Captain’s log:
- New proposed voting incentives protocol dubbed Astro Tributes would give third-party protocols and L1s the ability to influence emissions on Astroport and attract liquidity for their tokens
- Anyone with tokens could “pay tribute” to specific pools by donating tokens to potential voters in advance of each two-week voting period
- Only xASTRO stakers who lock their tokens for vxASTRO would be eligible to claim tributes
In a new forum post this week, Astroport contributors proposed new tokenomics for Astroport with vxASTRO 2.0. A key piece of the proposal involves the rollout of a voting incentives protocol dubbed “Astro Tributes.”
In this article, we’ll delve into the motivations and logic behind the tributes protocol, but first, let’s recap how the proposed design for vxASTRO works.
Short for “Voting Escrowed xASTRO,” vxASTRO was inspired by Curve’s veCRV – the same veCRV, which launched the Curve Wars and has led to several metaprotocols on top of Curve (including the $330 million protocol Convex Finance).
Curve’s unique approach has also inspired a legion of other protocols to take up ve-tokenomics. Although similar, Astroport’s newly-proposed vxASTRO model has subtle differences from traditional ve- protocols. Specifically:
- vxASTRO would not require multi-year lock-ups, opting instead for indefinite lockups that give users the ability to unlock their tokens at any time with a 2-week waiting/unlocking period
- xASTRO and vxASTRO holders would both have 1:1 voting power on general governance proposals (i.e. no boosted voting power for vxASTRO holders as originally planned per the Astroport litepaper); however vxASTRO holders alone would be able to vote on ASTRO emissions decisions
- vxASTRO would come with a built-in, Curve-style voting incentives or “tributes” protocol with tributes going exclusively to vxASTRO holders
The Temple: Astroport’s Tribute Marketplace
Vote incentive marketplaces are a staple companion to ve- tokenomics. With them, third parties can influence emissions without a stake in the underlying protocol and while benefiting vx- token holders with incentives.
While the concept of voting incentives has negative connotations, they will inevitably exist in a permissionless system. If we accept that they exist, it makes sense for Astroport to internalize them as tributes or donations and distribute fees from them to stakers.
In effect, this creates an open and free market for governance incentives. vxASTRO holders can either vote on the pools they prefer, or vote on pools that have received tribute donations in order to capture those rewards for themselves.
It’s a model that’s proven effective throughout DeFi.
Votium, the vote buying marketplace for the Curve ecosystem, has facilitated at least $287m worth of vote incentives on the protocol, providing a substantial benefit for veCRV and vlCVX holders. And Velodrome’s own vote buying marketplace generates ~5.4x more yield for voters than trading fees ($25m in incentives for voters vs $4.6m in trading fees).
By creating a native voting incentives marketplace for vxASTRO voters on Astroport, external protocols and L1s could incentivize votes for their own liquidity pools while creating a new source of yield incentives for vxASTRO holders.
With great power over ASTRO emissions, this new design could reinvigorate the AstroWars, which had only just begun on Terra 1.0 before UST depegged. Indeed, at least three L1s/protocols have already announced that they’re accumulating ASTRO: Neutron, Terra and Apollo DAO. Terra is the latest entrant, announcing yesterday that they’ve purchased 22.4 million ASTRO.
How tributes work
If and when launched, we envision Astroport’s voting incentives marketplace as a celestial temple. Beings from throughout the galaxy could enter the temple to pay tribute to AstroPepe in the form of tokens. If AstroPepe accepts the tribute, he would direct ASTRO emissions toward the supplicant’s desired pool.
To illustrate, imagine a user who wants ASTRO rewards to go to a NTRN-OSMO pool. If the user doesn’t hold vxASTRO, he could encourage other lockers to vote for that pool by donating tokens (i.e. “paying tribute”) to anyone who DOES vote for the NTRN-OSMO pool.
Tributes could be paid in any on-chain token (i.e. NTRN, OSMO, USDC, ASTRO, etc.). Then, any vxASTRO holder who votes for the NTRN-OMSO pool within that voting period would be able to claim a pro rata share of that pool’s accumulated tributes.
All emissions voting would take place on Neutron (Astroport’s future home for governance), and vxASTRO holders would be able to vote on emissions on any chain where Astroport has an outpost.
When pools receive ASTRO emissions, the APY for LPs increases. That attracts deeper liquidity, which benefits traders everywhere.
