Grant ASTR from Astar Treasury to Starfish Finance as a Part of the Incentive for DOT Liquid Staking Dual Reward Scheme

Astar Network (Polkadot) Denied proposals
1

Requested Amount: $500-600K worth of ASTR token (roughly 13,333,333 ASTR)

Date: 22 Aug 2022

Background

Hi Astarians, Starfish Finance will be launching DOT Liquid Staking in Q4 2022.

Starfish will be the go-to platform for DOT holders to stake DOT on Astar EVM for daily rewards in sDOT and ASTR.

Mechanism

sDOT is a rebasing token that is 1:1 pegged to its Astar EVM DOT. Users can mint sDOT in 1:1 ratio of Astar EVM DOT by staking their own Astar EVM DOTs through our system. After minting any holder of sDOTs will get rewards automatically by increasing the sDOTs balance. Users also can unstake and claim their Astar EVM DOT tokens back in two ways:

  • By swapping sDOTs to Astar EVM DOTs on Starfish AMM, and potentially other AMMs
  • An average of 28-30 days of unbonding period for unstaking sDOT

For more Starfish DOT Liquid Staking details, please check our gitbook link here:

Proposal

The purpose of this proposal is to request the allocation of ASTR from Astar Treasury to Starfish as a part of the liquid staking incentive program.

We humbly request $500k-600k worth of ASTR, i.e. 13.33M ASTR from the Astar treasury as a liquid staking incentive for the 12 months after the launch of Starfish DOT Liquid Staking on the Astar network.

Note that the exact amount of ASTR depends on the L7D average price of ASTR, the following estimation is based on the L7D average price of ASTR at $0.045.

To better describe the goal of liquid staking, we have created a table and will add a statement below so that the community can more clearly understand our request and how it will be used.

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Staking APR

The staking APR is calculated dynamically and fluctuates based on the node APY and the individual node fee. The formula is as follows:

sDOT APR = Node Staking APR * (1- node fee) * (1- Starfish fee)

ASTR APR = User’s Staked Astar EVM DOT/Total Staked Astar EVM DOT * Total ASTR Reward

The sum of the above 2 APR would be the final APR user gets by staking Astar EVM DOT on Starfish Liquid Staking.

Competitive Advantages

Higher APR

Users can earn dual tokens on Starfish Liquid Staking, which means the Total APR user is receiving on Starfish is far more than those in Lido. At the beginning of the product launch the Total APR rate would be around 64.5% with the estimated TVL of $1.25M. Across the time, the expected TVL reaching ~$26M, the Total APR rate would be around 16.47%

Week 1 Total APR = 64.5%

  • sDOT: 16.5%
  • ASTR: 48%

Week 52 Total APR = 16.47%

  • sDOT: 14.24%
  • ASTR: 2.23%

DOT Liquid Staking comparison across parachains:

  • Compared to Lido, the net APR is 16.5% * (1-2%) * (1-10%) = 14.55% APR, which is 49.95% less than Starfish Liquid Staking APR.
  • Compared to Parallel Finance, the net APR is 19.72%, which is 44.78% less than Starfish Liquid Staking APR.
  • Compared to Acala, the net APR is 14.41%, which is 50.09% less than Starfish Liquid Staking APR.

sDOT Utilities

With Starfish as the main DEX platform to yield farm and other star protocols on Astar ecosystem as extended sDOT usage, sDOT will become a reward earning rebasing token that can be used as collateral for borrowing.

  1. Trade - AMM swap of sDOT token on Starfish balancer pools, where Meta-stable pool of DOT - sDOT tokens will be created for low slippage swapping and liquidity investment to earn swap fees
  2. Provide Liquidity (SPT) - sDOT can be paired with tokens like $SEAN, $ASTR, and $DOT to yield farm dual token rewards on Starfish
  3. Farm - stake SPT that has sDOT as one of the pair token to yield-farm
  4. (Soon) Mint stablecoins - use sDOT token as collateral to mint stablecoin BAI, and possibly other stablecoins on polkadot ecosystem
  5. (Soon) Earn deposit APR - deposit sDOT on Starfish NFT-Fi Reserves to earn yields as a lender

Hodl - Users can simply hold sDOT to enjoy staking without having income events triggered on-chain while staking, earn sDOT to redeem more xcDOT

Statement

  1. The price of ASTR changes daily based on the market, but the total amount of ASTR in the proposal will be fixed. And the target APR is the estimated minimum APR of the pool when the target TVL is reached.
  2. Once Starfish lands on the Astar network, we will observe the TVL, volume, etc. of each pool and adjust the distribution of rewards in each pool according to the actual situation, and the total rewards will be ensured to be distributed among the above in 1 year.
  3. The target TVL was set as a feasible target based on current market conditions and Astar network liquidity, and we expect to exceed the set target. If the TVL exceeds the target or Starfish wants to increase the TVL, the amount of ASTR reward will remain the same as the total amount of ASTR received will be equally distributed across the year.
  4. The ASTR incentive program above only covers 1 year’s time only, once the reward is fully distributed, there will be no more ASTR reward for staking sDOT.
  5. We hope to build deeper collaborations with other projects in the Astar and Polkadot ecosystem to bring a better DeFi & NFT-Fi experience to our community. With Starfish’s all-in-one DeFi & NFT-Fi product suite, users with intention to liquid stake their DOT will have a smooth user experience - a seamless experience to perform swaps, provide liquidity, yield farm and more - enabling users to put their staked DOT (sDOT) into immediate actions. Learn more about Starfish: Welcome to Starfish Finance - Starfish Finance

The goal of the proposal is to help grow the TVL of the Astar Network, and provide Astar community with the option to liquid stake their DOT, while providing all-in-one DeFi and NFT-Fi experience in one place.

