ARC-77: Select Initial Incentivized Pools for Sei, Partner with Stride

Proposals ARC (Astroport Request for Comments)
1

Summary

This is a signaling proposal to establish social consensus around the initial incentivized pools for Astroport’s immenent Sei deployment. The proposed initial incentivized pools are:

Pool ASTRO per block ASTRO per day Percentage Alloc_points
ASTRO-USDC 0.05851 10,110.528 14.634 14,634
SEI-USDC 0.26556 45,888.768 66.419 66,419
USDT-USDC 0.00579 1,000.512 1.448 1,448
stATOM-USDC 0.06996 12,089.09 17.497 17,497
Total 0.39982 69,088.896 100 100,000

Furthermore, contingent on this proposal passing Stride commits to match the ASTRO incentives going to the stATOM-USDC pool on a 1:1 basis. So in addition to ASTRO incentives, the stATOM pool would also receive 483.5 STRD per day.

Normally, when Astroport launches on a new chain the initial pools only receive ASTRO incentives. But according to this proposal, Stride and Astroport would equally share the task of incentivizing this initial pool on Astroport Sei.

Initial incentivized pools for Astroport Sei were previously proposed in ARC-63, which has yet to be voted on and is still in the discussion phase. This proposal can be seen as an extension of ARC-63.

Disclaimer: I am employed by Stride Labs.

Motivation

Stride and Astroport

Stride has a long history of supporting Astroport.

  • In the Spring of 2023, the Stride DAO used over $100K to purchase xASTRO, which was then distributed as liquidity incentives on Astroport Terra.
  • Stride contributors arranged for over $1.5M of liquidity to be added to the stINJ/INJ pool on Astroport Neutron.
  • And Stride contributors worked with Cosmos Hub to get $3.5M worth of stATOM/ATOM liquidity added to Astroport Neutron.

Stride’s utilization of Astroport in these ways has been very beneficial for Astroport, attracting users and creating trade volume. Note that none of these efforts have cost the Astral Assembly anything, and were all arranged by Stride. Now, Stride would like to build on its past history with Astroport through this new joint initiative, where both Stride and Astroport equally incentivize a pool.

stATOM on Sei

The plan is for Stride and Astroport to equally incentivize an stATOM-USDC pool on Sei. Selecting this pool as an initial pool on Astroport Sei is consistent with the guidelines for choosing initial pools set out in ARC-41.

stATOM will likely be a useful and popular token on Sei, with a relatively high trading volume.

Today, stATOM has roughly 85% market share for liquid staked ATOM. It is integrated in leverage applications throughout the Cosmos, including Mars, Umee, Kujira, Demex, Nolus, and others. Notably, stATOM is featured in the biggest pools on both Forge and Shade Swap, and in the second largest pool on Osmosis. In each of these pools stATOM has significant trading volume.

It is expected that stATOM can replicate this success on Sei. In terms of integrations on Sei, stATOM will initially be integrated with the Kryptonite money market, which is a fork of Anchor. As more projects launch on Sei - such as Mars potentially - stATOM will no doubt find further integrations.

What’s more, Sei is expected to draw a lot of users from outside Cosmos. And if these users are curious to explore Cosmos DeFi they may wish to buy stATOM, since it is useful in DeFi on many chains throughout the Cosmos.

Having this useful stATOM liquidity and securing STRD incentives right out of the gates would give Astroport an early lead on the other DEXes that plan to launch on Sei. So far, a number of DEXes have announced plans to launch on Sei, suggesting that the DEX landscape may be very competitive.

Details

Incentives

It is proposed that the initial pool incentives for stATOM-USDC target this objective:

  • Pool liquidity depth of $1M
  • Assume incentive APR of 30%

These figures are consistent with the framework in ARC-41. Based on trade volume for existing stATOM pools, this pool would almost certainly generate fees at a 1:10 ratio for fees to ASTRO incentives.

To achieve this objective, it is proposed that Stride and Astroport each commit to providing $411 per day in their respective tokens, for an initial duration of sixty days. To be clear, this would mean a commitment of 60 * $411 = $24,660 in STRD and $24,660 in ASTRO.

