Providing Liquidity for LAY

Thanks for submitting. Wish Starlay to succeed but my commitment is 100% with Astar and community. I strongly do not think is a smart move using treasury to finance Starlay’s deals. I follow 100% @you425 and @moonme:

You need to be able to develop and sustain the business with whatever resources you already have.

Thank you for your reply.

Yes, I understand that we will need funds for future development and operating expenses. However, if you want to borrow funds from Astar’s Treasury, there are some points that need more clarification.

  1. The amount of past fundraising through Incubation Program, etc. (excluding IDO)
  2. Investment income from Starlay (interest income and liquidation income)
  3. Past expenditures and future plans for fund management.

Usually, when you get a loan, you need to explain this much.
More transparency is needed.

This is nothing personal, only a reflexion.

How could less be more? Let’s say I go to supermarket with 100 usd to buy 500 apples, based on this I could go with 10 usd to buy 10000 apples? I don’t think so. I think “less is more” is a limiting believe that stop us from getting great things in life. And it is not our fault, it is just that we learned it from a conditioned society.
How can you do more things, :by earning a salary of 5000 usd month or earning 50000 month? I guess 50000.
In the case of Starlay: How can Starlay grow and develop more faster? With more capital or with less? Certainly with more.
-By other side, Crypto is an Industry that moves at high speed, there is a lot of competition outside, we need to do the things that really work and do fast, and always be operationally extremely responsive.

  • I don’t think the liquidity that Aave has on uniswap is only 250k?
    -Why don’t to have a decent liquidity for the Governance TOKEN of our Native Lending Protocol on our native dex?

What image we want to give to our old/new investors who see the current liquidity we have? Why not contribute if we can? Is this a case when we want to make prevail our opinions upon the real facts even being these a complete benefit to our ecosystem growth?.
All of us are here with the same objective in common, :we want to growth Astar Network each day more and more, and together we need to push with all we got to moving forward, I think.
Thank you

Less is more is an approach of a minimalist. My point of view is to always use what you already have and make the best out of it. Having more does not necessarily mean you can achieve more.

If you can’t turn $1 into $10, how can you turn $10 into $100?

Starlay has raised $2m and with all the chaos that have happened, they seem not to be able to handle a $2m business. So, how can they handle a $3m business?

If I were a bank officer and Starlay comes to me asking for a loan, by looking at what has happened in the last month, I won’t approve the loan. It is risky for me to give the loan.

However, if Starlay has been doing very well and wants to borrow $1m to expand and diversify, I will consider giving it.

So firstly, please do the very best with what you already have now. In any business, always start small. Start turning $1 into $10 before wanting to turn $10 into $100.

10 Likes

We’re talking about adding liquidity to lay/wastr pool on ArthSwap. With a multi-sig.

Starlay team is handling our Native Lending protocol dapp who raised 300M TVL for our ecosystem Within only a month after being released + 2 more promising projects. Now due the general market conditions the TVL has decreased yes, but not only on Starlay. All markets has been damaged by these crashed.

I would like to hear @neo_defi arguments regard this:

  • A Lay token utility update in this forum.
  • How does lay token can provide clearly benefits to lay hodlers + all lay use cases.
  • In the case of:
    Starlay Finance team lends LAY to Astar Treasury and Astar community vote on the terms and provide the liquidity with a multi-sig. How this can be a potential benefit to Astar Network/treasury and the whole ecosystem?

Thank you

1 Like

Thank you @you425 for asking us for the clarifications.

Also, please let me (and our team) express our appreciation for all discussions, including those by @Dennis and @moonme.

Especially, @Dennis, our team and I are full of gratitude for all the posts you have done across forums and Discord. Please let me try to answer your questions in your latest post.

Before we jump into the “Providing Liquidity for LAY” discussion, please let me clarify the purpose of this proposal once again.

As @nancheng wrote here, the Starlay core team believes that developing Starlay and sustaining the price of LAY contributes to and leads to activating the Astar ecosystem.

To achieve these, we believe the following three things are essential.

  1. Try to be with the community once again.
  2. Not stopping the development of LAY
  3. Stabilize the LAY price

In this proposal, we attempted to put all the necessary measures to achieve the above things. And for No.3, we considered adding $1M worth of liquidity would be effective.

Now, back to the discussion of the proposal in this forum thread.

