VxAstro roadmap is currently very similar in respects to VeCRV and that has proven to be a good system. However, I believe that the solidly upgrade to Ve mechanics is superior and quite interesting for VxAstro. In Solid, VeSolid is locked into NFT that rebase to prevent dilution of the vote locked tokens. Having VxAstro that rebases to give an undiluted proportion of voting control would be amazing and is next level tokenomics. I hope that the team is pursuing this, perhaps even improving upon it.
I definitely agree with the sentiment that bribes, bribe claiming, voting all things should all be native to the astroport UI
I wrote this post more in hopes of generating some discussion as to whether vxAstro being locked into rebasing NFT’s
The advantage to locking vxAstro into an NFT is that the formerly illiquid token is now a composable and liquid asset while retaining the timelocked position and voting power
The advantage to rebasing is that now the timelocked vxAstro is not diluted by the future emissions schedule Astro via the pool rewards. As currently proposed, vxAstro will be diluted by the emission schedule of Astro. The number of staked astro has no effect on the number of astro being emitted through the pool rewards. The emission is constant. However with a rebasing schedule, the more astro that gets locked in vxAstro, the less astro would be emitted to the pools thus providing an incentive to lock and a supply squeeze on the emitted astro as emissions decline. The premium placed on the locked vxAstro drives the need for bribes to direct votes
This makes sense for incentivizing ever deepening liquidity and in a multichain world, we want to provide the greatest depth of liquidity to take advantage of our already low fees so that swap aggregators like rango always route a leg through Astroport.
This sounds great actually! This will actually value-add the tokenomics of $ASTRO even further!
While this actually solves the illiquidity of vxASTRO, which is a good idea, this might not be beneficial to Astroport as a whole for a few reasons:
Making vxASTRO liquid and composable will actually remove the motivation for other protocols to capitalize and build on the “cons” of vxASTRO. This also means that there is 1 less incentive for Convex-like Protocols to build on top of Astroport. If we look into the “Curve Wars”, Convex was actually the “KingMaker” which propelled Curve forward by fighting the shares of $CRV and reducing $CRV’s circulating supply rapidly.
If we make vxASTRO liquid and composable, Convex-like Protocols will also then have to secure funds to buy up the vxASTRO NFTs from the Terra Marketplaces, which adds another level of complexity to the whole Governance Wars.
Till date, none of the Terra NFT marketplaces are actually fully audited. This puts them at an increase risk of being exploited. If the motivation to sell vxASTRO NFTs is very high for whatever reasons, there will be a significant amount of vxASTRO NFTs on the marketplace. If the NFT marketplace were to be exploited, a significant amount of vxASTRO NFTs may fall into the hands of bad players, giving them significant amounts of voting powers as well as diluting the value of the vxASTRO NFTs because they essentially got it for free
To summarize, I will agree with adding a rebasing mechanism to vxASTRO but not to allow vxASTRO to be converted into an NFT to allow for Convex-like Protocols to build on top of Astroport to foster healthy competition and significantly increase the demand of $ASTRO
After seeing how Solidly has played out, I don’t think the rebasing mechanics are a good idea. Those who farmed a large $ASTRO position would essentially have permanent control over the protocol, without having to invest any more into the protocol. For example, if I bought up 400 $ASTRO and staked it while there was only 1,000 $ASTRO in supply, I would forever have 40% of the votes in the protocol. This is without me bothering to acquire or buy any more $ASTRO.
As more people stake their $ASTRO, the value of all future $ASTRO will continue to diminish, because all $ASTRO emitted in the future represents a smaller and smaller share of the overall pie. For example, if 80% of current $ASTRO got staked with a rebasing mechanism, then all future $ASTRO emissions would just represent the remaining 20% of the protocol.
In other words, the rebasing mechanism gives early adopter whales a permanent lock on the protocol.
I’m not sure what the perceived downside to locking the vxastro in an nft would be? It provides a level of composability that is unmatched by a nontransferable share while still retaining all the properties that make the locked share so important to the protocol. I do not think that the immaturity of current terra nft markets is a good enough reason to not pursue this.
Its not really about the immaturity of current Terra NFT markets but rather the safety and security of the current marketplaces given that none of them are audited.
In addition, there are 3 protocols that aim to build on top of Astroport, Reactor, Retrograde and Apollo. They are able to resolve the incomposability of vxASTRO with their wrapped $ASTRO tokens ($retroASTRO, $reASTRO). This allows users to immediately exit their locked $ASTRO positions, reducing the need for vxASTRO to be tokenized as NFTs.
It’s true, protocols will provide derivative exchanges but the peg will not be 1:1. The derivatives will trade at a discount as the wrapping will not be reversible. Only the nft will allow you to liquidate your vxastro at fair price or use it as full collateral. Prism could even work on refracting the nft’s. There’s a lot of potential utility to locking inside an nft. Markets will eventually catch up and provide a safe and audited place to trade them
Also locking vxastro in an nft would not preclude the protocols you mentioned from offering any of there planned services. It just gives everyone more options and use cases which always drives price higher
Not necessarily in my opinion. Demand for the $ASTRO derivatives will be relatively high as staking the $ASTRO derivatives on the respective protocols will earn yields significantly higher than what a user can get if the user locks their $xASTRO for the full 2 year duration to get vxASTRO.
Users will also be incentivised to provide liquidity for the $wrappedASTRO-$ASTRO Liquidity pools.
Given that there are strong incentives to stake/provide liquidity vs dumping the $ASTRO derivatives, the chance of the $ASTRO derivatives maintaining the peg with $ASTRO or even being over-peg is very high
This is evident for $cvxCRV and $CRV where they trade very closely to each other.
Yeah, agree that is possible to incentivize a strong peg, but we are straying from the main point and I do not believe that derivatives like retro etc. are a reason to not lock into nft’s. The more options the better
Even if astro does not implement directly, someone will. It will be a very attractive lending market to use vxastro as collateral. It is inevitable imo
You can’t compete with whales either way, so that shouldn’t be your metric. The question is whether the rebasing mechanic is good for the protocol. I’d argue that it isn’t because it doesn’t align incentives with long-term investors.
For example, imagine a Whale currently owns 20% of the circulating supply of Astro (let’s say it’s currently worth $10m just to make the math easier), and assume 10% token inflation (new tokens emitted) per year (also to make the math easier). That’s a significant degree of control and very valuable: the whale could use governance votes to direct $Astro emissions to pools he is invested in.
If the whale wants to maintain maintain his 20% ownership of the protocol under the current system (and all the benefits that come with it), the whale would need to buy another $1m worth of Astro next year, and then $1.1m worth of Astro the year after that. This provides steady buy pressure on Astro, and also keeps the Whale invested at current market prices. If the Whale doesn’t keep accumulating $Astro, his control over the protocol gets diluted. This means that only people who are invested in the protocol long term will retain control over it. If the Whale isn’t investing long-term by continuing to buy Astro tokens, he’s going to get his share diluted by all the other people acquiring Astro.
If you introduce rebasing mechanics, the Whale will ALWAYS have at least 20% of the total circulating supply of Astro — even if the whale keeps dumping every $ASTRO that he farms through his LP positions.