Thank you for considering our proposal.

Links

Twitter - Website - Discord

2 Likes
2

Hi, thank you for this proposal.
With Astar SpaceLabs Team, We talk about the “Campaigns” launch in our ecosystem during our last team call. It seems we can observe a short term hype on projects which decide to launch this type of campaigns.
But, it’s subsiting a problem, in particular about the Astar Treasury. Provide this type of Grant, is really profitable in short term for the project who benefits, and for short term liquidity.
I explain: there’s smart user, that will provide lot of liquidity in this type of campaign, and later, when the APY goes down, they don’t hesitate to move away them bags and they go to another campaign, elsewhere.

At the end, Astar treasury is impacted, TVL has not growt for long term.
I’m not surethis type of campaign (and the ammount that demands) is necessary.

2 Likes
3

I like your campaign, since it utilizes DOT on top of Astar ecosystem. However, the reward is enormous big. Worried that less people will still depending on it when the campaign is nearly finished.

Unless, you can put some kind of tax cut. Let’s say if a user is staking DOT on week 1 to chase 48% APR, he/she can only claim 10% of the reward or wait until the campaign is over for 100% reward (all along the campaign). Tax can go back to Astar treasury, or spread proportionally between remaining users and can be claim after campaign is over. This is just an example. It’s like a game of hold. You stake, you hold, you win.

2 Likes
4

In my opinion, this type of campaign is not a sustainable one. It is better to build a sustainable product than to release such a huge amount of treasury funds into circulation.

Let’s first focus on building the product. Get the token sale done, develop and add unique features, grow the community and users.

If you have shown a reasonable growth after 5-6 months, then maybe we can discuss this topic again.

3 Likes
5

The way to incentivize users with tokens is not sustainable because there will be so called ‘mercenary’ to take advantage of it, but we still can’t deny that we also take benefits from them by increasing Astar TVL as well.

In addition, to launch a new DApp/feature required an initial incentive to bootstrap liquidity, i.e. Benqi on Avalanche, Aave on Optimism. One important factor, we are in a down-turn market which will be very hard to predict.

I have discussed with one of Starfish members, with their vision and upcoming feature I really wish StarFish could be a bluechip on Astar.

Regarding Liquid staking, it seems everyone is doing Liquid staking derivative for DOT.

  • Acala
  • Parallel
  • Bifrost
  • Lido

As we can see, liquid staking solution is everywhere, but the best way to compete is more utilities and benefits.

Could you please tell us the utilities by holding sDOT?
or Will there be cool stuff to incentivize users to hold or interact with dApp on StarFish ?

ps. One thing might be sustainable is to have multiplier reward system, the longer you hold the more small percentage you get. x1, x1.4

6

Hi, a proposal to incentivize a product that is not existing yet is too early.
I would suggest to come back with a reasonable proposal once the product exists.
I would also highly suggest to describe technical solution of this product, and its level of centralization (ie choice of validators).

2 Likes
7

This can be solved adding a vesting period for the astr rewards…

8

How does this high apr reward strategy can generate more income than the expenses in the long term to our ecosystem to be sustainable?

9

Hi fren, thanks for your suggestion, the proposal is updated with sDOT utilities, please have a look :slight_smile:

1 Like
10

Mate, please check on the updated sDOT utilities, users can provide LP to sDOT/DOT Metastable pool to yield farm, also, sDOT will be one of our reserve tokens for NFT-Fi lending and borrowing and more. With more usage in sDOT by creating all-rounded product cycle, this could benefit Astar ecosystem to become more sustainable.

We are also open to cross-parachain and cross-Layer 1s collabs, stay tuned while we are building strong partnerships with different protocols and projects :wink:

2 Likes
11

I believe your project is great and has a huge potential.

And

I’m also agree with @moonme words

Thank you

12

Thanks for the reply, fren
I am really looking forward to using sDOT as a collateral to mint a stablecoin or doing degen things on Starfish.

This is just an idea :
instead of competing with the derivative DOT market that will likely has plenty of versions from tail of the market and to the well-known head.

Is it possible to do a standard derivative version on Astar?
ex. DOT-lDOT (Acala) , DOT-vDOT (Bifrost) then mint sDOT to interact with dapp? This will solve capital efficiency, that one derivative can only be used to this dapp, this one can be used to those dapp not this dapp.

In additional, Starfish team could communicate with other parachains to grant incentive for bootstrapping as well. Capital efficiency problem is what a product on Acala trying to solve too.

Of course, there is a risk to consider like a counter party risk.

14

Closing this down, because no further communication about the grant proposal.