[Proposal] Redirect MINE-UST rewards to Astroport

Dear Pylon community, the Astroport contributors are pleased to present this proposal to redirect MINE-UST MINE rewards to Astroport.

Background and key concepts

Astroport is a next-generation AMM built on Terra expected to launch in December 2021.

Scheduled emissions of the ASTRO governance token will be directed to a limited number of Astroport liquidity pools as determined by Astroport governance. MINE-UST is set to be in the initial batch of pools to receive recurring ASTRO rewards.

As part of the Astroport launch there will be a “lockdrop” where users can move LP tokens from Terraswap to Astroport and “lock” it for a predetermined period of time in exchange for a “drop” or distribution of ASTRO tokens. However, not all Terraswap pairs will qualify for the lockdrop–the purpose of this proposal is to ensure that the MINE-UST Terraswap liquidity pool will be supported.

ASTRO Generators let LPs claim governance tokens from two protocols at the same time (specifically ASTRO + a third-party token such as MINE).

You can read an overview of Astroport here in the litepaper. The lockdrop is described in this Medium post.

Advantages of moving to Astroport

Astroport incentivising MINE-UST Astroport liquidity with ASTRO on an ongoing basis means Pylon users will have to choose between staking in Terraswap and earning MINE rewards, or staking in Astroport and earning ASTRO. However if Pylon chooses to shift MINE rewards to Astroport instead of Terraswap then MINE-UST stakers can collect both the ASTRO and MINE rewards thanks to the dual-token distribution mechanism of the Astroport generator.

Continuing MINE rewards for Terraswap liquidity while the same LPs could be earning ASTRO on Astroport will also have the effect of splitting liquidity between the two AMMs. Fragmenting liquidity like this is undesirable as it makes large trades less capital efficient and allows value to be lost to arbitrageurs. Concentrating liquidity in a single pool would avoid these issues.

We expect that Astroport will become the home of deep liquidity for all the main Terra assets due to ASTRO incentives and the flexible pool types such as stableswap invariant pools and concentrated liquidity pools which aren’t available elsewhere. Deep liquidity also for MINE will also allow capital efficient trades to and from MINE from a wide variety of Terra assets, which is beneficial to MINE traders.

For all these reasons, we believe that shifting MINE rewards to the MINE-UST pools on Astroport is the best decision for the Pylon community.

Why move now rather than later

The Pylon community may prefer to wait until after Astroport has launched and matured and then make a decision on moving incentives over.

Astroport would like to include MINE-UST in the initial lockdrop, allowing stakers to earn a significant one-time ASTRO reward for locking their existing Terraswap LP tokens in Astroport for a given amount of time. However, for the reasons above this only makes sense for Astroport if there’s a commitment from the Pylon community to migrate incentives. That way, upon Astroport’s launch, MINE-UST stakers will immediately benefit from dual ASTRO/UST rewards (in addition to the lockdrop rewards) rather than needing to sacrifice one to get the other.

Approximate awards

The Astroport lockdrop will distribute 7.5% of the ASTRO supply (75,000,000 ASTRO). If this proposal is positively received, MINE-UST will be allocated 4% of the lockdrop (3,000,000 ASTRO).

In addition to the lockdrop there will also be emissions of the ASTRO governance token directed towards the MINE-UST pair, though these have yet to be finalised.

Summary and next steps

We have made this proposal to gauge the interest of the Pylon community as to whether a migration to Astroport would make sense now or later.

If the Pylon community chooses to move incentives right away and participate in the Astroport lockdrop, MINE-UST stakers will be able to earn upfront ASTRO rewards in addition to dual MINE/ASTRO rewards post launch. If the Pylon community choses to delay and reconsider later based on Astroport’s launch and success in attracting liquidity, then there will be no ASTRO lockdrop rewards available to MINE-UST LPs and no dual incentives available post-launch.

Following the Astroport launch there will be the first governance poll:

  1. Move over future MINE-UST LP rewards from Terraswap to Astroport

After some days or weeks once liquidity is sufficient a second poll will be conducted:

  1. Route MINE<->UST trades in the web app to the Astroport pools

We invite open discussion in the comments below.

7 Likes

This is a great idea. I think it will help Pylon and $MINE in price action. My question is when we can vote on Pylon governance ?

Given Pylon is an IDO platform, seems strange to choose not to use Pylon at all for launch and not provide any allocation but then come back asking for liquidity migration.

