Providing Liquidity for LAY

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.

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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.

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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

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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.

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@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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Thank you @you425 for suggestions and explanations. Understood.
Will try our best.

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I bought a lot an hour ago. I bought 12000000LAY. The price went up, but it soon returned to normal. Perhaps the problem is the selling pressure of early investors and early contributors rather than liquidity.

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Thank you @neo_defi for the sustain dialogue and for laying out the proposal. My gratitude as well to the community and ambassadors for describing in great detail the risk involved, the variety of outcomes that may occur, and asking questions in order to find clarity and push for improvements.

I share a similar sentiment as @you425,

After seeing the double-digit days of transparent conversation and the attention to questions and concerns (and consideration taken for all valid feedback), I believe a rebuild can be possible. I will be supportive of the proposal.

Perhaps it would be of a benefit to us and the rest of the community if the proposal was rewritten and placed for a vote sooner rather than later.

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Thank you for the great discussion. I value both the community’s feedback and Starlay’s comments. As a moderator, I would like to propose a compromise. How about the following idea?

Background

  • Starlay: Want to use Astar’s treasury to stabilize the LAY’s price and boost TVL.
  • Community: Have a concern about Starlay’s past activities.
  • Core team: KPI we are tracking is TVL. By providing liquidity, the treasury can have ARSW tokens and increase TVL.

Solution
To find a compromise, I would like to ask Starlay’s team to show us the roadmap for the next 3 months. Since the 1-year loan is long, our community can terminate the liquidity provision anytime after the initial 3 months. If their development is great and shows the community strong commitments, the community can extend the period up to 1 year.

At this moment, our ecosystem is still early and we need to bring more DOTs from Polkadot to Astar to become an asset hub on Polkadot. Lending is definitely the most attractive use case for DOT holders and this use case boosts our TVL since people don’t need to make a pair to deposit DOTs. Hope we can find a win-win solution for all.

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Strongly agree. that’s a great idea.

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Thank you @sota for your suggestion.
I agree with your idea.

The following is a summary of what the Starlay team will be developing over the next three months:

  • A Makai loop position can be closed with a single click. It will be released at the end of June.
  • aUSD will be listed on Starlay Finance and Kagla Finance. It will require cooperation with the Acala team and is expected to be released at the end of June or early July. Also, the laUSD+l3KGL pool will be available as a new pool at Kagla Finance.
  • Enable users to receive not only KGL but also LAY when using Starlay Pool in Kagla Finance, which is called Dual Mining. It will be released in July.
  • The ve will allow Starlay Finance’s protocol revenue to be returned to LAY holders. We are currently working with Runtime Verification, a Tier-1 audit firm, to develop the smart contracts, which is expected to be released between the end of June and early July.
  • Muuu Finance will support muLAY for veLAY. It can be handled in the same way as muKGL. It will be released in August.
  • The muKGL-KGL and muLAY-LAY pools are created at Kagla Finance. The former will be available in July and the latter in August.
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Thanks for your proposal. Please check @Ambassadors @Core After People ask questions (if any), let’s start the vote. @moonme

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i like Technical from starlay. But we want more transparency in Starlay.

Thank you @bLd759 for the opinion.
We were discussing your post among core members.
What do you think if Starlay Finance gives lent LAY to Astar Treasury if LAY price incredibly goes down?

From @sota’s post, I assume we will have another discussion after three months regarding the liquidity provision. Hopefully, we can confirm the price of LAY at that moment and talk about this in that discussion.

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i like Technical from starlay. But we want more transparency in Starlay.

Thank you @Jin666. Please let us try and improve…