To provide $1M worth of liquidity to stabilize the LAY price, we proposed two options:

  1. Starlay Finance will borrow ASTR from Astar Treasury for a period of 12 months; after 12 months, we will again decide in the forum whether to withdraw liquidity or leave liquidity. The interest rate will be 1.0% per year, and we will pay Astar Treasury in LAY. All rewards earned by providing liquidity will be used to buy back LAY.
  2. Starlay Finance lends LAY to Astar Treasury for any period. Astar’s vote would determine interest rates and terms. The Astar community can vote on using the liquidity rewards and everything else, except that $1M of liquidity will be provided.

I see @you425’s point about conducting option No.1 above. So let me elaborate.

  1. The amount of past fundraising through Incubation Program, etc. (excluding IDO)

$1M as seed round

  1. Investment income from Starlay (interest income and liquidation income)

$0 (the revenue will be distributed to ve voters)

  1. Past expenditures and future plans for fund management.

About $4M in two years:

  • Ongoing Audits: $0.5 - 1M
  • Future Audits: $0.5 - 1M
  • Developers / Core Team / Community Managers and other Supporters: $1 - 1.5M per year

As some people have mentioned, yes, our team received $2M in the first IDO and second token sale. However, for the amount of $0.75M we received at the time of the first IDO in ASTR (which is now worth $0.25M), we decided to use all ASTR we received in the first IDO to buy back LAY.

So to do option No.1, we need to ask for funds from Astar Treasury.

But to be honest, what I am really proposing is option No.2.

If Starlay Finance lends LAY to Astar Treasury and Astar provides $1M liquidity to the pool, Astar Treasury will acquire a liquidity fee. And anything other than that $1M in liquidity, the Astar community can vote on what to do with it.

We believe this second option would not only help to stabilize the price of LAY but also help the Astar community to expand the ecosystem. In addition, the community vote would determine interest rates too.

We are very appreciative to receive positive feedback on option No.2 from @sota and @Maarten. If possible, I would be grateful if I could ask @sota and @Maarten for your thoughts on option No.2 once again.

By the way, discussions on Starlay Finance have been continuing for nine days. And there are more than 228 have been made.

Thank you again to all participants who have spent time on these discussions. Let’s move forward together.

Neo

6 Likes

Hi everyone, I’ve tried to follow up discussions here but I couldn’t see anything about market conditions/impermanent loss.

I am not against a loan in the principle but there has to be at least a zero sum interest for Astar treasury:

  • ASTR Inflation is 10% yearly, this has to be the interest rate (not 1%)
  • In case LAY/ASTR price falls, there has to be a guarantee of reimbursement of the ASTR missing in pool from USD funds of Starlay

Without these conditions, the risk of loss for Astar treasury is too high.

1 Like

@neo_defi , thanks for the reply.
I have a general understanding of the past funding amounts and future needs.
I will assume that we will proceed with Option 2 as you proposed.

On that basis, I have an additional question.

$0 (the revenue will be distributed to ve voters)

1.Regarding the above answer, do you mean that all of the protocol revenue will be distributed to ve voters? That would mean that the funds already raised to develop and maintain the protocol would be gone in less than two years. What is the plan for obtaining the funds for continued development? In general, the system should be designed to save funds in the Protocol’s Treasury to some extent. If the amount saved is large enough, it can be returned to the community through buy-backs or other flexible measures. If this proposal is approved, I think sustainability is very important since we will be supporting Starlay.

2.You need $500k worth of $LAY to provide $1M worth of liquidity. Where would the allocation for this amount come from? Based on the current $LAY price, you would need about 63M LAY. This is about 6.3% of total supply.



The image above is a graph of allocation vs. circulation taken from Starlay’s documentation. It seems to me that no matter which allocation is used, it is not enough for circulation. I think an explanation on this point is needed for the Starlay Community?

3.This is not a question for NEO, but for the entire Astar Community to know: if you do Option2, you will be offering a LAY-WASTR LP. As I am sure you know, offering liquidity will result in IL. I believe that accepting this proposal means supporting Starlay and assuming that the price of $LAY will increase. This in itself is not a problem, but borrowing $LAY from Starlay to provide liquidity is taking a risk.
(If the $LAY price increase is higher than the $ASTR, the IL will cause the $LAY in the LP being supplyed to decrease and the $ASTR to increase. In other words, the need to repurchase to repay $LAY means that a debt has been incurred. Conversely, if the rate of price increase of $ASTR is higher, $ASTR in the LP will decrease and $LAY will increase, so that after repayment, the increased $LAY will remain and $ASTR will flow out.)
It is safe to say that there is no direct burden on the Community as it uses $ASTR (public goods) stored in Astar’s Treasury. However, if the price of $LAY does not go as expected and falls, $LAY in the AMM Pool will increase and $ASTR will flow out. This means that the circulating supply will increase, diluting the value of $ASTR held by the community. In other words, it is indirectly a burden to the community. I wrote this as a threat, but even if this were to happen, it would hardly be a hindrance because it is not a large amount. However, we need to know what could happen and what the risks are. Indirectly, we are supporting them with our assets.

