ARC-75: Astroport Long Tail Incentive Alignment

Proposals ARC (Astroport Request for Comments)
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This proposed Incentive Alignment proposal aims to achieve the following goals:

• attract more TVL to Astroport on all of its deployments, thus making it the most liquid avenue for the long tail of assets
• allowing projects to align themselves with the Astroport protocol and reap long term benefits from directing liquidity to Astroport
• spread the narrative that Astroport is the best AMM for new projects to launch their tokens on
• pave the path for established projects to deploy part of their DAO treasuries inside Astroport pools

In this post, we’ll dive deeper into how this proposal aims to achieve the above mentioned goals. We will start by explaining the lack of alignment between protocols and brand new projects that launch a token. We will then propose a solution which can make Astroport an even more desirable avenue for new projects to launch on, either directly or through a launchpad.

How Tokens Bootstrap Liquidity Today

We believe the current model to attract liquidity for recently launched tokens is suboptimal. As of today, a new project usually picks the dominant AMM on the chain they want to launch their token on. The hope is that their token will get more visibility due to the brand power of that AMM and that they will receive other perks such as:

  • Rewards in the AMM’s native token which can attract more liquidity for their token
  • The option to offer LP rewards in their own token
  • Superior trade or LP UX due to certain features offered by the AMM

While some of these perks can be beneficial, relying on liquidity mining rewards to attract and retain LPs is not sustainable or desirable in the long run and can actually drain value away from the newly launched project. Moreover, we do not believe that the most technologically advanced AMM will always win mindshare. We think that the liquidity avenue which is best aligned with individual projects has a higher chance of attracting and retaining recently launched as well as established tokens and can thus get an edge over competing AMMs.

Thus, we would like to present an idea which can better align the interest of external projects with the Astroport protocol.

Overview of Sharing Swap Fees

The central idea of this proposal is to share up to 10% of specific Astroport pool swap fees with projects that perform any of the following:

  • Make Astroport the central place to attract liquidity for recently launched tokens
  • Deploy idle liquidity from a treasury; this applies both to DAOs that want to leverage idle tokens as well as projects that employ protocol controlled liquidity

For the avoidance of doubt, by “Astroport pool swap fees” we mean the swap fees produced by individual Astroport pools and not the aggregate fees collected (and swapped to ASTRO) by Maker contracts.

We believe this fee share feature offers several benefits and poses minimal downsides for the Astroport protocol. First, recently launched projects have a way to benefit from the volume that their token brings on Astroport and can slowly build a treasury from the share of fees they receive. Second, this proposal can pave the way for established projects to deploy part of their idle assets, such as DAO treasuries or protocol controlled liquidity, on Astroport and receive a perpetual stream of swap fees in return.

Criteria for Sharing Fees

Either of the following criteria has to apply in order for a project to qualify for swap fee sharing:

  • The project is a token launchpad or similar platform; this token can be the launchpad’s native token or a token that recently launched through the launchpad; the project creates at least on pool using this token on the Astroport protocol and not on any other DEX or AMM
  • The project (or community) is not a launchpad or similar platform; the project’s native token is already trading in at least one Astroport pool; the token has been trading on at least one Astroport deployment for at least 3 months; the project/community is currently offering token rewards (using Astroport’s dual-rewards infrastructure) for at least one pool that contains their own native token

There are also several other details to take into account:

  • Projects can only request a swap fee share for pools that contain a token which passes the above mentioned criteria and which is paired with Cosmos chain native tokens (e.g SEI, NTRN, INJ, LUNA), stablecoins (e.g USDC, USDT) or their derivatives e.g ABC-axlUSDC, ABC-stNTRN, ABC-stSEI
  • In the case of staked or derivative versions of a token that already passed the above mentioned criteria, the project will need to submit separate governance proposals for each individual token flavour

Governance Process

In order to receive a portion of a pool’s swap fees, a project needs to post an Astroport Request for Comments (ARC) on forum.astroport.fi which includes the following:

  • The name of the community/project that the proposal author represents
  • Whether the project is a token launchpad or not
  • The target token they are interested in and the Astroport pools that contain this token and whose fees they want to receive a share of
  • The pool addresses and chains/networks these pools are on
  • The percentage of swap fees the project would like to receive from each pool listed above; each percentage must be lower than or equal to 10%
  • The swap fee receiver for each pool; this is the wallet or contract that will receive the proposed percentage of fees from each Astroport pool

The proposal should stay on the forum for at least a week and address all concerns raised by the Astroport community. Assuming the proposal is valid and the author/s addresses the community’s concerns, it can proceed to on-chain voting.

Proposal Timeline

We welcome any input from the Astroport community regarding this proposal. In roughly 7 days from now, we plan to put this proposal up for vote in the Astral Assembly.

Copyright

Copyright and related rights waived via CC0.

28 Likes
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Simon here from Eclipse Fi.

We are considering this for the deployments of tokens from launches on Sei Network and see it as a great way to align with Astroport and also share in the revenue generated by launches.

One concern or thought is around the requirement for proposals for each launch/pool. From a launchpads’ perspective, requiring to submit a proposal for each launch could end up with a governance bottleneck, and fairly difficult when launching multiple projects inside a month.

Suggestions could be to batch multiple projects per month inside one proposal, but there could still be details missing for that such as contract addresses.
Open to thoughts and suggestions on how to reduce the friction there.

