Incentivise ampLUNA on Astro 2.0 and ampLUNC on Astro Classic

Proposals Discussion
1

Hi all,

I’m Philipp from Eris Protocol, and I wanted to open up a discussion for incentivising ampLUNA - LUNA / ampLUNC - LUNC before putting up a proposal.

I cannot make any proposal for the amount of alloc_point as I do not know about how many other pairs are getting but would propose a fair share between different staking derivatives.

Right now only LunaX is receiving rewards even though in our opinion the goverment procedure of setting it was not fulfilled for Terra 2. Or should be redecided as the dual incentives with $SD are not implemented anymore as far as I know: ARC-3: LunaX<>Luna Pool Addition to Astroport with Dual Incentives

Eris Protocol right now is a Liquid Staking Provider, but this was never our end goal, but gives us new possibilities. I will not focus on what Liquid Staking is, as most of you know and/or can look it up, but what we are planing around Liquid Staking and how to create volume and value on Astroport.

While we don’t have an official litepaper, here is a couple of topics we are working on right now and will be releasing in the future.

Eris Generation 0: Liquid Staking

Launched.

Eris Generation 1: Yield-Splitting

We want Eris to be able to split the yield from staking or auto-compounding into different parts. But instead of the “futures” aspect that Prism is working towards, that yield is a token, we want to do it based vaults. In the first iteration it will be possible to extract x % of yield from ampLUN* and donate it to other projects like Angel or LUNC DAO.

Eris Generation 1.5: Yield-Compounding

While we already auto-compound staking rewards, there is a big hole in the Terra ecosystem, as no auto-compounder is available. While auto-compounder will create some sell pressure on astro and dual incentivized tokens, it also generates volume, value and attracts more capital due to higher APYs.

We were on the sidelines because we expected Spectrum to launch in august, but feel like competition is a good thing to build the best apps and getting new users on Terra.

Also our specific goal of yield-splitting will be applied here. So that auto compounding LP tokens can extract yield and donate / fund projects.

Eris Generation 2: Yield-Investing

The next generation will allow investing the yield or any amount of it into any other token and generating continuous trading volume on Astroport.That means you can deposit any yield bearing token into our vault and define how much of the yield should be converted into a different coin.

Eris Generation 2.5: Yield-Investing Portfolio
Now things get really spicy. We want our users to be able to define portfolios with token allocations like 30% USDC 30% USDT 20% ampLUNA 20% ASTRO.
And the yield will be used to invest into the specified portfolio, generating again swap volume for astroport.

Eris Generation X: Slow-Burn Arbitrage
So this is still a wild card. Our smart contracts on Terra Classic were deployed on Testnet just before the crash. But in the future we will provide vaults for slow-burn arbitrage. That means we are swapping LUN* → ampLUN* / STEAK / LunaX and slowly unbond them for 21-24 days. It will also create volume for swapping.

While we had no high focus on this part, due to low liquidity and low volume,
seeing spreads of 4.5 % increases our priority on porting and finalizing the contracts.

Terra Classic

We think incentivising Astroport on Terra Classic makes sense. There is still a big volume on the chain, the community is big and it allows for a big inflow of new users into the Terra Ecosystems and also leads to pulling people towards Terra 2. Both chains can flourish when they work together and both will find it’s unique use case. Even adjusting the LUNC-USTC mint algorithm in the future can lead to big opportunities on Terra Classic and with IBC on Terra.

The burn tax will have some implications about the on chain volume, but the TerraRebels devs will be watching very closely and execute appropriate steps.

Dual incentives
While many other projects always go with inflated tokenomics and create crazy APY. We will first deliver our product before implementing a token. We are also big fans of the Kujira model of providing apex assets for our users and amp* depositors.

That means a form of protocol fee participation will be based on provided ampLUN* in combination with deposit length. Details still need to be worked out first.

Final words
We want to bring direct value (volume+TVL) for astroport and also the Terra Ecosystems. I hope I have given you a good outlook on what we are working on. We do not have any big investors, are completely self funded and received an emergency allocation of ~ 16000 LUNA.