I have written a lot, but I am by no means unsupportive of Starlay. I want the team to do well. However, I don’t want this to be the status of a project to which the Incubation Program has been applied (even though it has graduated). I want them to show me something that makes me think, “I think we can successfully rebuild this.”


Here is what I would like many people to be aware of as it relates to Starlay. There is no need to discuss it here, as it is not the main topic of this case.
Many Astar Community Members ask, “What are we doing in the Incubation Program?” I think. If you have some knowledge and ability to research, as I do, it was obvious that this IDO would fail (as for too little liquidity, I did not expect it…). However, some of you may have participated in Starlay’s IDO solely because it was accepted into the Incubation Program. This is because, since it is called Incubation Program, I think they are advising on the contents of the Project (Tokenomics, operation, how to deploy, etc.). In other words, this is a situation where trust is being generated for Astar, not Protocol. Trust requires evidence, but there is not enough transparency for that. Trust and blind acceptance are not the same thing. Situations where blind acceptance occurs should be avoided. For better or worse, there was a lot of attention and expectation on Astar. It is understandable that there would be a great deal of disappointment when the top protocol (and one that has already adopted the Incubation Program) is in this situation, even though it coincided with the overall market crash. What has already happened can’t be helped, and improvements should be made for the future.

I am a member of the Astar Community who has high hopes for Astar and wants it to grow. I don’t want to be too picky, but I believe that we all need to seriously think and discuss (not complain) for the future and that will lead to DAO. But even here, if there is no transparency, there is no discussion.
We hope that this case will help Astar and the community grow in the future. Now is the time to step up to the plate!

11 Likes

I am not against a loan in the principle but there has to be at least a zero sum interest for Astar treasury:

  • ASTR Inflation is 10% yearly, this has to be the interest rate (not 1%)

Thank you for the post @bLd759 .
Sorry if my understanding is not enough. It’s appreciated if you could add a little more detail to the above.

I think I understood about the reimbursement.

Thank you @you425 for the post.
Also @bLd759, let me try to answer you in this post.

I have a general understanding of the past funding amounts and future needs.
I will assume that we will proceed with Option 2 as you proposed.

Great to hear this from you.

1.Regarding the above answer, do you mean that all of the protocol revenue will be distributed to ve voters? That would mean that the funds already raised to develop and maintain the protocol would be gone in less than two years. What is the plan for obtaining the funds for continued development?

Thanks for your concern. As you might know, protocols such as Curve try to distribute revenue to users from the treasury as much as possible. At the same time, those protocols try to increase the value of the native asset (token) to continue development. Our team is aiming to manage the protocol almost in the same way.

2.You need $500k worth of $LAY to provide $1M worth of liquidity. Where would the allocation for this amount come from? Based on the current $LAY price, you would need about 63M LAY. This is about 6.3% of total supply.

Currently, we’re planning to allocate the amount to be borrowed from shares of remained IDO (4.5%) and Community Growth. We’ve already assigned 5.5% of IDO in the first IDO and second token sale. By the way, the fund for No.1 in this proposal will be allocated from Team’s share.

3.This is not a question for NEO, but for the entire Astar Community to know: if you do Option2, you will be offering a LAY-WASTR LP. As I am sure you know, offering liquidity will result in IL. I believe that accepting this proposal means supporting Starlay and assuming that the price of $LAY will increase. This in itself is not a problem, but borrowing $LAY from Starlay to provide liquidity is taking a risk.
It is safe to say that there is no direct burden on the Community as it uses $ASTR (public goods) stored in Astar’s Treasury. However, if the price of $LAY does not go as expected and falls, $LAY in the AMM Pool will increase and $ASTR will flow out. This means that the circulating supply will increase, diluting the value of $ASTR held by the community. In other words, it is indirectly a burden to the community. I wrote this as a threat, but even if this were to happen, it would hardly be a hindrance because it is not a large amount. However, we need to know what could happen and what the risks are. Indirectly, we are supporting them with our assets.

Yes, agree with you. While there is a chance for Astar treasury to earn liquidity fees, there is also a risk. Considering the amount of Astar currently circulates, yes, have the same understanding with you that it won’t be a big issue for the ASTR price even if some proportions of ASTR in the pool dilute due to the price changes of LAY.

