0. Introduction
The prominent and dominant DEX on the Terra ecosystem, Astroport, has recently announced its long-awaited vote-escrow system, vxASTRO, to be live within days. Though a latecomer to the industry, Terra (LUNA) has grown to be one of the largest crypto economy in terms of TVL, being second only to Ethereum.
The Curve Wars were of great importance, and ever since the introduction of vote-escrow tokenomics (veTokens) by Curve.fi and the subsequent arrival of Convex, which hoards veTokens, all DeFi enthusiasts cried out for their favorite protocols to implement veTokens and incite (insert token) Wars.
As the mechanics of the Curve Wars have been thoroughly studied, I would not pore over the backdrop. For now, it would be suffice to know Astroport built a veToken model very similar to Curve.fi — investors may lock up its governance token, ASTRO, as the vote-locked token, vxASTRO, with which they could control the LP reward emissions to each liquidity pool.
It would be tempting to focus on the accumulation of veTokens only through incentives, as the locking is irreversible, but there is one more factor that is crucial: Peg stability.
1. Participants
O f course, there would be no war if there were no combatants. As of May 8th, a total of 5 protocols declared their participation in the Astro Wars: Two neonatal protocols (Retrograde, Reactor Money), three old school protocols (ApolloDAO, Orion Money, Spectrum Protocol). Each has distinctive strategy approaching the warfield, but their goal is largely the same — to hoard more ASTROs.
Out of 5 participants, Reactor Money acknowledged their deficiency and dropped out on the Astro Wars to accumulate ANC, the governance token for Anchor Protocol; Spectrum Protocol did state their mission and strategy but has not begun the accumulation yet, thus the active participants of the Astro Wars are Retrograde, ApolloDAO, and Orion Money.
Although I would not dive too deep into the strategies of the protocols as they are not the objective of my writing, I would at least summarize what the protocols are aiming for.
Retrograde
- Newborn protocol built solely to be #1 ASTRO hoarder
- Mimics Convex to have RETRO emissions tied to locked ASTRO growth
- Going to launch a stableswap pair for rexASTRO-ASTRO on Astroport
ApolloDAO
- Already working yield optimizer
- Will forgo some yield to build a deep liquidity for zvxASTRO
Orion Money
- Already working cross-chain DeFi service
- Has some little NFT drops in ASTRO Wars to boost yields
I could not find much information on Orion Money’s strategy, and the main difference between Retrograde and ApolloDAO is that the former was built for the sole purpose of the ASTRO Wars, so it could deploy much more incentives than the latter.
2. Performance
How did each protocol fare in the war?
Most numbers are self-explanatory, and I would like to focus on the rightmost column: FDV/locked xASTRO value, which practically shows how much FDV is valued per locked xASTRO. It might be an unfair metric as Orion Money and ApolloDAO are not built for the sole purpose of the ASTRO Wars, but still it would help to catch a sense of valuation.
Reactor Money quickly adjusted its strategy from accumulating ASTRO to accumulating ANC, but even accounting for ANC it is still valued too high. Reactor Money is built to hoard veTokens, so not having many veTokens is a bad sign.
For other protocols, they are roughly valued the same at 0.7x ~ 1.0x of locked xASTRO value. Let me check the peers to see if they are valued fairly.
CVX is, well, Convex-style protocol that locks CRV; VTX and ECD locks PTP, which is CRV for Avalanche. Now Fantom chain has a variety of veToken DEXes running, but I ignored the chain for now since there is no Convex-style protocol that accumulates a single veToken. (VTX buys PTP and JOE, but the feature is relatively new.)
So looking at the first to entries, it seems reasonable for veToken hoarders to be valued at 0.7x of the locked veToken value — until I see the third entry, ECD.
Even before the recent BTC crash, ECD has been underperforming in terms of relative price compared to its competitor, VTX. The PTP mechanism does not hinder the minority from earning the boosted yield, so it feels weird to see ECD lagging that much in value.
Does being the loser in the war give reputation loss of that degree? Actually, I have a better explanation for the phenomenon.
Ever since its inception, the ecdPTP-PTP spread has been consistently larger than xPTP-PTP.
The whole purpose of Convex model is to grant ‘the liquid derivative of locked veTokens.’ It would be of no use if the liquid derivative were trading at 90% discount, as such a huge discount bars liquidity anyway.
Both protocols, VTX and ECD, stated that the teams has not done any sort of manipulation to keep the peg, so the peg stability is purely determined by the market — the pool depth.
3. Winners of the ASTRO Wars
The initial ASTRO accumulation phase has passed, and it seems clear that Retrograde is leading by a wide margin.
As more liquidity guarantees a better swap rate for liquid derivative pairs, Retrograde certainly would be top of the line, but I would not count ApolloDAO out.
ApolloDAO already knew the importance of the peg, and they even sacrificed their yield and also clarified on how they would use their Warchest to buy back the liquid derivative in case of a depeg event.
As long as the peg superiority exists (if there is one), ApolloDAO, though it may not supercede Retrograde in terms of quantity, still it would have a better shot in driving in more ASTRO and more values than other participants.
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