Upgrade boneLuna-LUNA Pool to Handle bLuna Rewards

Proposals Discussion
24

This comment should be seen as a healthy discussion to the proposal laid out by the Backbones Lab. For full disclosure, I did help to add some points into the proposal. I will lay down some facts for the community to decide whether they’d like to support or reject the proposal as I will not be taking sides for this proposal & I’m an SP/xASTRO holder.

The Good

  1. Being an xyk pool, the fees generated from this pool is 6x more than the pools for LunaX-LUNA & ampLUNA-LUNA LPs. In the Week 24th Oct, ampLUNA-LUNA pool had 36.066k LUNA traded whereas LUNAx-LUNA had 32.506k LUNA traded. At 0.05% stableswap fee, that yielded 18 LUNA & 16.25 LUNA in fees for ampLUNA & LUNAx respectively. In comparison, should boneLUNA-LUNA had 36k LUNA traded, that would have yielded 108 LUNA in fees back to xAstro stakers (6x more than ampLUNA pool).
  2. Funds for BackBone Labs are managed by a multi-sig wallet. (Important but not relevant to Astroport)
  3. The BackBoneLabs have a vibrant community of Skeleton Punks, supporters of Hermes, Capapult, Gidorah & PFC. This brings much needed light to the Terra ecosystem.

The Not So Good

  1. Although the stableswap pool isn’t ideal for LSDs, it is the next best option. xyk pool is better for fee generation but it deviates from the actual price quicker than the stableswap pool, making the LSD vulnerable to price oracle attacks if its being used as a benchmark for lending protocols. This creates a less favourable LSD for protocols to utilise. The long-term solution will be what @kai suggested here. The utility of the LSD can only be determined based on the utility on the back of the incentives. I believe even the existing pools of ampLUNA & LUNAx will have a change in allocation points once the new incentives framework by Astroport builders is out to ensure that the incentives benefit the Astroport community.
  2. BoneLUNA charges a 10% performance fee, with 7% going back to the LP provider pool as a dual incentive. For a $1mil LP value, if all things are equal, $500k will be boneLUNA & $500k in LUNA. At the current staking APR of 13%, that will equate to $500,000 value * 13% staking APR* 10% performance fee * 70% back to LP = $4,550. This is equivalent to only a mere 0.455% APR in LUNA back to the LP.
  3. The audit shared is for @larry’s St4k3h0us3 SCs whereas the ampLUNA was done by SCV & LUNAx by Halborn. As much as the CT throws shade at StaderLabs, they do have the necessary safeguards.

Now I certainly will not discount the community support behind this project. I believe that the spirit and motives behind Backbone Labs is beneficial to the Terra community and as I’ve mentioned in the first part of the comment, I’m laying out the facts for the Astroport community to make the best judgement.

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