Along with the risk, I hope we can discuss the possibility of how to use earned liquidity fees for Astar treasury and the ecosystem. Willing to participate in those discussions if requested.

I have written a lot, but I am by no means unsupportive of Starlay. I want the team to do well. However, I don’t want this to be the status of a project to which the Incubation Program has been applied (even though it has graduated). I want them to show me something that makes me think, “I think we can successfully rebuild this.”However, some of you may have participated in Starlay’s IDO solely because it was accepted into the Incubation Program. I am a member of the Astar Community who has high hopes for Astar and wants it to grow. I don’t want to be too picky, but I believe that we all need to seriously think and discuss (not complain) for the future and that will lead to DAO. But even here, if there is no transparency, there is no discussion.
We hope that this case will help Astar and the community grow in the future. Now is the time to step up to the plate!

Once again, we deeply apologize for the confusion we have made. However, I (and I believe the team also) have realized by all the discussions we’ve had in this forum in these nine days that Astar is loved by many users and ambassadors. It was an honor to have discussions with you and all the people.

Yes, let’s steps toward a better ecosystem.

2 Likes

The decision of whether Astar treasury provides $500k or not doesn’t relate to how much Starlay raised so far and how much they own now. The things we care about now are

  • how beneficial Astar community can get by providing liquidity
  • how long we will provide the liquidity

@neo_defi could you teach me more about these?

Given that we didn’t have many proposals and didn’t use treasury funds enough, this proposal is positive for me.

5 Likes

Thank you for your reply, @neo_defi

Thanks for your concern. As you might know, protocols such as Curve try to distribute revenue to users from the treasury as much as possible. At the same time, those protocols try to increase the value of the native asset (token) to continue development. Our team is aiming to manage the protocol almost in the same way.

I understand that you will strive to increase the value of the token allocation for the team. Remember, however, that this could be viewed as a way to eliminate the incentive to sustain the project if all the LAY for the team is sold.

Currently, we’re planning to allocate the amount to be borrowed from shares of remained IDO (4.5%) and Community Growth. We’ve already assigned 5.5% of IDO in the first IDO and second token sale. By the way, the fund for No.1 in this proposal will be allocated from Team’s share.

Okay, thank you very much.

Yes, agree with you. While there is a chance for Astar treasury to earn liquidity fees, there is also a risk. Considering the amount of Astar currently circulates, yes, have the same understanding with you that it won’t be a big issue for the ASTR price even if some proportions of ASTR in the pool dilute due to the price changes of LAY.

Yes, I agree. But even if the risk is low, as long as we are going to use Astar’s public property, we need to explain the risk to the community. There was no mention of this in the proposal, which is why I did it.

Along with the risk, I hope we can discuss the possibility of how to use earned liquidity fees for Astar treasury and the ecosystem. Willing to participate in those discussions if requested.

Frankly, I think it is a bit difficult to take advantage of in this regard. For example, the following are the benefits of providing liquidity:
1.Swap Fee ($LAY & $ASTR)
2.Farming Rewards ($ARSW)
Selling what Astar got is not good for dApp(ArthSwap & Starlay). Even if it is not sold, it could be seen as unfair to invest in some DeFi because it provides liquidity.
Basically, I think the conclusion would be to save the token. However, I am positive that the community will discuss it and invest it somewhere. There seems to be no problem to think about this at a later date since it is less urgent. It’s only a side effect.

Now, regarding this proposal, if the Astar community decides that there is no problem, it would be good. However, as it stands, I am not very positive about it.
As Sota posted above, the following needs to be presented:

  1. Why should Astar help increase $LAY liquidity?
  2. What are the benefits to the Astar ecosystem?
  3. How long is it necessary to support liquidity provision? (There is a need to be able to maintain some of the above benefits even after the liquidity support ends.)

Without a specific reason to offer liquidity to Starlay, it would not be fair not to accept the proposal if other protocols wanted the same thing. Of course, that is not realistic. There needs to be a determining factor for the community to make a fair decision.

*Portfolio diversification does not make much sense in this case, as there are few dApp tokens other than stablecoins that are more stable than the L1 reserve currency.

5 Likes

Thank you @sota for your comment.

how beneficial Astar community can get by providing liquidity

The number of ASTRs, LAYs, and ARSWs held by Astar Treasury may increase. According to the docs here, PancakeSwap will return a 0.17% transaction fee to liquidity providers, and the same can be said for ArthSwap, which was forked from PancakeSwap. In addition, ARSW will be earned by staking LP tokens to ArthSwap. Given the liquidity volume at the moment, a yield of several hundred percent per year would be displayed.

how long we will provide the liquidity

We would be happy if you could provide liquidity for at least one year.

