Stake Luna With More Than 17% APR

De-Fi Strategies v4: "Stake $LUNA With 17% A.P.R. And Astroport Review"

By Le Dex | Le Dex | 10 Apr 2022



You can check my previous strategies here:


INTRO

Hello everyone, my name is Le Dex and I present a series of DeFi strategies that I use in my own portofolio. Of course, this is not a financial advice and you should do your own research before you invest in anything, especially in DeFi world. DYOR !!!

In this episode I will review a protocol that made me involve with $LUNA and Terra ecosystem, Astroport protocol. I observe this effort from the beginning and you will read here some basic milestones that I found useful before my interact with the protocol.


ASTROPORT

Astroport is a DeFi ecosystem on Terra Network with AMM (Automated Market Makers) which means that users deposit their own liquidity so anyone can trade without a centralized authority. What I like most is that there is no captain in Astroport and the ecosystem will be owned by its users! The goal is to improve pricing and trade efficiency to attract more liquidity and help the adoption of the protocol on the Terra Network. Built on the Cosmos SDK, apps like Astroport can interact with other interoperability protocols like Wormhole v2. That means that its liquidity will be reached by other blockchains without requiring from the users to have a Terra Station wallet!!!


MATHS ALWAYS WIN

When the AMM ecosystems started, they all had the same algorithm for determining the token prices which is based on the price of the two tokens in the pool. Although, while the DeFi were expanding new algorithms came up, making the pools more efficient for traders and liquidity providers. Astroport supports the following type of pools (algorithms) to its ecosystem:

  • Constant Product Pools. These pools are eligible for high volatility pairs and gives sustainability to sudden market changes. They use this equation: Rx * Ry = k [where Rx=reserves of token X , Ry=reserves of token Y, k=constant] . So if a trader wishes to sell X token the equation becomes: (Rx + Δx) * (Ry - Δy) = k. When you try to add liquidity you deposit token X and Y in a ratio Rx/Ry so the k increases its value. The increased value of k will give higher output for Δy in our example which means that higher liquidity = less trade slippage.
  • Stableswap Invariant Pools. These pools are used for less volatility pairs like Stablecoins or Luna-bLuna pool etc.d86c5e464bfac3e30b0dfffb0ba136b8932460076ddcd2243a9ecf5099a45273.pngthe two added parameters here ( A & D ) represent A: How close the stableswap curve should be to the constant product curve and D: is a constant for the total number of tokens X and Y when they have an equal price332f199cf76f7b9a5a71a5afc30bfb5489b8af79015d98409c2de46f2bd521cb.png
  • Create New Types. Something amazing that developers will love is that Astroport allows you to create new pool type using their flexible architecture. You can use the core protocol code and add minimal changes for your own algorithm.

WHAT MAKES ASTROPORT UNIQUE

All the liquidity providers face a common issue, they can't decide which platform to engage and provide their liquidity. We look for % rewards , the quality of the token we get rewarded or audits etc. Astroport gives answer to this with the "Astro Generators" . It is something like dual farming as they created proxy-based smart contracts that can interact with other platforms too. What do I mean? 

Proxy Based Smart Contracts

If I want to deposit an LP into a third party protocol to receive their rewards, I can deposit the same LP token into ASTRO Generators and receive rewards from both protocols !!! For example, let's say I want to stake my ANC-UST LP to the Anchor protocol and receive Anchor. Astroport gives me the ability of staking the same LP tokens through the ASTRO Generator and receive both $ASTRO and $ANCHOR as rewards.

5188ec53978d27d46636164330c85afcf95bc1f0243174fa706166aeecbd526a.png

In my opinion, the use of these proxy smart contracts and the dual liquidity mining is something that can  "moon" Astroport's liquidity and can easily be adapted to the Terra ecosystem.

 

TOKENOMICS

When you look to a DeFi project you should always check the tokenomics because investors take them very serious and many times they determine price actions. $ASTRO has a total supply of 1.000.000.000 tokens. The 49% of these tokens will be the supply for the LPs for over 69 years. Which means that the 49% of the tokens will be created and rewarded to the liquidity providers in the next 69 years. 10% of the supply is reserved for the Astral Assembly [Astroport DAO (Decentralized Autonomous Organization)]  . 11% is shared through the community with the lockdrop and the Airdrop. The rest 30% is allocated to the builders / Astroport's developers which is much, but they have a 3-year locked period (they can't sell the tokens for 3 years).

b9959c03f15ba1d6df593ea1c33d2cefaea16b80b2d4c3c317009346a3e0b603.jpgAlso, the "Maker contract" swaps the collected fees from each pool and buys $ASTRO which is rewarded to the $xASTRO holders. In order to become an xASTRO holder you need to stake your $ASTRO and receive $xASTRO  in 1:0.97 ration right now:

93d209de6d8e2ad23a20a9fa30bd58ad93b54d8b14701d85e4c522af5d452a0d.png

With xASTRO you can participate to the Astral Assembly that will govern Astroport's smarts contracts, upgrades, and treasury managements (remember when I said in the start that Astroport will be owned by its users?)


AUDIT

In DeFi space everything comes with a risk. Sometimes smart contracts have bugs which can lead to an exploit or a hack. The Astroport's contracts were audited by Halborn  and Oak Security . You can check the audits through github in the links. Although audits reduce the possibility of a smart contract's bug, they are never perfect and there is always a risk of getting hacked.


