When xAstro goes live, I believe it would be best if the xAstro staking contract was divided into two staking contracts:
One staking contract as stated in the documents where protocol fees are collected and distributed to stakers via market buying of the astro token. This is good and a nice buy pressure on stakers who are bullish on the protocol and looking to acquire more astro
The other staking contract should be one in which the protocol fees are collected and distributed to the stakers as straight ust claims. This staking pool is for the incooomers. It relieves sell pressure where stakers would otherwise be selling the astro rewards from staking.
All distributions would maintain the pro rata divisions put forth in the white paper. I think this split would go a long way to relieving sell pressure on the token and making it easier to generate passive income when wanted. This should really be the standard for protocols using the token/xtoken buyback staking model
A question! Will the staking contract for the $xASTRO that allows $UST claims be allowed to lock up their $xASTRO for vxASTRO?
Yes in theory they would be able to lock the xastro for vxastro all the same and retain governance rights. The only difference is that fees would be distributed as ust instead of astro
The entire premise is to boost the token price by eliminating dumping for revenue in mass which will absolutely happen with the xtoken model. The dumping of the rewards will always hold the price down. It has been pervasive in every form of the xtoken model
This is the best outcome for everyone! revenue takers get revenue and long term believers get more token and are not at the mercy of those will nonstop dump for revenue. Additionally, in the future if bribes prove more fruitful as a revenue source and thus reinforce the accumulation of astro, long term revenue lockers recieving ust can still use the ust to buy more astro. In my opinion, there is very little downside to this alteration. There is less volume on the astro/ust pool from the reduction in protocol buybacks but there is also much less downside in price for token holders and those who actually believe in the protocol
How would providing rewards in UST reduce sell pressure? The rewards not being sold are the rewards that would have been bought with the UST. So, you’ve negated potential sell-pressure by eliminating definite buy pressure.
I believe this proposal can only increase sell pressure and couldn’t possibly reduce it, as you’re moving volume from “definite buy pressure” into “no buy pressure” (effectively reducing the friction of selling the rewards). Choosing to be rewarded in UST is effectively the same as someone currently choosing to sell all rewards for UST.
I agree with ChaunceyStJohn on this one. The rewards going to stakers are not inflationary on token supply which is the key, they are using fees generated to purchase the tokens from the LP pools (as i recall) and then giving them to the safest hands in the protocol (the xAstro and vxAstro holders). It is an interesting discussion though and I am sure Delphi ran the ruler over it when considering the tokenomics. I believe Stader might have done something similar recently re converting all rewards into a token other than Stader - so maybe that helps as a case in point to review?
The problem with the xToken model is that it does not work when the stream of protocol fees does not increase with increase in xToken price. Contrary to what would seem common sense forcing dividend reinvestment in this situation does not cause long term appreciation of the underlying token’s value because as xToken increases, the cost of the same revenue stream increases which then drives the Token price down an equal amount.
The xToken model works while adoption increases because fee collection is increasing. However once this increase in fee collection levels off xToken model slowly drives the underlying Token straight into the ground. Selling is the only way to realize revenue
Removing the fee distribution from the buyback dividend mechanism and placing it straight into a fee distribution actually reinforces the price of the xtoken underlying because purchasing it is the only way to increase an individuals slice of the revenue pie. Flywheel to the upside
Vxastro further reinforces this with voting and bribes. But as currently constructed, xastro does not
(Thanks to hotahatalo for talking this out)
If you expect most sell pressure on Astro to come from people dumping astro LP rewards for revenue and believe that protocol generated fee capture distributed to astro stakers will eventually outpace the astro emissions for lp rewards, this is a great modification. In that event lp holders seeking revenue will be incentivized to stake the astro lp rewards in the ust distributing xastro staking contract and this is where they will realize their farming rewards. Now lp’ers are realizing revenue without selling astro. More astro is staked, less is circulating and long term believers seeking to compound their astro positions are still reaping the fee rewards distributed as astro in the original xastro staking contract.
In the current model, astro lp rewards would be incentivized to stake in the xastro contract when the fee capture becomes more lucrative but they will also need to sell the fee distributed buy back astro to realize the gains.
Joe on avalanche has switched to a similar model forsaking the buyback xjoe distribution for an entirely stablecoin distributed sJoe model. I think choice between buyback and stablecoin distributed fee yield creates an interesting game theory dynamic. Either way it is worth monitoring the sJoe situation in comparison to xAstro