Initial two months of dual ASTRO and STRD incentives for stATOM-USDC:

Token Price Dollar amount of incentives per day Token amount per day
STRD $0.85 $411 483.5 STRD
ASTRO $0.034 $411 12,088.23 ASTRO

After these sixty days, the Astral Assembly would be free to change the amount of ASTRO it spends on the pool, likely by using the Astroport Incentive Framework. Another possibility is that sometime after the initial sixty days Astroport chooses to implement vxASTRO. In either case, Stride would continue to use STRD incentives to match the dollar value of ASTRO incentives directed to the pool for a further one-hundred-and-twenty days (so long as the dollar value of ASTRO going to the pool does not become unreasonably high.)

So after sixty days, Astroport can increase, decrease, or cease incentives to the stATOM pool - or leave them unchanged. Whatever happens, Stride will continue to match for another one-hundred-and-twenty days. This provides Astroport with some flexibility.

Implementation

ARC-63 proposes three initial pools for Astroport Sei, and incentives of 56,999.808 ASTRO per day.

This current proposal would add a fourth pool initial incentivized pool, stATOM-USDC. Combining ARC-63 with this current proposal, here’s what the parameters would look like for the ASTRO generator on Astroport Sei. Note that this table uses a Sei block time of 0.5 seconds.

Pool ASTRO per block ASTRO per day Percentage Alloc_points
ASTRO-USDC 0.05851 10,110.528 14.634 14,634
SEI-USDC 0.26556 45,888.768 66.419 66,419
USDT-USDC 0.00579 1,000.512 1.448 1,448
stATOM-USDC 0.06996 12,089.09 17.497 17,497
Total 0.39982 69,088.896 100 100,000

In order to allow STRD incentives, developers would have to implement a generator proxy contract for the stATOM-USDC pool. This contract would further have to accommodate STRD, which is a native Cosmos token. It would have to be something similar to the contract from ARC-53.

Final thoughts

Stride has a long history of benefiting Astroport. At this point, it makes sense for both sides to work together to incentivize the stATOM-USDC pool on Astroport Sei.

The pool would likely have significant volume, as stATOM is very popular in the Cosmos and will be integrated with DeFi applications on Sei. And so stATOM-USDC makes sense as an initial pool on Sei.

Quick recap

  • Stride and Astroport to dual incentivize an stATOM-USDC pool on Sei, at a 1:1 ratio for STRD and ASTRO
  • Dual incentives to last for at least six months
  • Initial incentives for first two months: $411 worth of STRD and $411 worth of ASTRO per day
  • After first two months, Astral Assembly may change rate of ASTRO incentives - or even discontinue incentives, if it wishes to
  • Stride will continue to match ASTRO incentives on the pool for a further four months

Please ask any questions you may have. Also, suggests are very much welcome.

5 Likes
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Definitely in support of this. stATOM/USDC liquidity will be very important in attracting and retaining users on Sei. Stride is doing amazing work alongside astroport, hope the synergy continues long into the future

1 Like
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Thanks for the solid proposal John and I agree Stride has been bringing a lot to the table.

A few initial questions:

  1. Why stATOM-USDC and not stSEI-USDC? stATOM for Neutron made a lot of sense as a consumer chain, I’m not convinced that stATOM will gather as much volume as stSEI potentially could.

  2. Perhaps I missed it, but what is the reasoning behind $411 of incentives per day? Is that based on trading volume of stATOM elsewhere?

  3. Are you proposing adding additional 12 089 ASTRO per day or would that be taken from other pools on other chains?

  4. If vxASTRO should come into play within the next 6 months (not saying it will, but if). How do you see this working given that vxASTRO allows holders to direct incentives instead of Assembly - which could direct incentives elsewhere than agreed on?

1 Like
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Very thoughtful questions.

1 - Totally agree that stSEI would be ideal. However, it appears that Stride won’t be able to onboard the Sei chain and issue stSEI - at least not at launch. Sei is launching without interchain accounts, and that’s requisite for Stride to onboard a chain.

2 - ARC-41 established the framework used to select initial incentivized pools on a new chain, and selecting stATOM-USDC at $411 worth of ASTRO per day is consistent with that framework. I choose $411 by estimating the amout of volume the stATOM on Astroport Sei can expect to generate, based on stATOM volume on other DEXes in the Cosmos.

Technically speaking, the pool only needs to generate $15K average volume per day to achieve the target 1:10 fee to incentive threshold. Considering existing stATOM volume and expected stATOM utility and demand within the Sei ecosystem, I believe the pool will easily achieve this threshold.

