Develop a warchest in Astroport. All accumulated swap fees up to where $ASTRO staking goes live, growing since Astroport’s launch, are swapped for $LUNA, $bLUNA, $ASTRO and $UST. Any $UST will be deposited in Anchor for aUST and/or lent to Mars protocol to receive interest.
A different proposal will be submitted describing what percentage of the future swap fees will go to the developing warchest and be returned to $ASTRO stakers.
The purpose of this proposal is to receive feedback from the community about moving existing assets into a warchest and gather thoughts regarding the warchest’s asset distribution.
Swap fees manifest themselves in the staking wallet as the very assets from the pool in which the swap occured. Some of these assets are the cornerstone of the Terra ecosystem (e.g. LUNA, bLUNA). As it currently stands, accumulated swap fees are destined for $ASTRO distribution to $xASTRO/vxASTRO holders. This is a great design and one that directly rewards those who believe in the future of Astroport.
Since launch, Astroport fees have been accumulating in the staking wallet, preparing for distribution, when staking goes live. Many of the assets, e.g. LUNA, are yield-bearing assets with incredible growth potential. These assets should not be swapped to $ASTRO and distributed. Instead, they should be held in the warchest. Future yield can be swapped for $ASTRO and distributed to stakers. As the warchest grows, staking yield will grow.
As a DEX Astroport is perfectly poised to develop a warchest. Swap fees accumulate in the staking wallet in a variety of assets. In its current form, these assets are ultimately destined to be swapped into $ASTRO which will then be disbursed to $ASTRO stakers.
As of this proposal’s drafting, roughly 9.2M $UST-worth of assets sit in Astroport’s staking wallet. The top three by percentage are $LUNA, $UST, and $bLUNA, but there are many other protocol tokens present as well. While these are ultimately destined for $ASTRO stakers, it would be better for growth if methods are applied to grow their value before swapping for $ASTRO. For example, move all $LUNA, $UST, and $bLUNA to the warchest. Then, send the remaining assets to the warchest, swapping to $bLUNA/$UST. UST can be deposited in Anchor and/or Mars for yield. This paired with bLuna yield can be used to increase $Astro buybacks.
Redirect 100% of already-accumulated swap fees to a new multi-sig Astroport Warchest wallet. $LUNA is converted to $bLUNA through the most profitable route (conversion in Anchor or swap on Astroport). $ASTRO and UST are retained. Swap all remaining tokens to UST. Deposit UST in Anchor and/or Mars. The $100k of existing $ASTRO can be directed to stakers.
This would result in an initial asset mix of about $4.7m in $bLUNA as well as $4.5m in UST. Yield projections for this would be above $1m per year, which can be used for further $ASTRO buybacks.
While in the short term this may not create the large payout many expected when $ASTRO staking goes live, developing a warchest is forward-thinking and will grow Astroports wealth in the future. This future yield can serve to stabilize staking rewards so in bearish markets when swap fees tend to reduce, $ASTRO stakers will still receive a substantial reward. The assets in the warchest will also serve to back the value of the $ASTRO token with blue-chip $bLUNA, which can serve as a soft-floor for $ASTRO price.
The addition of a warchest introduces a new wallet and code. It will likely need auditing services unless the code being used has been audited already (e.g. Apollo Dao code which utilizes a warchest model).