Astroport - The New Go-to DEX for Terra Ecosystem

Astroport is a decentralized exchange(DEX) on Terra. Developed through a joint venture of builders from Terraform Labs, Delphi Labs, Attic Lab and We3, it is purposed to replace the Terraswap as the main DEX for Terra ecosystem. Through a unique lockdrop mechanism, liquidity has been migrated from Terraswap to Astroport, and this new DEX has officially gone live at the end of December 2021.

The multi-pool type DEX

Astroport has taken reference to some of the best practice and product types in the DEX field. In terms of pool types, Astroport enables different pool types to accommodate different token characteristics, including constant product pool, stableswap invariant pool and liquidity bootstrapping pool.

• Pioneered by Uniswap, Constant Product Pool is well suited for token pairs with high volatility (e.g. Luna-UST).
• Originally developed by Curve Stableswap Invariant Pool is the choice for token pairs with an exchange rate fluctuating around 1:1. (e.g. dollar-pegged stablecoin or wrapped or staked version of asset like bLuna-Luna) The pool type changes seamlessly in the backend according to the token pair intended to trade.
• In addition to constant product pool & Stableswap invariant pool, Asptroport also offers Liquidity Bootstraping Pools (LBP) in its product suite and made LBP a public goods in Terra ecosystem allowing other projects to launch initial DEX offering. White Whale has become the first TeFi project successfully launched its token through this LBP.

Dual token liquidity mining

Astroport introduces ASTRO Generator which enables LPs to receive both liquidity mining rewards from Astroport(i.e. ASTRO) and other external protocols which distribute its own token to LPs for any specific pool. LPs will only need to stake their LPs in the ASTRO Generator, which will forward the deposited LP token to the 3rd party staking contract, LPs hence be able to claim both rewards from Astroport and the 3rd party protocol.

https://docs.astroport.fi/astroport/astroport/astro-generators

Trade Fees

A fee is charged on all trades made through Astroport pools, the fee structure with a comparison to Curve and Uniswap is shown below.

• For constant product pools, the fee is 0.3% which is in line with Uniswap fee rate. Out of the 0.3%, 0.2% will be paid to the LPs and remaining 0.1% will be paid to the Astral Assembly(the governance DAO of Astroport).
• For stableswap invariant pools, the fee is 0.05%, compared to 0.04% on Curve. Out of the 0.05%, 0.025% will be paid to the LPs and remaining half to the Astral Assembly.

A Token distribution without previous round investors

The native token ASTRO has a maximum supply of 1 billion and to be allocated as below:

Things to note is there is no previous capital raising round for Astroport protocol, Delphi Labs, Terraform Labs, Attic Lab and We3 have built this protocol on their own resources.

Token Utility & Governance

Token utility

The utility design has many aspects similar to Curve's CRV token which has proven to be a very successful practice. The ASTRO could be staked and in return xASTRO will be issued to stakers. The xASTRO will enjoy a share of trading fee and activate the governance power. xASTRO is transferable.

Similar to Curve's vote-lock feature, xASTRO could further be locked and in return vxASTRO will be issued. vxASTRO holders will be entitled a larger share of trading fee and amplified governance power. To be noticed, vxASTRO cannot be transferred once locked and the locking period can up to 2 years with a longer locking period come with more vxASTRO received. The amount of vxASTRO a user hold will decrease linearly over the length of locking period, such that the user will has zero vxASTRO at the end of locking period.

In a nutshell, Astroport has layered the ASTRO holders by their commitment level to the protocol. By lockup vxASTRO, the holder shows a higher level commitment and hence entitled higher governance power and more reward.

2.5x liquidity mining boost with vxASTRO

One important feature of vxASTRO is the holders with it could receive a boost to ASTRO liquidity mining reward if they are also LPs in Astroport pools. The boost could range from 1x to 2.5x depending on several factors, incuding: the % of LPs engaged in ASTRO liquidity mining through the ASTRO Generators, the liquidity provided by the users, the specific pool, the overall liquidity level of that pool, how much vxASTRO the user holds and the total amount of all vxASTRO then in existence.

ASTRO emission vote

In contrast to Curve where only locked CRV(i.e. veCRV) could vote for governance, both xASTRO and vxASTRO holders are entitled with the voting power to decide the ASTRO liquidity reward emission allocation, with vxASTRO representing greater voting power. The holders could vote for the emission weights for different pools for the upcoming two weeks.

Current status

The swap and liquidity providing function have gone live at the end of December 2021, the governance staking (xASTRO/vxASTRO) function is expected to launch in 2-3 months after the protocol launch. LP token staking for ASTRO emission in major pools that do not support dual governance rewards to be launched in early January while the dual reward generators will launch within January.

Astroport has accrued 1.05 billion USD total value locked, surpassed Terraswap's 880 Million USD TVL as at 6 Jan according to Defi Llama, making it the 15th DEX ranked by TVL. The total liquidity amount of the protocol is 1.05 billion since there hasn't been governance staking function.

Closing thoughts

A well-designed product suite supported by strong developing team, Astroport is set to be the main DEX for Terra ecosystem. The tokenomic design has taken reference to Curve's successful vote-lock function which could lock vxASTRO up to 2 years, essentially reducing the circulating supply. That said, ASTRO has a quite aggressive inflation schedule with 10% of total supply will be emitted in the first year as well as 10% of total supply will be unlocked for builders. This could bring selling pressure to the token and whether the governance staking function could counteract the selling pressure as the case of Curve shall remain to be seen.

Token Information: Astroport(ASTRO)