Stellaswap <> Interlay Governance Proposal

Abstract

This is a proposal for INTR tokens to be used as incentives on StellaSwap’s iBTC-DOT pool and for Stellaswap to actively support the growth of iBTC on Moonbeam. This proposal further recommends that Interlay provide incentives on a DOT-INTR pool. If accepted this would run for 2 months, at which point both parties can evaluate the success of the program and take next steps.

Background on Stellaswap

Stellaswap is the leading dex on Moonbeam, generally capturing 80-90% of on-chain volume. We’ve recently launched Pulsar, a Uniswap v3-style concentrated liquidity dex which constitutes a unique offering on Polkadot.The capital efficiency of Pulsar is many times higher than a standard dex, allowing much larger trades to be made on the same TVL without compromising on slippage.

The Advantages of iBTC liquidity on Pulsar

There are two angles to explore in terms of how Pulsar incentives are uniquely positioned to promote the growth of iBTC.

Stellaswap Support for iBTC

Stellaswap has the deepest BTC liquidity on Polkadot, in the form of our wBTC pool. This is a pool incentivized by grants from Moonbeam in the form of GLMR tokens. wBTC is of course a competitor to iBTC with a $4 billion market cap, but has the disadvantage of being non-native to Polkadot. Stellaswap is prepared to help siphon wBTC liquidity into iBTC with the following strategy

• When a user selects wBTC as the target on our Swap interface, a link will appear saying “Learn more about Polkadot’s native BTC solution: iBTC”
• A similar message would appear when users look at their Pulsar dashboard’s wBTC position
• On the iBTC-USDT pool’s row on the main Pulsar page, include a link to Interlay
• Stella incentives (more details in table below)

We feel that with the right push, many wBTC users will explore iBTC and choose to make the switch. We’re projecting this would achieve roughly half a million dollars in TVL based on the INTR and Stella emissions being provided.

Pulsar

A key reason Pulsar is an excellent choice is efficiency. As aforementioned, concentrated liquidity can do a lot more than standard constant product pools. Whereas a Uniswap v2 style dex will only use ~5% of tokens in a day, we’ve seen some of our pools approach 100% on volatile days. This means that your incentives go farther on Pulsar in terms of reducing slippage on trades.

And that’s a key thing to consider. Slippage governs whether an asset is suitable for lending protocols. Slippage also governs how much money can enter a token at a time. Lower slippage leads to greater adoption.

Real Life Example of Slippage Reduction with Lower TVL

AMM Type	Pool	TVL	Price Impact of $5k Trade
Standard	USDC-GLMR	$2M	.52%
Pulsar	USDT-DOT	$176k	.49%

This proposal also asks that Interlay provide INTR-DOT incentives on Pulsar. While we want to focus incentives on iBTC it’s important to have a healthy INTR-DOT pool as well, both to support the iBTC pool and to provide users interested in iBTC the chance to invest in the protocol token as well. Because of Pulsar’s efficiency, swaps can be supported with a more modest allocation than a constant product pool would require.

In conclusion, we think this is an excellent opportunity to grow iBTC’s market share among Ethereum native users who are accustomed to wBTC.

Incentives and Projections

iBTC-DOT

Asset	Price	Reward Value	Amount	Period
INTR	.0235	$8500	362,388	8 weeks
Stella	.0706	$8500	120,362	8 weeks

iBTC-INTR

Asset	Price	Reward Value	Amount	Period
INTR	.0235	$1500	63,950	8 weeks
Stella	.0706	$1500	21,240	8 weeks

Projections

Pool	Target TVL	Expected APR	$ INTR / Day	$ Stella / Day	Reward APR	Swap APR
iBTC-DOT	$350k	71.22%	$152	$152	31.22%	40%
INTR-DOT	$50k	58.57%	$27	$27	38.57%	20%

For reference, on our legacy v2 dex iBTC-GLMR averaged $200k TVL, peaking at $354k.

Technical Details
Deposit INTR to wallet controlled by Stellaswap: Interlay would send the tokens to the Stellaswap multisig, from whence they would be deposited into a smart contract for distribution as incentives.
Stellaswap Multisig: 0x4300e09284e3bB4d9044DdAB31EfAF5f3301DABa