I was wondering if it might be a good idea to incentivise more AVAX liquidity in Astroport by adding ASTRO emissions?
Basically, there isn’t much liquidity there. We have 3 pools currently, wAVAX:LUNA, wAVAX:UST and wAVAX:wasAVAX. The ones I think are most crucial is probably the UST pool and the wasAVAX pool. Mostly because if we increase the liquidity of the UST pool it may help bring more AVAX trading in, while the wasAVAX pool is going to be particularly useful as well due to other dApps already making use of wasAVAX (eg, Nexus wasAVAX vault). Incentivising the pools might also attract existing AVAX holders, who haven’t yet seen enough reason to bring their AVAX holdings over to Terra.
So… what’s your thoughts? Would it be meaningful and useful to incentivise or do you think it will not add any value or utility?
I’d say we need to look at it from the utility of wAVAX and transaction volume of these pairs. Currently the only utility of AVAX in Terra is as a collateral on Anchor Protocol. A deep liquidity pool is beneficial for both Benqi & Anchor. If the pools have low transaction volume and benefits both these protocols, we could get these protocols to contribute as a dual incentive to Astroport.
It will only make sense to have ASTRO emissions without dual incentive if the pool it’ll itself has high transaction volume which will bring fees to the ASTRO stakers.
Moreover, I suspect that most Anchor borrowers with wasAVAX interact with the protocol from Avalanche, which will mean that the transactions are usually done on the Avalanche chain. Not too sure if @fig is able to shed some light to whether Anchor borrowers using AVAX interacts from Avalanche chain or Terra chain.
Hey @MaxCallisto - let me look into this and report back.
Know this need and analysis have been requested by the Anchor team. Will share our findings here; sounds like it may already be in the queue.
@MaxCallisto reporting back - seems your assumption was right.
Interacts with the AVAX chain are dominant, about 1000x volume at its peak, please see the chart below:
Note this is internal data from Snowflake and not yet available.
The data doesn’t explain why users currently prefer using AVAX natively on Avalanche over Terra.
Liquidity incentives might bring more LP but will not change the underlying behavior that users may prefer to use AVAX natively on its chain rather than bridging over.
Hey Fig, thanks for the data. Since sAVAX originates from the Avalanche chain and Anchor is available on Avax chain, the process is much simpler to borrow directly from the Avax chain. My assumption is that the process is more cumbersome than bridging it over & the liquidity of sAVAX is rather thin on Astroport.
Since most of the users are interacting from Avax, it doesn’t seem to have much reasons for incentivising the pool. The pool, however, could benefit Nebula if there’s a cluster made to accumulate sAVAX. This could potentially drive up the APR of the pool, attracting more liquidity organically.
Thanks Max and Fig - what you’re saying makes perfect sense. Thank you!