Hello Terraport community!
This discussion is about the next proposals that will be published in the Terraport Governance to increase functionality of Terraport, facilitating the creation of liquid staking and increase trading and burn volume. There are three main aspects to the discussion.
- Update the configuration of the Treasury module.
- Migrate the Provider Contract to fund Liquidity Staking.
- Incentivize the farm for arbitrage pairs.
1 Update the configuration of the ‘Treasury Module’:
Objective
The proposed modification to the Treasury module configuration aims to optimise resource allocation to enhance the platform’s long-term sustainability and growth.
The new configuration significantly increases the buyback and burn ratio of $TERRA tokens from 30% to 68% of the fees allocated to the treasury. This change in configuration means that for every $100 traded, $1.21 worth of $TERRA will be bought back and burned increasing positive price pressure, as well as burning $0.535 of $LUNC for every $100 traded. This should increase the speed of the reduction of circulating supply of $TERRA, contributing to the stabilisation of the token’s value. A reduced supply can increase the value of the remaining tokens, incentivizing investors to hold and purchase more tokens.
Background
The existing parameters have allowed the creation of a good level of liquidity to accumulate to the $TERRA / $LUNC pair. 6 Months ago with ‘Proposal 15’ we changed the configuration to the following parameters:
{
“native_token_ratio”: 2,
“cw20_token_ratio”: 30,
“staking_pool_ratio”: 8,
“provider_ratio”: 45,
“community_pool_ratio”: 5,
“security_ratio”: 10,
}
This means that the current burn ratio of $LUNC is configured as 2%, $TERRA token buyback&burn ratio is configured as 30%, staking pool funding 8%, community pool (governance) funding 5%, security and management funding 10% and the ‘Liquidity Provider Contract’ (the stability system that provides new liquidity into the $TERRA pools at every treasury execution) with 45%.
Proposal :
Our proposal is to change the configuration to the following parameters:
{
“native_token_ratio”: 2,
“cw20_token_ratio”: 68,
“staking_pool_ratio”: 5,
“provider_ratio”: 10,
“community_pool_ratio”: 5,
“security_ratio”: 10,
}
This mean that the burn ratio of $LUNC is configured as 2%, $TERRA token buyback&burn ratio is configured as 68%, staking pool funding 5%, community pool (governance) funding 5%, security and management funding 10% and the ‘Liquidity Provider Contract’ (the stability system that provides new liquidity into the $TERRA pools at every treasury execution) with 10%.
2 Migrate the ‘Provider Contract’ to fund ‘Liquid Staking’:
Objective:
The proposed modification aims to; modify and activate the ‘provider contract’, burn $TERRA, and redirect resources from providing liquidity to the pair ‘$TERRA / $LUNC’ to a liquid staking pair, which will create new ways to increase trading and grow volume on Terraport.
Context:
The provider contract has never executed its activities due to an unresolved bug, leading to the contract accumulating approximately 900,000,000 $LUNC over 6 months, in addition to the initial balance of 141,800,000 $TERRA tokens.
Proposal:
To optimise the use of these funds and definitively resolve the provider contract issue, we propose to:
Replace the old provider contract in the treasury configuration with a new provider contract that fixes the problems of the old contract and allows for better management of the funds (currently limited to providing liquidity on the $TERRA / $LUNC pair).
Utilise the current balance of 141,800,000 $TERRA and 900,000,000 $LUNC as follows:
a) burn 97,800,000 $TERRA tokens,
b) send 40,000,000 $TERRA tokens and 100,000,000 $LUNC to the new provider contract.
c) use 800,000,000 $LUNC to fund the $LUNC / $bLUNC ‘Liquid Staking’ pair.
d) use 4,000,000 $TERRA to create ‘Farms’ for $LUNC and $USTC pairs.
Liquid Staking Funding:
The soon-to-be-launched ‘liquid staking’ functionality will allow users to stake $LUNC and receive a staking derivative in return: $bLUNC (1:1 ratio).
Holders of $bLUNC will have the right to claim staking rewards as in standard staking, destroy $bLUNC to reclaim staked $LUNC, or trade them for $LUNC directly on Terraport.
The 800,000,000 $LUNC taken from the provider contract will be used to mint 400,000,000 $bLUNC, which will be paired with 400,000,000 $LUNC in liquidity for the $LUNC / $bLUNC pair to enable a rapid start of the protocol.
This initiative will provide an excellent arbitrage opportunity on the pair for traders, a powerful start for the liquid staking protocol, and an immediate exit opportunity from staking for users participating in this protocol.
3 Incentivize the Farm for arbitrage pairs:
Objective:
The proposed allocation of $TERRA tokens aims to promote liquidity provision by users to increase the trading volume of key pairs on Terraport increasing fees to the treasury bringing the associated benefits, including burning.
Proposal:
It is proposed that 4,000,000 $TERRA tokens will be assigned to the Farm to incentivize users to provide liquidity in the following Pairs:
$LUNC-$USTC 2,000,000 $TERRA
$LUNC-$axlUSDC 1,000,000 $TERRA
$USTC-$axlUSDC 1,000,000 $TERRA
Conclusion:
In conclusion, the proposed updates to the Treasury module configuration and the migration of the provider contract to a new version aims to enhance the long-term sustainability and growth of Terraport. The increase in the buyback and burn ratio of $TERRA tokens and the implementation of liquid staking will help stabilise the token’s value and provide new investment opportunities for the community. Increasing the opportunity for farming rewards for selective pairs also helps to maximise the attractiveness to investors, which inturn promotes increased trading volume.
These changes optimize resource allocation, resolve pre-existing issues, and lay the groundwork for a more robust and dynamic future for the platform. The future of the protocol is in the hands of the Terraport community, share your opinions!
