astroport deployment incentivizes between three to eight pools in the first eight weeks post launch. We believe each selected pool should adhere to the following constraints:

  • The first pool contains ASTRO paired with either USDC, USDT, (one of) the chain’s native token or ATOM, in this order of preference
  • The second pool contains (one of) the chain’s native token paired with USDC, USDT or ATOM
  • The third pool should be a stableswap containing USDC and USDT
  • Every pool from the fourth to the eigth one should be chosen according to the average daily trading volume it had in the past 30 days
    • The minimum average daily trading volume for a pool must be at least $100K in order for it to be considered
    • If the pool has been trading (on a DEX or orderbook) for at least 30 days on the chain where Astroport is deployed, governance should take into account the daily trading data from that pool in order to decide whether to incentivize it
    • If, instead, the pool does not yet exist on the new chain where Astroport is deployed, governance should take into account the 30 day trading volume from at least one other chain where the pool does trade. For example, tokens A & B might trade on a DEX on Terra but not on Injective. In that case, governance should take into account the trading volume on Terra in order to decide if the same pool should be incentivized on Injective

There may be special cases where it can make sense for the Astral Assembly to incentivize liquidity for a brand new token that is not trading on any other DEX. For example, Astroport might be deployed on a chain that launched just recently. A project there might be closely associated with the main thesis of that particular ecosystem and thus it could make strategic sense for the Astroport community to consider incentivizing that project’s token. Cases like these should be debated thoroughly on the Astroport forum and the team that wishes to have their pool incentivized should make a detailed post explaining their value proposition.

Choosing How Much to Incentivize Each Pool

We propose that the Astral Assembly allocates ASTRO emissions to each pool so that the ratio between the value of expected fees (produced by a pool) and the value of the emissions is ~0.1.

Balancing Emissions Between Astroport Deployments

Governance should seek to allocate incentives in accordance with a target fee:emission ratio (currently 0.1), regardless of what chain a pool is deployed on. If Astroport fee growth reaches a level where this would result in more incentives required than is allowed by the ASTRO emission schedule, the target ratio should be increased so that emissions can be brought back under control

Judging Ongoing Emissions on a New Chain

Ongoing emissions on each Astroport deployment should be managed according to the guidelines from the current version of the Astroport Incentives Framework.

This means that, if and once a vote passes to incentivize Astroport pools on a new deployment, the Astral Assembly should gather every eight weeks to analyze the performance of each pool (be it incentivized or not) in order to decide on emission changes.

Note that it is not mandatory for the initial batch of pools to be dual incentivized. That being said, any future pool requesting ASTRO emissions (on any new Astroport deployment) must dual incentivize their pool(s) before posting a proposal asking for ASTRO.

Next Steps

The community can debate this proposal on the forum for a week, after which the Assembly should post the proposal on-chain and signal whether they support it.

Copyright

Copyright and related rights waived via CC0.

3 Likes
2

This is a very thoughtful proposal, and I support it. Thanks for taking the time to craft this framework! There are, however, a few gaps where details are missing.

First, how much will the first pool on a new chain be incentivized, namely the ASTRO-USDC pool?

I suggest we determine a certain percentage of ASTRO incentives to devote to ASTRO-USDC pools across all Astroport chains. For example, 10% of all ASTRO incentives must be devoted to ASTRO-USDC pools.

But these ASTRO incentives shouldn’t be deployed equally to all chains. There should always be one chain with the lion’s share of this 10% of ASTRO incentives for ASTRO-USDC pools. That way, there will always be one chain where users can go to to trade ASTRO in size, while the rest of the chains will have smaller ASTRO-USDC pools for smaller trades. For the time-being, the chain with the deep ASTRO-USDC pool should be Terra.

Second, what bridged versions of stablecoins will Astroport use?

I suggest we dialogue with the leaders of a new chain, to determine what their preference is. Ideally, all apps on a given chain will use the same versions of USDT and USDC. Different chains may use different bridges, but the important thing is that Astroport use the standard bridge on a given chain (assuming it’s a reliable bridge!).

Third, regarding the fourth to eighth pools on a new chain, while I totally agree with your proposed criteria, they still leave a lot of room to pick many different tokens.

How will we choose between $ATOM, $CVX, $SOL, etc? I don’t have a suggestion for this one. Will keep thinking about it.

3

I agree with John’s approach that ASTRO should have its own dedicated % allocated to it to ensure that swaps can be done with the least price impact.

Ideally, the stable that is paired with ASTRO should be a stable that is predominantly used on chain. In the case of Injective, the stable of choice is USDT, therefore, there should be higher preference of using USDT over USDC. That avoids the need for a separate pool like USDC-USDT to have deep liquidity just to perform swaps to ASTRO.

I agree with @stefan that the first 3 pools should be ASTRO, native token & stablecoin swaps.

As for Injective, with regards to the 4th to 8th pools, we could take the largest swap volumes on Helix to determine the incentives being allocated. These are some of the possible pairs:

  1. XPRT/USDT
  2. SOMM/USDT
  3. SOL/USDC
  4. ATOM/USDT
  5. WETH/USDT
4

I also support this proposal. The current Astroport Incentive Framework is limited in its ability to incentivize pools on new chains, and this proposal offers a well-thought-out solution to that issue. The proposed approach to selecting pools for incentivization, allocating incentives, balancing emissions, and ongoing management of emissions is sensible and well balanced.

In particular, I appreciate the emphasis on considering both the daily trading volume and the potential strategic value of a token when deciding which pools to incentivize. This approach strikes a good balance between practicality and flexibility.

Additionally, the requirement for future pools to dual incentivize before requesting ASTRO emissions shows a commitment to responsible use of emissions and aligns with the overall goals of the framework.

Overall, I believe this proposal will greatly enhance the Astroport Incentive Framework and its ability to support the growth of Astroport on new chains.