Another query is suggestion is for pools that are not paired with USDC/USDT. For example, we plan to launch our initial ECLIP pool on Astroport paired with the SEI native token from an LBP accepting SEI.
Maybe the project could submit a separate proposal for exemption allowing for the sharing of fees outside of an USDC/USDT pair in certain circumstances.

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This is great news; it enables people who have an interest in attracting liquidity to Astroport to be able to share the upside alongside Astroport, should they be successful.

I agree with the proposal in general, but I do wonder why projects that aren’t launchpads have to wait out 3 months before being able to submit a fee share proposal?

Also, I don’t think I agree with perpetuity agreements; it puts a burden on future ASTRO holders to comply with said agreements, and they might not even be the same ones that made the deal in the first place. I think there can be a good window (like 6/12/24 months) that is renewable.

I do believe that 5% might be low and not be attractive at all; instead, if we really want to set boundaries then I think it could be a maximum of 50%. But it should be up to ASTRO governance to decide if they agree with the proposals or not.

Last thing, I wonder why we are limiting the functionality only to pools that pair with stables; is there a technical reason for it?

It would be good to clarify how and when the fees get sent/shared, and in which token/denom those fees are paid.

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I roar yes. 5% maybe low yeah, could maybe do 10.

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There are a lot of eligibilities and requirements to keep track of in this proposal. :sweat_smile: Eventually, it might be helpful to see it laid out in a flowchart for governance voters to better understand which projects would, and would not, qualify for such a request.

I think the 5% fee share could be too low (of a max value). The goal would be to increase liquidity in those pools, as it could lead to increased swap fees as a by-product of growth activity, and then everyone benefits further. In the case of project tokens, these LPs are likely mainly utilized by the project’s community/supporters. The project itself may be the only one trying to achieve the goal of increasing the use of that LP. With only 5% of the 0.2% fees, it just seems too little to do anything productive with.

For example, what if 0.1% of swap fees (50% instead of 5%) were sent directly to a burn address instead of the Project’s address as part of the proposal? ASTRO stakers would still benefit 0.1% from swaps and LPs would earn 0.1%. I can see a scenario where that could be the desired outcome, but maybe I am thinking about this incorrectly

If they are projects launched by a launchpad then my understanding is that they wouldn’t have to wait the 3 month period. I assume this is to ensure a project is coming in bootstrapped with at least some liquidity support from the get-go. Although that is not necessarily guaranteed for those that utilize a launchpad, it is more of an unknown for projects that do not go that route I’d think.

Agreed, I think this minimum time should be relative to the minimum lockup time for launchpads (3-6 months?). Once that period ends, then liquidity could change drastically, and I think that is something that should be evaluated shortly afterwards.

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the heart of defi is liquidity, so I agree that the liquidity reward is bigger for the liquidity provider portion because it attracts their interest to do yield farming so that TVL is large and appears in various defi databases so that it can attract users to use our platform, at the beginning your team should get a large portion less first, when there are a lot of new users it is shared equally with the liquidity provider to cover your operational costs

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I think with an incentive of 50% it burdens Astro itself because for long-term sustainability, maybe an average value of 30% can be taken very good.

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Hello.

I fully agree that the liquidity avenue is best aligned with individual projects and with sources of liquidity, such as launchpads. This would enable the project to gather a higher chance of attracting and retaining new and well placed tokens.
Fee sharing sounds a great idea. People are not able to afford fees these days. Thus they always look for cheaper alternatives. It would also enable people to have an interest in attracting liquidity to Astrosport.

Only suggestion i would have is not 5% but maybe higher 10$ fee.
Thanks.

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I think its a good idea… going ahead with this will be benificital

1 Like
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Very good proposal! Would be very beneficial to proceed - upvote from me granted! :rocket:

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Fees should be collected from volume traded with the platform popularity. Those who believe in the project will be willing to stake in the protocol and provide liquidity.
5% sounds great but I would go with 10% that going to attract more users.

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This is an amazing proposal. This could definitely increase the interest of participating providing liquidity to Astroport. The liquidity rewards add to the attraction of involving to the project even more.
Fee sharing is a great Idea in general. But I think 5% is not enough to attract more investors. Maybe higher number be more interesting.

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This is very good idea i guess to support the people like this really appreciated

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Great. Such a crypto VC bank for other new projects. Can that be incorporated with other BC, like Sei, which starts in the middle of August. There is a testnet launch pad Eclipse Fi on Sei.

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In full support of this proposal, great idea.

I do think the 5% share of swap fees may need to be increased to 10 or 20% in order to be an attractive propsition.

Hope it is true that the 3 month waiting period is bypassed by being launched on the launchpad also.

Great proposal

1 Like
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This is a good new. Astroport Long Tail Incentive Alignment

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very impressive, I hope all of this will benefit everyone, both devs and users…

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There is nothing bad about this project, I am with you from the beginning until the moon

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What kind of time frame or milestones do you foresee for implementing and testing this alternative launch model?

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The proposed Incentive Alignment proposal for Astroport aims to attract more TVL, offer long-term benefits to projects, and position Astroport as the top AMM for token launches.

By sharing up to 5% of specific pool swap fees with qualifying projects, they can build a treasury and establish perpetual swap fee streams.

This approach can benefit both new and established projects, fostering alignment and liquidity growth.

The proposal will undergo a governance process with input from the Astroport community before voting in the Astral Assembly.