ARC-6: Add ASTRO Emissions for the MARS-UST Pool

References

  1. Announcing Astroport’s Post-launch ASTRO Emissions Schedule
  2. Airdrop smart contract
  3. Airdrop 2 smart contract

Summary

Add ASTRO emissions to the MARS-UST pool.

Abstract

Mars is emerging as a significant member of the Terra ecosystem. There are no ASTRO emissions for the MARS-UST pool, however. As of 3/9/2022, with 13 days remaining to claim, there are approximately 8 million unclaimed ASTRO tokens (from Airdrop, and Airdrop 2). When the period to claim ASTRO tokens ends these tokens will return to the Astral Assembly. The unclaimed ASTRO tokens would kickstart the MARS-UST pool. It may be few or many. Whichever the case, the bi-weekly vote can address disparities, if any, in the quantity of ASTRO the MARS-UST pool is receiving

Motivation

Liquidity for the MARS-UST pool is approximately $30M, identifying it as a significant player in Astroport. MARS liquidity providers are important to the Terra ecosystem and should be provided the opportunity to earn ASTRO and to participate in governance.
This proposal would serve to establish initial emissions for the MARS-UST pool.

Specification

When Kujira transferred liquidity from Astroport their initial ASTRO emissions were distributed to all active pools. In a similar way, any unclaimed ASTRO from Astroport’s airdrops 1 and 2 would be distributed but only to MARS-UST providers as they aren’t receiving ASTRO at the moment.

Implementation

Calculate total unclaimed ASTRO tokens when the period to claim the ASTRO airdrop ends. Apply its fractional value of ASTRO tokens to liquidity providers on a per block basis- in the same way the other pools distribute ASTRO to their providers.

Copyright

Copyright and related rights waived via CC0.

5 Likes

Thank you, if you can also submit this as an AIP on Github we have all the pieces to kickstart the gov process.

1 Like

Will do. Thanks for taking a look at it and making edits.

@TopHatOnURHead - thanks for outlining this on the forum.

Looks good to me, I am happy to see this get more legs and move towards an AIP.

I will mirror the merit of this strategy below:

Incentivizing LPs on Mars not only benefits the wider ecosystem but welcomes new $ASTRO holders who may not have received tokens otherwise. This diversity is important.

Off the top of your head, do you know the daily claim rate of the airdrop? How is it changing? Feels like it may be something we can analyze - let me try to spin something up.

1 Like

Well, I’ve only been tracking for less than 24 hrs to be honest. Digging around in the airdrop and airdrop 2 smart contracts (see references). 2pm UTC, 3/9 there were 8.41M (31%) Astro tokens unclaimed. As of 4am UTC, 14hr later, 3/10, 8.37M (30%). I’ll keep following it as well.

2 Likes

Thank you for taking the time to do the write up!

Mars protocol is actually in a unique position to draw in liquidity into Astroport because of their Leveraged Yield Farming strategy. The increased APYs that their Leveraged Yield Farming offers will be able to attract users to utilize it and the liquidity pools created as a result are then staked into Astroport, deepening Astroport’s liquidity.

However, I have a few thoughts about this:

I hope it does not sound rude but I am a little bit unsure of the main motivation behind incentivizing the $MARS-$UST liquidity pool. Is it to foster a healthy collaboration between Mars and Astroport as Mars is a significant member of the Terra ecosystem?

Generally, my understanding of incentivizing a liquidity pool can bring about a few benefits. They include:

  1. Deepening liquidity to ensure optimal swap rates, reducing the barrier of entry for potential investors of the involved asset
  2. Improving the price action of the involved asset as providing liquidity reduces the circulating supply

I personally feel that the $MARS-$UST pool size of ~$30M is already sufficient to ensure optimal rates during swaps. By incentivizing this pool with additional $ASTRO, we can further deepen its liquidity by attracting more liquidity providers and attracting more swaps within this pool but that will only benefit Astroport and indirectly, the price action of $MARS but not really to Mars Protocol itself unless the $MARS-$UST pool is also offered in the Leveraged Yield Farming strategy.

In my opinion, If we want to promote healthy collaborative spirit between Astroport and Mars protocol, it will be better for the unclaimed $ASTRO to be redirected to the $LUNA-UST, $ANC-$UST and $MIR-UST pools instead. This will be more beneficial for Mars Protocol as well as to the price action of $MARS. Here’s why:

More $ASTRO emissions for these 3 pools will increase the APY when utilizing Leveraged Yield Farming. This will attract more users to use the Leveraged Yield Farming strategy → more borrowing demand on Mars → increase revenue for Mars → higher APR for $xMARS staking-> more demand for $MARS

To summarize, it really depends on what is the objective that you want to achieve. If we want to improve the price action of $MARS, incentivizing the $MARS-$UST with $ASTRO will be sufficient. But incentivizing the pool does increases the risk of increasing sell pressure on $ASTRO by giving a chance for liquidity pool providers to farm and dump.

