Addition: We are now aiming to release the bribing market within a few weeks of launch, allowing projects to allocate points or tokens to influence the voting power that Equinox directs.
Introduction:
This proposal outlines a strategic plan for Neutron DAO to allocate a portion of the xASTRO from its treasury to provide liquidity in the Eclipse Equinox LP vault.
Equinox is designed to strengthen both Astroport and the Neutron ecosystem by locking up significant amounts of the ASTRO token supply. This strategy will create more opportunities for users to engage with ASTRO, while also making voting power more efficient. By leveraging a portion of this voting power, Equinox can drive ecosystem growth by supporting projects that are launching their tokens on Astroport and Neutron.
By allocating xASTRO to the LP vault, this proposal aims to bolster Equinox’s voting influence, improve liquidity pegs, and enhance confidence in the model. Additionally, it will increase voting power, helping to attract token launches and the listing of new tokens within the Neutron ecosystem.
Supporting Equinox will provide both Neutron and Astroport DEX with a stronger launchpad and growth engine. This will attract more protocols to launch on Neutron and Astroport, increase volume and liquidity, and ultimately drive the ecosystem’s expansion.
Context & Background Information:
Reminiscent to Astroports epic past, the “Astro Wars” saw multiple protocols fiercely competing for control over ASTRO emissions, with some protocols emerging solely to fight for dominance in these liquidity wars. However, the landscape has evolved, and now Astro Wars will be fought across a multichain arena, where not only projects but entire chains are competing to accumulate control over ASTRO emissions.
Eclipse Fi identified a unique opportunity—not only to create a moat around new token launches but also to leverage this voting power to drive ecosystem and Astroport growth, which in turn supports Eclipse’s expansion.
This vision led to the creation of Equinox, the first and only governance aggregator for Astroport DEX. Equinox is designed to aggregate and concentrate vxASTRO voting power, making it more efficient, accessible, and affordable. This voting power controls ASTRO emissions during two-week epochs, and gaining access to these emissions is highly attractive for projects looking to boost their liquidity pools and for users who can rent out their voting power in exchange for token bribes.
When integrated with Eclipse Fi’s launch hub, Equinox has the potential to become a powerful catalyst for growth on both Astroport and Neutron. By controlling and consolidating this voting power, Eclipse Fi can use it to offer liquidity to projects and attract higher-quality projects to launch through its platform.
This strategy also enables Neutron ecosystem projects to gain access to liquidity during their launches, listing more liquid and high-quality token pools on Astroport and Neutron. As a result, more volume and trading activity will be drawn to the network, leading to higher fees and making this liquidity even more attractive. This dynamic creates a reinforcing growth cycle, or “flywheel,” further solidifying the model.
By aligning all these elements, we believe that Astroport, Neutron, and Eclipse can collaborate to make Astroport on Neutron the premier venue for high-quality interchain token launches and protocols seeking liquidity. Equinox isn’t just a standalone protocol but a foundational layer that can be built upon to drive long-term growth.
Proposal:
This proposal outlines a plan for Neutron DAO to utilise 8 million xASTRO tokens from its treasury to support liquidity on Equinox. This liquidity provision will act as an additional buffer for the eclipASTRO peg, increasing confidence in the stability of the system. In turn, it will enhance the voting power controlled by Equinox, making it more effective in driving the flywheel for ecosystem growth.
Half of these xASTRO tokens will be converted into eclipASTRO and paired with the remaining xASTRO to create a LP positioning on Astroport. The resulting LP tokens will be deposited into the Equinox LP vault, where they will generate rewards, including trading fees, ASTRO incentives directed to the pool, and additional ECLIP/bECLIP incentives.
Once the security and participation of the Equinox is further validated and stabilised this proposal signals that a further proposal will be submitted looking to further increase the supplied amount of xASTRO.
Terms:
1. Allocation of ASTRO Tokens:
On 10-11-2024 at 23:00 UTC, when the live Equinox vaults launch, Neutron DAO will allocate 8 million xASTRO tokens from its treasury. These tokens will be converted and staked into the Eclipse Equinox LP vault, which will be managed by Neutron’s LiquidSig. Half of the allocated xASTRO will be converted into eclipASTRO and paired with the remaining xASTRO to create an LP position. The resulting LP tokens will be staked in the Equinox LP vault to support the goals outlined in the proposal.
