Tokenomics: Redirecting $Psi Airdrops

Gm Nexus Community!

With the imminent launch of EthNexus and our products also making decent progress, we want to touch on a core part of Nexus Protocol since inception - our weekly $Psi airdrops to $ANC stakers.

Blast from the Past

You might remember that the Nexus team decided to airdrop $Psi tokens to $ANC governance tokens as a means of a) giving back to Anchor Protocol since many of our products are built on it, and b) supporting the price of $ANC as it forms a part of the yield accruing by other vault strategies.

Much has changed since then, and hence the team sees a need to update this mechanism.

Adapting to DeFi Innovations

Many Lunatics would have noticed how concepts from DeFi on Ethereum have crossed over to Terra - namely, the implementation of -ve tokenomics and the commencement of ‘governance wars’ on AMMs and lending protocols.

On Terra, protocols like Astroport, Mars, and Prism have already adopted this. We’re confident that soon-to-launch protocols will also follow suit.

As Nexus seeks to identify, develop and simplify yield opportunities for users, it is imperative that we continually adapt our macro and micro strategies in response to any changes in tokenomics. Let me be clear: not doing so will mean sub-optimal yield for users.

Proposed Changes

Hence, Nexus must itself accumulate the governance tokens of protocols it builds vaults or strategies on.

We will move to roll out this strategic program in phases, depending on how imminent tokenomics changes of our partner protocols are, and in view of other Nexus priorities.

The key initiatives would be to:

  1. Accumulate (on a protocol level) key Terra governance tokens (e.g. xASTRO, ANC, xPRISM) by allowing users to deposit these tokens with Nexus

  2. Create new “Nexus Vote-Locked” tokens that will be given to users who deposit governance tokens into the Nexus staking contract, e.g. xPRISM and xASTRO

  3. Redirect all $Psi airdrops currently going to $ANC governance stakers to those who deposit and stake “Nexus Vote-Locked” tokens, i.e. nexPRISM, nexANC, nexASTRO.*

  4. Either lock these tokens in governance contracts for the maximum time frame or fully stake these tokens in the governance contract**

  5. Propose the creation of stable-swap invariant pools on a DEX like Astroport in order to facilitate trading between ‘pegged’ tokens, e.g. nexPRISM-xPRISM

*Note that users who stake nex tokens will still receive the regular governance incentives from the partner protocol, and potentially extra yield if the ‘power’ of these tokens are used in any Nexus vault.

**Note that governance protocols can in the future, move to unstake the tokens (in the PTP model) or remove token stakes at maturity (the CRV model).

Our Impact

While we know current $ANC governance stakers may be disappointed at this news, since airdrops will be spread out across a wider range of tokens, this is a necessary step that Nexus must take to continue to deliver the best yields for users.

Furthermore, as we provide a new avenue for tokens to be locked up for extended periods of time, we are confident that this will bode well for the long-term performance of protocols.

Nexus is here for the long-term - why not join us in this (3,3) journey?

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While it may be too early to consider this, tying the yield weightage of nexPRISM, nexANC, or nexASTRO to the duration, amount and governance participation of PSI will tie the PSI token to the growth of the protocol. Currently, the PSI token gets yield from the revenue of the protocol but it doesn’t incentivise governance participation (as Nexus is a strategy-heavy protocol, with a higher than usual number of decisions needed).

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Hi Max,

Interesting idea - do you mean weighting the airdrop rewards based on an individual’s participation in governance? One other model I am thinking about is tying the token distribution based on TVL or protocol fees generated for the Nexus treasury.

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Hey Alex,

I’m taking cue from Shimmy’s post to direct some of the yield for active governance. Instead of directing yield from bATOM alone, why not build participation of governance into the yield payout of nexPRISM, nexANC and nexASTRO?

However, we do not want participants to vote yes/no if they do not understand the proposal, hence there should be an “abstain” vote.

We could have separate weightage based on PSI stakers’ behaviour, out of 100% of the yield distributed:

  1. Duration of PSI staked (40%)
  2. Amount of PSI staked vs total PSI staked (40%)
  3. Governance participation since PSI staked (20%)

This would introduce complexity into the tokenomics and it should be best decided as part of the tokenomics re-design. For the bATOM parameter change proposal participation, initially we could consider to airdrop participation reward snapshot and airdrop.

So the idea here is that you would need to stake your ANC on Nexus Protocol to get the PSI Air drop now, so that Nexus could use your ANC to vote how they want in ANC governance?

yeahp defo agree that we should consider more incentive alignment for active government participation. perhaps we can even take the variables you’ve mentioned, and consider veGMX model almost, where the user will accrue additional vePsi in accordance with the staking amount and period, we also consider governance participation; formula being sth like - weight = sqrt(vePsi*gov participation)

the airdrop redirection is more a prep towards gathering as many ANC under nexus umbrella as possible prior to veANC upgrade, where number of ANC staked may impact the reward from Anchor Borrow.

Until, the veANC implementation, the main effect of nexANC would be as you described, Nexus governance exercising delegated ANC’s voting right in Anchor governance on their behalf.

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