[Proposal] Redirect VKR-UST rewards to Astroport

Dear Valkyrie community, the Astroport contributors are pleased to present this proposal to redirect VKR-UST VKR 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. VKR-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 VKR-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 VKR).

You can read an overview of Astroport here in the litepaper or check this excellent Twitter thread. The lockdrop is described in this Medium post.

Advantages of moving to Astroport

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

Continuing VKR 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 rewards and the flexible pool types such as stableswap invariant pools and concentrated liquidity pools which aren’t available elsewhere. Deep liquidity also for VKR will also allow capital efficient trades to and from VKR from a wide variety of Terra assets, which is beneficial to VKR traders.

For all these reasons, shifting VKR rewards to the VKR-UST pools on Astroport is the best decision for the Valkyrie community.

Why move now rather than later

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

Astroport would like to include VKR-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 Valkyrie community to migrate rewards. That way, upon Astroport’s launch, VKR-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, VKR-UST will be allocated 3% of the lockdrop (2,250,000 ASTRO).

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

Summary and next steps

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

If the Valkyrie community chooses to move rewards right away and participate in the Astroport lockdrop, VKR-UST stakers will be able to earn significant ASTRO rewards in addition to dual VKR/ASTRO rewards post launch. If the Valkyrie 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 VKR-UST LPs and no dual rewards available post-launch.

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

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

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

  1. Route buybacks to the Astroport pools; alter the web app to use Astroport pools

We invite open discussion in the comments below.

3 Likes

I would like to move the rewards right away and participate in the lockdrop. I don’t see any harm in locking the LPs since I plan to hodl anyway and see where the project goes.

1 Like

Sounds solid to me… I’d be willing to risk an immediate move to Astroport. Great work!

2 Likes

Hi, I’m Valkyrie’s holder. I believe it will go to the Moon.
It was an interesting suggestion, so I read articles including litepaper.

I was interested in the proposal the first time.
However, the more I read, the more questions I had.

First, I don’t understand that 33% of Liquidity Provider’s profits are used for Astro port, not Valkyrie.

In addition, who owns the ASTRO purchased using 33% of the money that the Liquidity Provider should receive?
(ASTRO is AstroPort’s governance token, and I think ownership is significantly important)

If Astro runs several pairs in this way, it will eventually create huge dependency and power on Astro, so I don’t know why this is good for Valkyrie…

I am Holding VKR because I believe it has potential (I am not holding for the ASTRO)
Let me know if I’m wrong.

1 Like

Thx for the feedback, I understand your concern. Let me try to explain why I believe paying out 0,2% of the fees to normal LPs and the other 0.1% those with skin in the game is a good thing for both Astroport and Valkyrie.

Astroport’s LPs with skin in the game get the full 0,3% fees.

  • 0,2% from being a LP
  • 0,05% in ASTRO, through holding xASTRO
  • another 0,05% in ASTRO, through holding vxASTRO

On top of that, those with skin in the game can boost their liquidity mining rewards up to 2.5x over a LP who doesn’t hold/lock any ASTRO. Resulting in higher than normal returns for LPs with skin in the game.

The above aligns LPs with Astroport and Valkyrie to ensure sticky and stable liquidity. Which is in the interest of both projects.

To answer your Qs:

  • The Valkyrie LPs with skin in the game own the 33% of fees paid out in ASTRO.
  • It’s important that liquidity is concentrated to get the best executing as possible for VKR holders. Deeper liquidity results in better prices with lower costs for traders.

*with skin in the game I mean LPs who hold vxASTRO, from locking xASTRO.

1 Like

Thank you for your reply.
I appreciate it.

I understand your opinion but I think there is an assumption.

  • Assuming that Astroport will benefit more than Valkyrie.

I think It is a big point, Astroport can go well but I still don’t understand why it is good for Valkyrie.

In the short term, it may look good because of Airdrop, but in the end, only Astroport improves.

It is the same model as an actual bank, and Astroport benefits more than users. Like a bank.

tl;dr
I’m unsure if Astroport or Valkyrie will benefit more from this proposal. Imo it’s a win-win for all parties involved. Due to the reasons outlined below.

Valkyrie benefits:

  • From sticky and stable liquidity created by Astroport’s tokenomics.
  • VKR token could be paired with numerous different tokens, utilizing Astroport’s different pool types which improve execution. Think Prism’s different token pairs for example. This will lead to higher demand for VKR.
  • Ongoing ASTRO incentives will increase returns for VKR LPs

Astroport will benefit from every token getting listed, as it increases tvl, volume and thus fees generated for Astroport’s tokenholders. This is a good thing for the Terra ecosystem as a whole imo. A tier 1 AMM is sorely lacking, Astroport is looking to fill that void.

1 Like

Half agree and half disagree.

  • From sticky and stable liquidity created by Astroport’s tokenomics.

I still think it is good for Astro not for VKR. terra network has a limited VKR lp provider and you are splitting this. (Astro uses a better curve than terraswap so it could make stable liquidity but lp is split. I don’t know it is more stable liquidity)

  • VKR token could be paired with numerous different tokens, utilizing Astroport’s different pool types which improve execution. Think Prism’s different token pairs for example. This will lead to higher demand for VKR.

I don’t understand this deeply could you provide a link? I will read that again.

  • Ongoing ASTRO incentives will increase returns for VKR LPs

Yes if ASTRO goes well.

I know there is a positive aspect but the cost of using Astroport is too expensive. I cannot guess it will make VKR better or not.
You should not assume Astro 100% goes well and benefit VKR

I would suggest

  • reduce the amount of money used for Astro.
  • should give more airdrop to VKR lp provider

Astroport will benefit from every token getting listed, as it increases tvl

Does Astro provide bridge or IBC swap? could you explain why it increases tvl?
Astro uses one-third of the fees and the sum is the same.
you will get more than VKR because 33% uses + Astro - UST pair fee (I am not sure this pair uses 33% again for vAstro, vxAstro)

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 Valkyrie 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.

1 Like