I can see the benefit for liquidity providers and for Astroport but for governance stakers there isn’t a lot in this proposal.

6 Likes

Like Anchor, Pylon is currently exploring options to reduce/remove LP rewards. With this, we are also exploring CEX listings for the transition.

As my understanding goes, LPs who move across to Astroport (given we move MINE rewards) will receive a once of ASTRO reward. On top of this, they will receive ongoing ASTRO rewards via the ASTRO generator on top of the already established MINE rewards.

This provides an ideal situation where MINE LPs are still being significantly rewarded whilst also allowing Pylon to reduce MINE rewards. This is a great incentive to move MINE rewards to Astroport if we wish to continue providing LP rewards.

Are you able to speak a little bit more about the expected ongoing ASTRO rewards LPs will receive? As in, do you have a rough idea around what the ASTRO APY/APR MINE LPs could expect given different circumstances?

1 Like

@Simon a token sale of any sort would not have been appropriate or necessary for Astroport which is why Pylon wasn’t considered.

@Woody the distribution for ongoing ASTRO rewards at launch hasn’t been announced or finalised yet. As a rough indication you can assume approximately 1.5m ASTRO rewards annually directed towards the MINE-UST pool. Although this is changeable by governance after the Astroport launch.

1 Like

The poll has been posted now. Please go and vote.

@Luke, thanks for the proposal and welcome to the community!

Question: if our community does this LP redirection for the Astroport community, what will you do for the Pylon community in return? For example, one thing that our community would like to see is an allocation at similar terms as your private seed investors, say, $2-3m in capacity, to kick off our Pylon Treasury Swap program?

In case you are not following all of the discussion here within the Pylon community, we are close to approving a new Treasury Swap program. Thus, we could do our very first Treasury Swap as a deal with Astroport on whatever lock-up and terms as your private seed investors have received (please excuse the fact that I’m not at all aware of where you are at in your fundraising process), or maybe a few pennies higher or lock-up a little bit or a lot longer then the private seed investors, reflecting the fact that we’d likely be later to join the seed investor group.

Would there be appetite on your side to get aligned with the entire Pylon community for the medium- to long-run?

Feel free to dm me, I could take this to the Pylon Advisory Council if there was appetite, and in return the Council could put its weight behind your proposal with the Community.

Thanks!

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As a a separate issue for a different discussion on a different day, you should be aware that generally speaking our Pylon community does not see value in maintaining high LP emission rates in the Pylon ecosystem as we could have all the liquidity that we need via a CEX listing without anymore issues of $mine stakers having their value rekt thru high inflation / emissions rates.

2 Likes

I need to have more clear the concept of moving incentive right away at a community level.
In my opinion the community has not the mandate to decide what to do with the incentives of single investors. Are you just asking to enable the LP to the lockdrop opportunity or really to force it?
what happens to staked LP, for instance in spectrum or apollo?

Overall, I like the idea of addressing the problem of fragmented liquidity. My only concern is “picking a winner” in the form of Astroport instead of allowing the market to decide where to concentrate liquidity.

2 Likes

I don’t agree with the prposal. Good for astro, bad for mine.
I have created this discussion

1 Like

and doing it for free …

While there is a lot to be said about the sustainability of LP incentives, Pylon is currently still supplying incentives on TerraSwap. Before/unless that changes I think the main question would be what DEX has the most upside for Pylon.
Assuming LPs and Stakers overlap, getting Pylon community into Astro governance will be helpful down the line for continuing incentives while reducing MINE emissions.

1 Like

I agree with the sentiment here - Astro should also allocate some $ASTRO to Pylon Gateway (Pools and/or Swap), and not just ask us to reward liquidity providers on their platform with our tokens, for free.

I think we should understand the implications here if we can’t reach an agreement with Astroport.
This article says 10 LPs will be chosen and 6 are already chosen, 4 remaining. If $Mine is not in that group of 4, $Mine LPers will not get any rewards for participating in the Astroport lockdrop. This may cause a liquidity drain as $Mine LPers who want to do the lockdrop LP a different token instead.

1 Like

I thought about this and it is partially true. Actually my intial positioning was exactly your.
I wanted to spark the discussion now and I took a strong stance to stimulate as much feedbacks as possible.
I waited long the astro event and I am the first to say that the project could have positive effect: mature projects will be able to reduce inflation to LP pools thanks to it and this alone is great.
I was anyway shocked by the request of cutting out all the other DEXes. There are plenty of people using terraswap with scripts and projects, now saying nothing, like apollo or spectrum which will be cut out for some time.