MY CHOICE AMONG THE LPs: bLUNA - LUNA (0.05% fee) 17.25% APR

You can check the pools that you can farm here . I choose bLUNA-LUNA pool for the reason I will analyze at the end of this article. But let's see how you can farm with this pool. First of all, you will need a Terra Station wallet if you don't have already.  I will leave a decent video tutorial about how to create a browser extension so that you can interact with Dapps on Terra Network. Remember to use the official links from the description.

The next step, is to withdraw your Luna from the exchange to the Terra Station wallet. This process takes a few minutes. After $LUNA arrives, we have to buy bLUNA in order to add liquidity to our pool. But, there is a way to stake your $LUNA for $bLUNA and get rewards for this staking. This can happen through  Lido Finance and receive 6.25% APR for bonding $LUNA for $bLUNA which is not bad!

bLUNA

In my example, you see that I selected bLUNA to "Bond" and not stLUNA. Also, I bond half of my $LUNA because I will need to add liquidity and liquidity goes 50-50 $LUNA-$bLUNA. After I press 'Bond' Lido stakes my $LUNA and gives me $bLUNA instead!

The next step is to go back to Astroport Pools and find the pool I want to stake : 

bLUNA-LUNA

and I press "Add Liquidity"f7abc2b628f7b96dd07b702955a9289130807098122688899368976062d1492f.png providing 50% bLUNA and 50% LUNA 4a495574c1483ed8e988fd3194d090a3163e02127a80287c8ad166b4fbd18d57.png

Finally, I press again "Add Liquidity" with the check of "Stake LP Token" a08bc772762c2cfe12d111bb6b34160b5343f5132d321df54e83a4c2a086babf.png.

I AM READY ! I now farm my $ASTRO rewards!!!


ADVANTAGES

  • Blue chip yield farming: Everyone agrees that $LUNA is a blue chip nowadays. 17% APR on a blue chip is much appreciated!
  • $ASTRO rewards: In this protocol users get rewarded with $ASTRO tokens. The utility that analyzed in my review is only a small part of the work that Astroport's devs did and they continue to do all this time. In my opinion, $ASTRO is really undervalued compared to the future of this protocol so the rewards will increase the value of portfolio.
  • Lido rewards: As you can see we didn't just buy $bLUNA for the liquidity but we bond it with $LUNA through Lido Finance so the APR is more than 17% as half of our $LUNA will be staked with 6.25% APR into Lido. 
  • No risk of impermanent loss: $bLUNA is bonded $LUNA so there is a peg between $LUNA and $bLUNA that is almost impossible to break. That means that the ratio of LUNA-bLUNA will be always almost 1 so there is no risk of impermanent loss, something you don't easily find through DeFi space.
  • Low fees: Terra Network has low fees that gives us the opportunity for many transactions without cost. The whole process for staking my LPs cost me around $0.40 in $UST. Yea, in Terra you can pay your fees through $UST and not only $LUNA. The claim of the rewards process costs $0.05 $UST which is ridiculous.  
  • High TVL Total Value Locked: TVLAs you can see the Total Liquidity for this pool is more than half a bilion $. This is too much liquidity which makes investors feel safe with this LP.

RISKS

  • Smart contract hack/bug: Despite there are audits for Astroport protocol there is always a risk of a bug that can lead to an exploit. So do not invest your life savings into any DeFi !
  • $ASTRO rewards may lose value: I like a lot this protocol but what they present us may differ in the future. When someone becomes a Liquidity Provider he should always expect his rewards to have $VALUE when he is about to unstake. If somehow Astroport fails the value of the rewards of these pools will drop too. 
  • Combined APR: We are talking for Automated Market Makers so the 17% APR is not something stable forever. This APR is affected by the TVL and the price of $ASTRO token.

CONCLUSION

In conclusion, I do not intend to sell my $LUNA in the near future and I hate to see them sitting in my wallet. So, I make them work for me! This is my own strategy to provide liquidity with my $LUNA and farm $ASTRO tokens which have a great future in my opinion. HOWEVER, remember to do your own research before you invest to any protocol!

Do you have any questions about my strategy? Feel free to ask below in the comments or message me in Twitter. 


If you like my work I will be pleased with a follow here or Twitter or you can direct donate me: 

Twitter : @LeandrosDim

Addresses

  • BTC : 1Gzsdiw4PBbD4zLAvVRcNR6ECbbSd69y6C
  • ETH : 0x3689115C7f622c31Fa400978AeC1072831B29872
  • ADA : addr1q95hvjls2rdvxlz94q25q45tu6083pmc5g65upglfqqljeaeuket7v2vcgqw3a0wxljtvs88mzj8jndqa4mmr6wm2uyqqnc7ja
  • HARMONY : one1x6y3zhrlvgkrr7jqp9u2asg89qcm9xrj2c24aq
  • LUNA : terra1xwq59th62jeuwr6d8nesyz4v6ak9lr7jlp8ypf
  • SOLANA : 5emxBQPgyqB8JQkwPQiRKWXKp3u1A4LeAyryaPpiaLzY

 

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Le Dex
Le Dex

Hello everyone this is Le Dex and here you can find some interesting ideas about Decentralized Finance and how you can make your own cryptocurrencies work for you 24/7

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