New ideas in DeFi never cease to amaze us and it seems like we’re starting 2022 with a slew of new innovations in the space. Today I’d like to focus on the recently announced AMPS program from the Prism Protocol team regarding their upcoming Prism Farm and what Nexus can do to optimize yields for users.
Over the next 12 months, users can stake yield bearing assets into the Prism Farm module to receive PRISM tokens in return. Only yLuna is accepted at launch but it is their intention to include other Terra-based yield bearing assets in the future.
13% of the total supply of $PRISM (130mil tokens) is allocated for the farming event but its distribution is not uniform. Unlike vanilla ‘stake-to-earn’ farming mechanisms, Prism Protocol borrows a concept popularised by Platypus Finance on Avalanche.
Users are both yLUNA stakers and xPRISM stakers are entitled to a greater share of the per block $PRISM rewards distributed compared to users who only have yLUNA staked for the farming event. Furthermore, the criteria that determines a user’s receipt of $PRISM rewards does not simply depend on the amount of xPRISM staked but also on the amount of time the tokens has been staked.
This is because, every block, xPRISM stakers accumulate a non-tradeable AMPS ‘token’. The more AMPS a user has, the greater the yield received. Furthermore, if users unstake any xPRISM, the total amount of AMPS accumulated and therefore entitlement of boosted farming rewards will disappear.
The Nexus Proposition
The seasoned and shrewd DeFi participant would realise that this mechanism bears similarity to the symbiotic relationship between Curve and Convex on Ethereum. Nexus proposes to build the underlying smart contracts to bring this model to Terra.
Both users who hold $PRISM tokens and yLUNA who wish to maximise their yield would be incentivised to stake their tokens with Nexus as they would benefit from the much larger ‘AMPS’ power of the Nexus vault contract. In a nutshell, this allows users to gain much higher yield than they would otherwise have if they deposited on their own.
The contract will be set up to accept xPRISM and yLUNA deposits from users with the former on a one-way basis until the end of the farming basis and the latter withdrawable at any time.
User Group 1 (xPRISM holders):
- Yield comes from xPRISM (protocol fees) and rewards sharing from yLUNA depositors
- xPRISM given to Nexus will be locked without exception until the end of the farming period with users receiving nexPRISM in return
- Nexus will either set up a PoL pool for nexPRISM/Psi or give incentives to users who provide liquidity
- While there will not be any deposit fees for using the vaults, users may find that nexPRISM may not trade 1:1 against xPRISM
User Group 2 (yLUNA holders):
- Yield comes from the base $PRISM incentives and the boosted yield from this strategy
- yLUNA stakers simply deposit their tokens into Nexus and benefit from yield much higher than they would be able to achieve on their own
- Users can unstake at any time and there is no deposit fee
User Group 3 (Psi stakers):
- Nexus will charge a performance fee to users participating in this strategy; this fee will be added to the existing yield accruing to $Psi token stakers
As the Prism team has indicated that they might use the AMPS token in other ‘boosting’ programs, accumulation of AMPS by the Nexus vault also has the potential to reap greater benefits in the future. By locking up protocol tokens for an indefinite period of time, Nexus commits itself to the long term success of both the Terra blockchain and its constituent protocols.
We seek the community’s thoughts about this product. We are already speaking with the Prism team on how we can actualise these vaults to the benefit of all users.