Adoption can’t be forced, but it would help our project alot receiving some incentives for providing liquidity on astroport. As right now with the price of ASTRO, providing LUNA + LunaX is extremely lucrative, not because of LunaX, but because of Astroport.

Before putting up a proposal it would be awesome to hear your opinion on that topic and start a discussion here.

Our proposal would be to decide a total amount of allocation points for liquid staking derivates and share the allocation points between all liquid staking derivates in the same amount (or with a slight advantage for stader) and revisit the topic bi-monthly. And adjust based on adoption / user growth / volume generated, etc.

Best Philipp

2

Hi Philipp,

Thanks for raising this proposal and I personally believe that Stader requires more competition rather than being the incumbent LSD on Terra. However, I have a few reservations to your proposal (albeit, in the wrong format). Unfortunately, the proposal was more of a roadmap for Eris Protocol rather than the reasoning behind an incentivised pool.

Being a LSD protocol, although wasn’t the main vision being Eris, should be focusing on providing utility to your LSD token. Currently, there isn’t any utility behind LunaX, Steak & ampLUNA. Although most might argue that there isn’t any dApps on Terra, but the proposal should focus on some of your Biz Dev efforts that you might have with the other protocols that will be launching.

Unfortunately, the roadmap provided did not give an accurate picture of how a deep incentivised pool will bring value to Terra or Astroport. Given Staders’ lack of activity in Terra, I would think that the other dApps which will be launching on Terra would want to speak to you on possible collaborations.

A few possible collaborations:

  1. Collateral for lending or money-market protocols (eg. Edge Protocol)
  2. Collateral for stablecoin CDP (eg. Capapult)

I would love to support the proposal for incentivisation but the lack of utility for the LSD token will be equity wasted.

2 Likes
3

Hi Max,

awesome of all your involvement here on astroport. It would be great to get even more people on here to engage.

That’s totally true, and the initial post is only for starting a discussion and getting some valuable like you did.

So right now Terra Ecosystems are quite empty and teams take their time building again or focusing on other chains. With our roadmap I wanted to layout that we are commited on building on terra, increasing the value of DeFi here and try to bridge over the Terra Classic crowd, by making Terra only one step away for them.

So we will bring trading volume through our contracts and people to astroport in the future.

The same argumentation can be made about LunaX right now, but they have the advantage, that they can show their incentivized pools and the liquidity, which increases the possibility of using LunaX as collateral.

It is a bit of a chicken or the egg problem. Using a liquid staking derivate as a collateral ideally requires deep pools. And deep pools will only happen through incentivation.

That’s why we focus on our utility around our LSD and of course also try to build partnerships.

4

Thanks for starting this conversation, Philipp!

You’re proposal is a very big ask. You have $1,224.45 liquidity in your ampLUNA Astroport pool, no integrations, and no token. To bootstrap your liquidity, you’re asking the Astroport community to incentivize your pool. Bit of a one-sided deal, don’t you agree?

I agree that Stader shouldn’t get so much ASTRO rewards. In many ways, Stader has been very lucky. They don’t deserve it. But even though they just got lucky, the fact of the matter is people trust them and they’ve already established deep liquidity. The LunaX pool does generate significant trading volume. It’s not ideal, but I think we should leave these incentives in place for now.

Prism wants the same deal as Eris. Prism is going to launch a LUNA LSD without first relaunching their PRISM token, and they expect the Astroport community to incentivize their pool. I say the only LUNA LSD we should incentivize now is LunaX, until another LSD provider comes along that agrees to add external incentives.

Yes, it’s not ideal to incentivize LunaX when Stader can’t be bothered to contribute external incentives. But you know what would be worse? Incentivizing LunaX, ampLUNA, and cLUNA and fragmenting liquidity without any of those LSD providers contributing incentives themselves.

In my opinion, here’s what an LSD provider has to do to compete with LunaX. It’s simple. Present a vision, give a roadmap, communicate the message effectively to create interest and grab attention, get partnerships, launch a token, and use token as external incentives for Astroport pool. Only then should an LSD provider ask the Astroport community to contribute incentives, in my opinion.