Look at it this way: when Astroport launched on Injective, 14,693.18 ASTRO per a day was committed to the Injective ATOM pool (ARC-45). When Astroport launched on Neutron, 23,666 ASTRO per day was committed to the Neutron ATOM pool (ARC-62). But according to this proposal, by partnering with Stride Astroport only needs to commit 12,089 ASTRO per day to the Sei stATOM pool. And keep in mind, since stATOM doesn’t forfeit staking rewards this pool will be more attractive to LPers than an ATOM-USDC pool would, meaning the yield will compress more and incentives will be spent more efficiently.

In my opinion, this is genuinely a very good deal for Astroport.

3 - Nope. This proposal doesn’t take away incentives from any other pools. When Astroport launches on a new chain, new initial incentivized pools are selected. The new incentives for the SEI, ASTRO, stATOM, and USDT pools on Astroport Sei will come from the ASTRO IBC’d to Astroport Sei in ARC-64.

4 - I think everyone is hoping vxASTRO goes online within the next six months - I know I certainly am! This proposal was written with vxASTRO in mind. Technically, this proposal only commits Astroport to providing two months (sixty days) of incentives, at a rate of 12,088 ASTRO per day.

After these sixty days, the Astral Assembly would be free to change the amount of ASTRO it spends on the pool, likely by using the Astroport Incentive Framework. Stride would continue to match ASTRO incentives to the pool for a further one-hundred-and-twenty days (so long as the dollar value of ASTRO going to the pool does not become unreasonably high.)

So after sixty days, Astroport can do whatever it wants with ASTRO incentives directed to the stATOM pool - and Stride will adjust STRD incentives to the pool to continue to match the dollar value of ASTRO incentives. So the proposal is a little open-ended for Astroport, although Stride is committed to matching ASTRO incentives for six months. I’ll edit the prop to make this a little more clear.

2 Likes
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Huge fan of Stride and everything the project brings to the ecosystem. I do think Sei’s userbase and use-cases could diverge from existing Cosmos appchains, so demand for things like stATOM are hard to judge. Wondering if it would be better to wait for some stATOM usecases or demonstrated demand?

Would love to see an stSEI token get rewards as close to launch as possible – if and when that token comes along!

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Bit of a chicken and egg problem, though.

In order for people to trade stATOM and for protocols to on Sei to integrate stATOM as collateral, at least a small amount of liquidity needs to be available. For example, the Anchor-fork Kryptonite wants to integrate stATOM as soon as possible - but at least a little onchain liquidity is needed for this to happen.

At the end of the day, Sei is built with the Cosmos SDK and will be connected to the big Cosmos chains with IBC. All current Cosmos users will end up playing on Sei, and some Sei users sourced from outside the Cosmos will get curious about the Cosmos.

If demand doesn’t materialize, the Astroport Incentive Framework can be used to reduce ASTRO incentives after two months. But I’m confident there’ll be enough demand to justify the small ASTRO expenditure.

1 Like
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Hey @John_Galt thank you for the proposal!

Personally I tend to agree with @redphone and @donovan here: if this were about stSEI I’d vote yes straight away.

I think Stride did a lot of heavy lifting for the Astroport protocol and I do agree that stATOM should come to Sei. Before stATOM though, I think the Sei eco might benefit more from stablecoin, SEI and SEI derivative liquidity. stATOM is something that should definitely come a few weeks after Sei launches mainnet.

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Agreed that the Sei ecosystem will benefit from SEI token liquidity and stablecoin liquidity. But stATOM liquidity from day one would also be helpful:

  • stATOM is an established collateral token throughout the Cosmos
  • Sei application are interested in integrating stATOM right away, to attract regular Cosmos users
  • The influx of new users to the Cosmos should have a version of ATOM to buy on Sei, so they can start to explore the Cosmos ecosystem

In order to make sure Astroport gets as much attention and interest on Sei right off the bat, this proposal aims to have a diversity of different initial incentivized pools:

ASTRO-USDC, SEI-USDC, stATOM-USDC, and USDT-USDC.

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I think we may need to lower the estimate for Sei (pacific-1) block times :sweat_smile:
They look closer to 1/3 of a second than half. Unless of course they increase with tx activity…

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Wasn’t aware the mainnet was already producing blocks!

Checking the link now, average blocktime for last 100 blocks is 0.4 seconds. So looks like it varies a little. Will keep an eye on this.

1 Like
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This is a great project