However, if we want to foster healthy collaboration between Astroport and Mars Protocol by helping them to improve their revenue, then further incentivizing the liquidity pools that Mars protocol offers for their Leveraged Yield Farming strategy may bring about more benefits for Mars protocol instead of just incentivizing the $MARS-$UST pool.

Let me know what you think!

4 Likes

How about this: 10% unclaimed ASTRO goes to the MARS-UST pool, 90% to a warchest.

Staking wallet isn’t touched. Perhaps even swap 1:1, non-Astro assets in staking wallet for unclaimed Astro. This way, no ASTRO is sold to seed the warchest.

That sounds great! However, my original question will still remain, which is: what is the main reason/justification of incentivizing the $MARS-$UST liquidity pool?

Just by them being a significant player in Astroport base on the amount of liquidity that they have does not feel like a very strong justification to incentivize the $MARS-$UST liquidity pool for me personally!

1 Like

I’m guessing when voting to allocate astro opens up you’re going to go nuts on the current pool distribution. Lol

Well, it’s pretty simple in my mind. Astroport benefits from the mars-ust pool and should return the favor with astro reward. Quantity TBD.

1 Like

I see! This is a stronger justification for me personally! I will personally agree for this proposal haha.

This will be highly dependent on the presence of bribes actually :rofl: But personally I might place a higher weightage over the cross chain assets such as the wormhole pools because I believe that having significant liquidity there will facilitate an even easier entry for users from other Chains into the Terra Ecosystem. This will also allow us to capture another huge source of revenue if we are the default DEX for cross chain users!

1 Like

To determine ASTRO allocation to this pool I reviewed other protocols of similar liquidity as MARS-UST, also offering dual rewards. One example, MIR-UST, has an alloc_point of 33944, liquidity= 36M and astro apr is ~32%. MARS-UST liquidity is 31.7M atm with ~30% apr in Mars reward. Just to get Mars-UST on the board with some ASTRO rewards, maybe 15% apr or so, I propose we start with an alloc_point of 20000.

Future rewards may be reallocated through governance votes.

Thanks for this! Note that before this MARS-UST emissions proposal, Assembly will most probably vote on earlier ones where pools such as LunaX-LUNA, ORNE-UST etc may also get emissions.

Regardless of the exact allocation point value, I guess it’s fair to say that you propose 2% of the total emissions to go to MARS-UST?

yes sir. 20000 of 1000000, or 2% will work.

1 Like

Perhaps 1% would offer a better chance of passage since other LPs are trying to tap the generator, too.

1 Like

Assuming around 1% of ASTRO incentives are directed to MARS-UST, the message for this proposal looks like this:

[
   {
      "order":"1",
      "msg":{
         "wasm":{
            "execute":{
               "contract_addr":"terra1zgrx9jjqrfye8swykfgmd6hpde60j0nszzupp9",
               "msg":"eyJzZXQiOiB7ImxwX3Rva2VuIjogInRlcnJhMXd3NnNxdmZnbWt0cDBhZmNtdmc3OHN0Nno4OXg1enIzdG12cHNzIiwiYWxsb2NfcG9pbnQiOiAiMTEwMDAifX0=",
               "funds":[
                  
               ]
            }
         }
      }
   }
]

The value in msg is the base64 version of:

{"set": {"lp_token": "terra1ww6sqvfgmktp0afcmvg78st6z89x5zr3tmvpss","alloc_point": "11000"}}
2 Likes

Much appreciated Stefan.

I am unable to make edits to this proposal and it’s pretty outdated. The proposal mentions using unclaimed Astro airdrop but that has since been moved to the assembly. Would it be possible to make a few changes, mostly removing any mention of unclaimed airdrop and indicating 1% will come from current allocation?

Yes as long as 1% remains the same, you can make edits that clarify where the emissions come from

Will need a Github PR as well though

It would be better if this proposal were aimed to take a flat amount of ASTRO per year instead of saying “we’ll claim all the unclaimed airdrop ASTRO”.

I’d suggest modeling the proposal after some of the other proposals that have clearly laid out expected APRs, a proposal like this seems to pose the risk of the MARS-UST pool being overly incentivized. It also doesn’t leave any room for the airdrop ASTRO to go to treasury/warchest for future incentives making it more fair to other pools/protocols.

You know, you’re right. I wrote this before the others were written but was unable to make edits. There is a lot here i’d like to edit, mainly that the unclaimed airdrop has nothing to do with this proposal anymore since it has been absorbed by the assembly and the 1% will come from total allocation.