Of course, in the future we’ll have vxASTRO and gauges, which will fix this problem of asking for incentives. But until that happens, in my opinion the Astroport community should not subsidize any new LSD provider unless they have a token and are willing to commit external incentives.

Now, what we should do is incentivize the ASTRO / LUNA pool and reduce incentives to the USDC / USDT pool. But that’s another issue!

1 Like
5

I see your point, we initially provided more liquidity to astroport, but with the high incentives of LunaX it is not possible to create more on astroport itself.

As we are not interested in creating an inflationary token right now and want to provide value to staking users, we will share part of the yield from other different vaults with ampLuna users directly.

I think with the fragmented approach the TVL and trading volume on astroport would be higher than with a single one. And right now it is best for protocols to attract TVL, as this is how the community funding will be shared over the next 4 years. We talk about ~ 100 M LUNA to be distributed by TVL share. Incentivizing a pool will increase the TVL figure of the pool for astroport 2x vs for us 1x. That means attracting value will create twice the additional value for astroport than for us.

But you are right, that the astroport community can sit back and wait before incentivization without any issue.

This will create less interactivity on the new chain and the DEX then incentivizing many smaller communities by a smaller amount in my opinion.

6

Thanks for the reply, @Philipp. I see your point on a chicken & egg situation for LSD. Perhaps we consider sharing the incentives for both LunaX & ampLUNA, meaning the alloc_points distributed to LunaX pools will be shared between LunaX-LUNA & ampLUNA-LUNA pools. In that manner, other pools will not be affected with the addition of alloc_points to ampLUNA, and at today’s ASTRO prices, we will have two $2M pools LunaX & ampLUNA.

Do you think that will be sufficient as a start?

7

Yes from our point of view it is.

I also think that this topic should be regularly reviewed in the future aswell based on delivery and real value created for astroport and the terra 2.0 chain. (For all LSD providers)

8

How would several incentivized LUNA LSD pools create more TVL for Astroport than a single pool?

Way I see it, one pool is preferable. One pool means deeper liquidity and a better user experience.

Certainly don’t like how Astroport is subsidizing Stader and allowing their LUNA LSD to be the only competitive one, but these are exceptional times. Terra is struggling to rebuild, and the LunaX Astroport pool is one of the few useful pools, mostly because of its deep liquidity. Given the context, probably best to just let Stader keep their alloc points.

Would really love to see another LSD provider disrupt Stader. Like I said, all it would take for Eris, or Steak, or Prism, or even Stride to disrupt Stader is: create a valuable token though having a strong vision and communicating effectively, then use that token to provide external incentives for the Astroport pool. If a project did that, I would be in favour of giving Stader’s alloc points to them.

1 Like
9

Unfortunately this is a chicken & egg situation for all LSD providers. @larry was previously looking to provide alloc_points to STEAK before the collapse of Terra, but due to existence of SD tokens, it was deemed to be a better alternative compared to a tokenless Steak protocol, although it did yield higher returns since staking rewards are passed back to stakers.

The fact that Stader is obtaining all the alloc_points without committing to a single utility brings the question of whether we’re incentivising a protocol just because they’ve launched in Terra Classic in the past or we’re supporting multiple LSD projects in hopes that one of them will bring higher utility to Terra.

Thinking that a LSD protocol creating a worthless token just to “bribe” Astroport will be short-term thinking, but rather we should look at it from the perspective that we’re supporting multiple protocols in hopes that they’re able to build more utility from these deeper pools. Concentrating the Astroport tokens to a pool that generates close to no volume , which equates to no fees to Astroport is unjustifiable.

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Having a deep liquidity stableswap pool for LSD is not the end-goal. The end goal for a useful LSD is the utility associated to the token. At the moment, none of the LSD protocols are able to proof, and that includes Stader.

I hope the above will make you consider spreading the emissions to several LSD providers.

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But deep liquidity is the end goal, isn’t it? An LSD can only be useful with deep liquidity, as it enables trading at scale. Use as collateral is the next step, where deep liquidity creates a useful oracle and can absorb liquidations. Utility hinges on deep liquidity. Fragmented liquidity reduces the utility of LSDs.

Way I see it, deep liquidity in one LUNA LSD pool is in the best interest of Astroport.