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@sota

I think ARSW earned can be used to buyback ASTR and burn🔥 monthly amount. This will be healthy for Astar ecosystem.

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Yes this is great. I would like to proceed with this for our ecosystem benefits.

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Thanks @you425 for all of your questions. I hope that by discussing them with you, many community members were able to understand the pros and cons of the proposal made by our team.

  1. Why should Astar help increase $LAY liquidity?
  2. What are the benefits to the Astar ecosystem?
  3. How long is it necessary to support liquidity provision? (There is a need to be able to maintain some of the above benefits even after the liquidity support ends.)

Would be happy to refer you to the following postings for more information on the above questions:

In addition, let us note that currently the total TVL of Starlay Finance, Kagla Finance, and Muuu Finance have around $50M, which is about 42% of the total TVL of Astar at this moment.

Moreover, we are not just developing forking projects. Our team has already developed multiple unique features, not only for frontend development but also smart contract side: Launchpad, Makai and Voting Escrow, and more. This development capability is not something that other projects can easily imitate.

If I can clarify again the purpose of the proposal including this liquidity provision in other words, from our perspective, this is a proposal not only to save Starlay Finance but also to contribute to Astar ecosystem. This is NOT an investment recommendation proposal.

If this proposal is approved, we plan to conduct a buy operation with the 4M ASTR. In order to sustain a temporary price increase, sufficient liquidity must be available to withstand the selling pressures immediately after the operation. Otherwise, the price will decline to the price before conducting the buying operation. From our team’s perspective, the price of LAY, which is at the center of the Starlay ecosystem (including Kagla Finance and Muuu Finance), is too low at this point in time.

I would like to pass this proposal to revive LAY. And, maybe it’s an exaggeration, but to make Astar a better ecosystem.

With all due respect, if this proposal is rejected, it may be difficult to maintain the price of LAY. It will also make it difficult for us to develop and maintain Starlay Finance over the long term.

I am not sure how much your and other community members’ impression of us has changed during these 10 days of discussions.

We are serious about product development. Speaking as one member of the Astar Community, I believe it will be beneficial to the Astar ecosystem if the Starlay team can continue developing products.

Sincerely, Neo

3 Likes

Thank you @sota for the positive feedback :+1:

Hi @neo_defi I see from your replies the plan for the coming year, this makes sense IF LAY price goes up and stabilize.
But despite the mechanisms that will be set to support LAY price, no one know what the market will decide and how it will be in 1 year.

In case LAY price goes hardly down (I don’t wish it but it can happen), Impermanent Loss will balance the pool with high number of LAY and low number of ASTR. In this case, dapp staking rewards and pool rewards may not be enough to reimburse ASTR to the treasury.
This is why I’m saying you need a plan to reimburse treasury after 1 year in case this happens, otherwise the risk of loss is too high for Astar treasury.

1 Like

@moonme @Maarten & all @ambassadors @admins I think it is the time to decide/vote for this proposal approval. Thank you.

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Thank you again and again for your answers, @neo_defi .

I’m not worried about your development capabilities, I think it’s great. The problem is how to deal with and manage the community. I’m not in a hurry as this isn’t immediately obvious if it changes. I am very pleased that you have made suggestions at the Forum.

However, we need a sustainable plan for operations. For example, let’s say it’s good for Astar to help provide liquidity and reduce volatility after you buy back $LAY. So what about liquidity after Astar has finished providing liquidity? Also, the mechanism that can make it difficult to develop and maintain the protocol unless the price of $LAY rises is not good. As I have said many times, it is necessary to make efforts to create a sustainable mechanism.
Please think carefully while following the proposals 4 and 5 here.

Well, finally, I would like to tell you why I am talking so far this time.
Starlay was covered by Astar’s Incubation Program and had a lot of marketing help. Remember that your TVL is huge in Astar, but not only because of your power, but also because of the Incubation Program, too. That is doing a lot of damage to Astar as a whole in this case. And Astar’s intervention in Starlay’s rebuilding means that Astar as a whole bears additional risks. That’s why we’re not just talking about the price of $LAY, but about running the protocol. It’s a very short-term story that the price of $LAY should go up, and it doesn’t make sense if the operation cannot be sustained. I hope you understand this.

Thank you, please do your best.

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