On December 28th, Terra’s premiere AMM, Astroport, opened up its doors to trading. Incubated by the infamous Delphi Labs and Terraform Labs teams, as well as We3 and Attic Labs, there has been a large amount of excitement for the launch. Given that trading has been live for more than a month, we have enough data to assess whether the protocol has lived up to the hype. Here I do my best to break down and assess Astroport’s performance since late December.
In order to best evaluate the protocol’s success to-date, I decided to compare metrics with the competitor AMM TerraSwap, as they are both competing for the same user base and token liquidity on Terra.
For simplicity, I also decided to focus on two pairs exclusively: bLUNA-LUNA and LUNA-UST. These together take up almost all of the total transactions and a significant share of TVL for both TerraSwap and Astroport, and are therefore good proxies.
The primary functions of an AMM are to provide users the ability to trade assets with the best possible price and lowest fees, and to incentivize liquidity providers through revenue and reward generation. To measure the impact of Astroport’s success in these areas I decided to take a look at
- Trading metrics (Users, Transactions, Volume)
- Total Value Locked (TVL)
- Protocol Revenue
Let’s dive in.
The first metric we can take a look at to assess trading on the platform is daily active users. I took the amount of unique addresses that interacted with each exchange on a given day and plotted the points below.
Here you can better see the differences between the two exchanges beginning from December 28th.
In the first few weeks after Astroport first launched, more people still chose to use TerraSwap, peaking at a difference of over 2000 users. Since then, it has flipped, as Astroport has since gained a lead in active users by over 1000 per day.
As far as the total transactions, we can take a look at both the bLUNA-LUNA and LUNA-UST pairs and the number of transactions for each.
The bLUNA-LUNA pair has become more popular to use on Astroport, but the LUNA-UST pair is seeing comparable numbers across the two exchanges. The real differences are seen in the actual volume traded, which you can see below:
There is a large gap in actual volume traded in UST value on both pairs, with Astroport doing more than 4x the volume of TerraSwap on a daily basis. So while total number of swaps may be closer, people are choosing to trade much higher amounts using Astroport, regardless of the asset pair.
It’s also important to note the data points in which the market saw the highest amount of volatility, such as on January 22nd and 28th. As you can see, transactions and active user increased dramatically these days, and the gap in volume traded was extremely favored towards Astroport, with differences of $270m and $170m total from both pairs. This means that in times of distress, users are choosing to go to Astroport to make their trades, and doing so in large quantities.
So, as of only a month since launch, Astroport has already become the most popular DEX on Terra in both active users and trading volume. It is clear that Astroport is becoming the primary destination for traders, and we would like to see these gaps widen going forward.
In addition to trading information, AMMs are also competing for trading liquidity, which is assessed through Total Value Locked (TVL), or the value of assets being provided on the platform.
Here, we can take a look at the TVL for both the bLUNA-LUNA and LUNA-UST pairs.
As you can see from a very large spike starting around the beginning of December and peaking on December 26th, there was large demand to deposit liquidity on TerraSwap in anticipation for Astroport’s lockdrop event. As soon as the liquidity was migrated, the TVL of TerraSwap dropped below average levels.
Although Astroport obtained this large amount of liquidity, since the lockdrop event we have seen a slow decline in TVL across the board, especially with respect to the bLUNA-LUNA pair. This was likely due to continuous expiration of lock periods, where people were now free to withdraw their funds, and the ongoing market downturn, as LUNA’s price has dropped 50% since Astroport’s launch.
Let’s take a look at the same metrics, but in terms of LUNA so we can better gauge how much price played an impact.
Even in terms of LUNA, the TVL of both pairs has shown declines since launch, showing people taking out their liquidity from the pools. We would like to see this trend reverse, as more TVL provides better slippage and price transparency for traders, but Astroport currently enjoys a large lead over TerraSwap in this metric.
An important component of a protocols success is how much revenue the protocol is able to accrue. AMMs make revenues through fees taken with every trade.
For TerraSwap, there is a .3% fee on all trades, and the entire fee goes to liquidity providers (LPs). For Astroport, fees depend on the pool type. For stable swaps the fees are 0.05% per transaction, of which half goes to the LP and half goes to the Astral assembly. For other swaps, the fee is .3%, of which .2% goes to LPs and .1% goes to the assembly.
Here are the fees generated for both pairs in UST, with a separation for the total Astroport revenue and only the rewards going to LPs:
For the bLUNA-LUNA pair, TerraSwap is taking in more total fees than Astroport, and the difference is much higher to those going to LPs. This difference is likely due to the stableswap model of Astroport, which takes much lower fees from traders overall. With a lower TVL, this means the rewards for bLUNA-LUNA LPs on TerraSwap are likely a lot higher. However, the LUNA-UST pool is seeing much higher rewards for Astroport, with almost double the revenue flowing to LPs even with a less overall percentage of fees going directly to them. We can expect similar breakdowns between the revenue generated by stableswaps versus other pairs.
While the revenue generated by stableswaps may be lower on Astorport, we will soon see the introduction of the Astral Assembly and ways to lock ASTRO tokens for boosts on LP rewards. Therefore, we can expect more chances for LPs to earn rewards on Astroport pools in the future. Given a similar tokenomic model to that of Curve, we can also expect that similar platforms to Convex finance to pop-up for higher liquidity rewards as well. For more information on ASTRO’s tokenomics, you can read their litepaper, and for more information on the Curve wars and their implications check out this article.
Based on the information explored above here are the key takeaways I am concluding from the data
- More users chose TerraSwap within a few weeks of Astroport’s launch, but they have since gained a lead in Daily Active Users of over 1000. Astroport leads with a larger gap in terms of total volume and transactions traded, and this is especially true during times of greater market volatility.
- Astroport attracted a a very large amount of relative TVL for participation in the lockdrop, but since then has seen slow declines as lockup periods are closing and the market continues to be weak. This is in contrast to TerraSwap, which has much less overall TVL but hasn’t seen large fluctuations. The protocol hopes to see this overall direction change course.
- For bLUNA-LUNA (and presumably all stableswaps) the revenues generated are much higher for TerraSwap, especially those given out to LPs. For LUNA-UST (and presumably all non-stable asset pairs) the revenues generated are significantly higher on on Astroport. Therefore, providing liquidity may not be as lucrative on Astroport for stableswaps, but once ASTRO boosts are introduced, we are likely to see average rewards much higher for those who participate.
Astroport is showing some potential in its first month after launch, even in the face of uneasy market conditions. I’m excited to see how things progress with the addition of new assets, including those from across the Cosmos and Wormhole ecosystems, and the introduction of the Astral Assembly for increased value capture for the ASTRO token and rewards for liquidity providers.
Thank you to Flipside Crypto for the data, and here is the dashboard with charts updated every twelve hours and the SQL scripts provided:
If you enjoyed the content, consider following my Twitter @WestieCapital, and if you have any questions my DM’s are always open. Cheers.