Was not better asking, also without compensation, just a 50% redirection? Wasn’t it a fair behavior towards not only terraswap but also the projects using LP staking and many advanced terra partecipants?

Personally I have come to a very clear decision caused by astro behaviour: entering any single projects exposes to too many unpredictable risks, this being the most unbelievable and unpredictable.
I have partecipated to apollo farming event and i have now fully dumped the luna staker plus phase 1 distribution cause, clearly, apollo could temporary collapse. My position was clear: farm and forget that part of LP. Astro with its aggressive and disrespectful behavior has forced me to drastic changes (no losses but allocation of precious time …). But personal cases are irrelevant: the main take here is that an investor with an ounce of brain has the clear information that a project can destabilize his strategy very easily: this is absolutely impossible in ethereum for example. Who will feel confident to make any investments but luna and perhaps anc in future when a single project can change just by hurried up governance requests the global scenario?

As the discussion is still open, why not propose a 50% redirection without contribution knowing the future advantages we all will have and only later, eventually, switch to 100% if the community agrees
I think every project should agree about this not only pylon.

P.S. the biggest surprise to me is that apollo, spec and nobody else has raised any problem. Not to mention all the arbitrages between LPs now part in terraswap, part in astro with LP liquidity that can change on the fly leading to unexpected slippage.

P.S.2 as i said I take the decision of the community and obviously I am preparing for profiting of misallocation of capital. Lot of people will leave terra: you will see… the shockwaves of forced big movement of capital will be bad for many unaware little investors who thought to be safer having done reasonable choices.

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Well, regardless of this discussion $Mine has been chosen in the final four. Think because the No vote has been so small, it’s not really statistically possible for it to win (0.09% No).

This is team DELIGHT, which is one of the genesis validators of Terra network.

As a member of the Terra ecosystem, we run Terraswap in the part of the fine growth of the community. We have run more than compensation & currently run without compensation from it because we have been believing in the future of the decentralized world.

We think that our community needs more consideration & discussion of this proposal.

First of all, distributing LP staking rewards can be a good strategy for growing the liquidity of one DEX. But reward tokens are not absolutely free, whether it has a max cap or not. It is like dividing up the same pie. Our community should consider that this kind of issue would be helpful to Pylon community growth.

We totally agree with the competition for getting new incoming liquidity which makes the community healthier. However, we need to think about taking liquidity out of the existing owner by using a huge capital and marketing power is good for the community or not. Do you think it is great for our community’s growth?

Moreover, DEX should provide maximal liquidity to the swap users, and give maximal profit to the liquidity providers. It needs more strong consensus that what could be helpful to spend 1/3 of users’ commission for buying ASTRO. The answer may appear from the simple.

We have been thinking about various types of economies and expanding our pie of Terra. No fixed one yet, of course, but one thing I can tell you is that we’re finding our growth from the other chain & off-chain area, rather than competing with the blood on the same pie.

3 Likes

Good to see Team DELIGHT here.
First of all, I thought this ‘migration’ was well discussed with TFL, Team DELIGHT, and Astroport project team, but as I can see on this post, it was not apparently.

I always hope Terraswap to be developed more to provide better AMM and also made a proposal on Terra forum, while the movement was not successful.

While I am a fan of better AMM algorithm to reduce IL (Impermanent Loss), I respect Team DELIGHT for not having your own token to get any form of compensation, which is not shown in Astroport project. And for that point, I am totally agreeing with you. As you can see in my previous post(1, 2, 3, etc.), I am highly interested in decentralized governance system, thus I am greatly against on the business model of getting reward with a governance token, especially at the initial stage of the project.

In this perspective, I would like to propose the terraswap:

  • to have its own governance system with great care, so that the governance participator can decide which LP to be created, rather than allowing random people to create strange/scam pairs, and decide the direction that Terraswap needs to proceed, instead of being pastured without any watch.
  • to improve AMM algorithm (better model than constant product…) and give more options to the liquidity providers to deal with IL.

If this proposal is implemented on Terraswap, then I would be happy to keep using Terraswap, and I believe this will enhance the competency of Terraswap itself with its proven track record on stable operation.

2 Likes

for high volatile pool the approach of terraswap is absolutely good imho. It gives depth to the pool. A pool like luna bluna instead should be better handled with concentrated liquidity