Tribute Specifications
If the vxASTRO proposal is adopted, here is how we envision the tributes protocol working:
During a given two-week epoch, anyone will be able to create a vote incentive for a whitelisted pool. The variables of the incentive include: incentiveToken, incentiveAmount, and incentivePool.
The incentiveToken can be any token, and multiple incentives can be created for a single pool. The vote incentive will only be active during the given epoch that it is created. Vote incentives will be able to be created on any chain.
(Ex. Protocol A wants to incentivize their A/axlUSDC pool, they create a vote incentive with the specifications: A, 100000, A/axlUSDC. The vote incentive will consist of 100,000 A tokens for users that vote for the A/axlUSDC pool.)
The APR of a vote incentive for a specific pool can be determined by taking the value of the incentive and dividing it by the value of the votes for that pool. A formula to calculate the APR could be:
(incentiveAmount * incentiveTokenPrice) / (votesForIncentivePool * vxASTROPrice) * 100% * 52
At the end of the voting epoch, vxASTRO holders that voted for the incentivized pool will be able to claim incentive tokens proportional to their percentage of total votes:
incentiveAmount *votesForIncentivePoolByAddress/votesForIncentivePool.
To avoid spam tokens being claimed, voters must claim individual vote incentives at the end of the epoch. Vote incentive tokens will only be able to be claimed on the chain that the incentive was created on.
(Ex. if a user votes for the incentivized A/axlUSDC pool at epoch N with 10 votes out of 100 total votes, they will receive 100000 *10/100 tokens at the end of the epoch)
Additionally, external protocols could potentially build on top of Astroport’s native vote buying marketplace. For example, we could imagine a liquid staking derivative (LSD) or an auto-voter that automatically distributes the votes and incentives from vxASTRO each epoch.
With this approach, instead of a single source of potential tokens, ASTRO lockers would be eligible to receive two streams of tokens:
- xASTRO staking fees: Since vxASTRO holders are also ASTRO stakers, they would receive a portion of the trading fees captured on any Astroport outpost. As it happens today, those fees are collected in various native tokens and swapped into ASTRO on the open market before getting deposited into the xASTRO staking pool. Assuming Astroport continues to generate trading fees, this means xASTRO stakers should always be able to withdraw more ASTRO from the staking pool than they deposited.
- Tributes: As third parties seek to deepen liquidity for specific pools on Astroport, they could deposit tokens (i.e. NTRN, OSMO, USDC, ASTRO, etc.) into the tributes temple. If a vxASTRO holder votes on a pool containing tributes, they would be eligible to claim a share of the tributes after the voting period concludes.
Other Considerations
Builder allocations: Astroport’s builders will only be able to vote on emissions using unlocked and liquid ASTRO through standard vxASTRO staking. However, builders will still be able to vote on general governance proposals with their full allocated ASTRO amount (including locked tokens).
Illegitimate pools receiving rewards: Past ve- token models have suffered from permissionless pool voting, allowing whales to direct emissions to liquidity pools that they fully control. To prevent this, only whitelisted pools will be eligible to be voted for. Liquidity pools can be added to the whitelist through the Astroport governance process.
Assuming third parties deposit tributes into the protocol, ASTRO lockers would be eligible to claim those tokens after every two-week voting period. With many tributes expected to be offered in various denominations, it provides an ongoing source of rewards that’s non-correlated with ASTRO and acts as a source of exposure to the broader Cosmos ecosystem.
Closing thoughts
AstroPepe wants your opinion on the Temple. Join the conversation in the Astroport forums. There, contributors and community members are refining the proposal.
After incorporating any relevant community feedback, the proposal is expected be taken to a vote. If the community signals interest/approval in that vote, the coding work required to deploy it will kick off. Once the code is complete and audited, a new proposal will be created seeking approval to deploy vxASTRO 2.0 and tributes.
Then, the temple doors would open, and supplicants could pay tribute to vxASTRO lockers throughout the galaxy.
The future awaits.
✦
Follow Astroport on Twitter and subscribe to the Astroport email newsletter to get the latest alerts from the mothership.
DISCLAIMER
Remember, Astroport, Injective, Neutron, Sei, and Terra are experimental technologies. This article does not constitute investment advice and is subject to and limited by the Astroport disclaimers, which you should review before interacting with the protocol.
