ARC-75: Astroport Long Tail Incentive Alignment

[Kadua]

1. I’m quite a newbie in this field, still learning, and I’m tickled by the criteria that projects can only request a swap fee share for pools that contain token paired with USDC, USDT or their derivatives. Is there a specific reason for that?, one reasons I can think of is that it is because they’re stable coins, that maybe for some reasons they’re more…, I don’t know, easier to manage?, more predictable?

2. Any plan to allow sharing fees beside pools that contain the USDC, USDT or their derivatives?

[Rouf123]

Previously I would like to thank all the Astro team who continue to fight for trust and are not tired of doing pioneering projects to attract the interest of the community. a good news for all of us can participate in correcting, more precisely the discussion provides criticism of suggestions and input for the proposal. there are 1/2 points that I want to ask in this proposal the first relates to the percentage of 5℅ I think it’s too little, as friends have said above for various reasons, and maybe it can be increased to 30℅ or 40℅ even 50℅. the second is related to the 3 month period given, in my opinion it will cause problems for the community and be in the spotlight, this needs to be discussed again by the team and evaluated. that’s all from me if there are words that are less pleasing, I apologize

[Sania88]

great news for the community participating as well as contributing in it because this proposal can increase the community’s sense of trust to go deeper. although in the proposal there are several points that in my personal opinion are not optimal. I highlighted regarding the percentage of 5℅ , I think that’s too little and it would be nice to increase it to 10/20℅ , however, all are returned to the Astro friends and may be used as material for consideration

[saidd096]

This is a good new. Astroport Long Tail Incentive Alignment…

[ahmed15691]

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

[Woodrow]

This proposed Incentive Alignment proposal for Astroport is promising, aiming to attract more TVL and liquidity by sharing swap fees with projects that align with the protocol. While the plan addresses concerns about sustainability, clarifying the governance process and providing user-friendly resources could enhance its adoption. Diversifying reward mechanisms and showcasing success stories would further solidify its potential impact.

[YudaFadila]

I think this will be better for astropot in the future, I totally agree with the proposal on how low fees and good liquidity management are taken into account to attract investors, I agree with this proposal and I hope that astropot will always be at the forefront

[stefan]

Great to see so many people pitching in! Let me address some of the points raised above:

@Simon_ch0

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

I agree with this approach and think it’s the easiest one to implement. I don’t have other ideas at the moment so this is probably and area to iterate on

@Simon_ch0

Another query is suggestion is for pools that are not paired with USDC/USDT

The idea of targeting pools with USDC/USDT is that we avoid scenarios where a pool has 2 tokens from two different projects and only one of these projects ends up getting a portion of the swap fees e.g ECLIP-MARS and only Mars/Eclipse post a proposal to receive fees. Now that I think about it, we can allow each Cosmos chain’s native token as well, in this case SEI, NTRN, INJ and LUNA. ECLIP will most likely not be the only token paired with a native coin so it might be wise to relax the requirements here

@afsardo

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

In my mind this was more of an anti-spam requirement to ensure that a project has ample time to provide dual rewards to the pool/s they want to receive swap fees from. Maybe we can remove this requirement?

@afsardo

if we really want to set boundaries then I think it could be a maximum of 50%

I disagree with this. Most swap fees have to go to LPs, otherwise no one will bring liquidity to a pool in the first place. No liquidity means no or low swap volume which in turn barely produces any swap fees. Looking at other suggestions, increasing the limit to 10% might be a good idea. I’m aware though that every percentage in here is rather arbitrary.

@afsardo

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

See above

@afsardo

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

I think that, after every swap gets executed, (in a pool which is supposed to share fees) a portion of these swap fees gets set aside. Anyone can then call the pool and send these fees to second_fee_receiver. This second receiver is the address of the project/community that receives up to 10% of the pool’s fees

@codenoodle

If they are projects launched by a launchpad then my understanding is that they wouldn’t have to wait the 3 month period

That is correct

@codenoodle

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?

See my answers above for the other points

[IkhwanPemalu]

Hello I am IkhwanPemalu

My Question

How will Astroport ensure that the sharing of swap fees is distributed fairly and transparently among projects? What measures are in place to prevent potential disputes?

What is the mechanism to calculate the 5% fee share for each project, and how will this impact the overall profitability and sustainability of Astroport?

How will Astroport prevent projects from creating multiple pools with the same token across different AMMs to maximize fee sharing benefits?

How will the proposal handle situations where a project’s token initially meets the criteria but later fails to maintain the requirements, potentially affecting the fee-sharing arrangement?

What steps will be taken to encourage both newly launched and established projects to actively participate in this fee-sharing initiative?

Could this fee-sharing model lead to potential centralization if a few projects dominate the majority of fee-sharing arrangements?

[stefan]

@IkhwanPemalu

How will Astroport ensure that the sharing of swap fees is distributed fairly and transparently among projects? What measures are in place to prevent potential disputes?

This is done automatically by the pool on each swap. As long as the pool math is correct, the fee split will be done right.

@IkhwanPemalu

What is the mechanism to calculate the 5% fee share for each project, and how will this impact the overall profitability and sustainability of Astroport?

A governance proposal will need to set the fee split for each pool that does share its fees. It’s not just 5%, it can be any value up to 5%. Overall, LPs would receive up to 5% less swap fees in a pool that shares part of its fees with another wallet/contract which means LPing might be less profitable for that pool.

@IkhwanPemalu

How will Astroport prevent projects from creating multiple pools with the same token across different AMMs to maximize fee sharing benefits?

No one can prevent a project from launching pools with the same tokens on other AMMs. As for different Astroport deployments, a project can deploy pools on different chains (Injective, Neutron etc) using the same tokens and post proposals where they ask that they receive up to 5% of the swap fees from each of these pools.

@IkhwanPemalu

How will the proposal handle situations where a project’s token initially meets the criteria but later fails to maintain the requirements, potentially affecting the fee-sharing arrangement?

In order to handle these cases, we might have to drop the part where fees are split in perpetuity and allow Assembly to terminate fee sharing.

@IkhwanPemalu

What steps will be taken to encourage both newly launched and established projects to actively participate in this fee-sharing initiative?

I can’t think of anything off the top of my head besides writing about this feature in docs.astroport.fi

@IkhwanPemalu

Could this fee-sharing model lead to potential centralization if a few projects dominate the majority of fee-sharing arrangements?

I don’t quite understand this part. A project should only request a fee share from pools that contain their native token/s. Project A can’t request that they receive part of the fees from pools that contain Project B’s token/s.

[redphone]

@stefan

The idea of targeting pools with USDC/USDT is that we avoid scenarios where a pool has 2 tokens from two different projects and only one of these projects ends up getting a portion of the swap fees e.g ECLIP-MARS and only Mars/Eclipse post a proposal to receive fees. Now that I think about it, we can allow each Cosmos chain’s native token as well, in this case SEI, NTRN, INJ and LUNA. ECLIP will most likely not be the only token paired with a native coin so it might be wise to relax the requirements here

I’m in favor of relaxing requirements. “USDC/USDT” could be broadened to “stablecoins and native tokens.” Other stables like Paypal’s or decentralized stables may rise to prominence in the ecosystem.

[stefan]

Updated the proposal with the following:

• Increased the max percentage split from 5% to 10%
• Relaxed the requirement to target pools that only contain USDC, USDT or their derivatives to 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
• Removed the part where fees are shared in perpetuity so that Assembly has flexibility when it comes to how long an Astroport pool can share its fees for