Dear Mirror community, the Astroport contributors are pleased to present this proposal to redirect MIR-UST MIR incentives 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. MIR-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 MIR-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 MIR).
Advantages of moving to Astroport
Astroport incentivising MIR-UST Astroport liquidity with ASTRO on an ongoing basis means Mirror users will have to choose between staking in Terraswap and earning MIR rewards, or staking in Astroport and earning ASTRO. However if Mirror chooses to shift MIR rewards to Astroport instead of Terraswap then MIR-UST stakers can collect both the ASTRO and MIR rewards thanks to the dual-token distribution mechanism of the Astroport generator.
Continuing MIR 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 MIR will also allow capital efficient trades to and from MIR from a wide variety of Terra assets, which is beneficial to MIR traders.
For all these reasons, shifting MIR rewards to the MIR-UST pools on Astroport is the best decision for the Mirror community.
Why move now rather than later
The Mirror 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 MIR-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 Mirror community to migrate incentives. That way, upon Astroport’s launch, MIR-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.
The Astroport lockdrop will distribute 7.5% of the ASTRO supply (75,000,000 ASTRO). If this proposal is positively received, MIR-UST will be allocated 9% of the lockdrop (6,750,000 ASTRO).
In addition to the lockdrop there will also be emissions of the ASTRO governance token directed towards the ANC-UST pair, though these have yet to be finalised.
Summary and next steps
We have made this proposal to gauge the interest of the Mirror community as to whether a migration to Astroport would make sense now or later.
If the Mirror community chooses to move incentives right away and participate in the Astroport lockdrop, MIR-UST stakers will be able to earn significant ASTRO rewards in addition to dual MIR/ASTRO rewards post launch. If the Mirror 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 MIR-UST LPs and no dual incentives available post-launch.
Following the Astroport launch there will be the first governance poll:
- Move over future MIR-UST LP rewards from Terraswap to Astroport
After some days or weeks once liquidity is sufficient a second poll will be conducted:
- Route MIR<->UST trades in the web app to the Astroport pools
We invite open discussion in the comments below.
Potential future integrations
Many of Mirror’s synthetic assets are less volatile than a typical token due to their price being tied to a non-crypto asset such as stock or commodity. Astroport is built to accommodate multiple pool types and in the future it may be that a pool type is added that is more suitable for these less-volatile assets, such as some form of concentrated liquidity pool. Should this happen then a follow up proposal would be an option to also migrate these asset pairs to Astroport for increased capital efficiency.