2. Control of Assets and Rewards:
The assets will remain under the control of Neutron DAO, as they will be deployed through the LiquidSig. Neutron DAO will earn trading fees, ASTRO incentives, and ECLIP/bECLIP incentives by staking the LP tokens. These ECLIP incentives can be staked and be used to vote with Equinox’s voting power or delegated to the Delegation Vault to automatically earn bribe rewards.
3. Risks and Considerations:
It is crucial for participants to understand the Equinox model, including its risks and considerations, many of which have mitigation strategies that are outlined in the proposal. Similar to the Convex model, converting xASTRO into eclipASTRO is irreversible, but liquidity will be available through the stableswap peg pool. The system is designed to prioritise liquidity and has attractive opportunities for arbitrage in the case of a depeg. Due to the nature of the LP position, only half of Neutron DAO’s xASTRO in this proposal will be converted to eclipASTRO, leading to only partial exposure to the eclipASTRO wrapping.
There is a potential risk of impermanent loss in the LP, particularly in the event of a depeg. However, the DAO will benefit from enhanced rewards compared to regular xASTRO staking, receiving both ASTRO and ECLIP/bECLIP incentives while retaining governance power through staked ECLIP rewards. Forum discussions can explore further strategies for how the Neutron DAO LiquidSig should manage and maintain the LP position.
How Equinox Works and Benefits Stakeholders
Equinox permanently locks ASTRO tokens within the protocol and stakes the underlying assets as vxASTRO, redirecting this voting power to be controlled by staked ECLIP tokens—the utility token of the Eclipse Fi ecosystem.
To facilitate the locking of ASTRO, Equinox provides vaults that allow ASTRO stakers to maximise their rewards. ASTRO stakers can wrap their tokens into eclipASTRO, using a mechanism similar to the well-known cvxCRV wrapper. As with cvxCRV, the wrapping of ASTRO into eclipASTRO is irreversible, but a stableswap peg pool is available to provide liquidity, enabling users to enter and exit eclipASTRO seamlessly.
Stakers of ASTRO have two vault options for their eclipASTRO:
1. Single-sided Vault: This vault accepts eclipASTRO deposits and rewards users with boosted ASTRO yield, distributed in the form of eclipASTRO, as well as a share of ECLIP/bECLIP incentives, which are distributed over 4.5 years.
2. LP Vault: In this option, users can pair eclipASTRO with an equal amount of xASTRO to form an LP, which can then be deposited into the LP vault. The LP vault offers multiple rewards: trading fees from the LP position, staking rewards for the xASTRO, a portion of the ECLIP/bECLIP incentives (also distributed over 4.5 years), and 10% of Equinox’s accumulated voting power will vote to direct ASTRO incentives to the LP vault every epoch.
Benefits to stakeholders:
Equinox Mechanism and Whitepaper
Video on Equinox Mechanism and peg model
ECLIP Token and Rewards Structure on Equinox
The ECLIP and bECLIP emissions are to be sourced from the community incentives and ecosystem growth pool, will be distributed as rewards through a lockdrop event and over a 4.5-year period to bootstrap liquidity for Equinox. This reward structure is designed to eventually become self-sustaining, with fees generated from the entire Eclipse ecosystem used to incentivise the vaults and deepen the protocol-owned LP in the peg pool.
Equinox will allocate up to 28% of its total token supply for ongoing incentives and liquidity bootstrapping, broken down as follows:
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7% for the lockdrop, distributed upfront post lockdrop event.
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Up to 21% distributed over 4.5 years with a linear decay model.
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Token Emissions: ECLIP and bECLIP split in 40% ECLIP and 60% bECLIP
Equinox’s emissions will be split between these two tokens:
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ECLIP: A liquid, tradable token factory token, with liquidity on exchanges like Astroport, Camelot, and Gate.
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bECLIP: A bonded, staked derivative of ECLIP, representing a maximally staked version of the token. While bECLIP cannot be directly traded and transferred, it can be distributed as incentives and controls access to the voting power accumulated by Equinox.
Pathways to Liquidity for bECLIP:
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Unbonding: Converts bECLIP into a 12-month staked position and begins the countdown timer.
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Forced Unlock: Allows for early unlocking into liquid ECLIP at the cost of a slashing fee.
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Future Liquidity Option: The forthcoming release of the “Cosmic Splitter” will provide a more straightforward liquidity pathway for bECLIP holders.
Fee Utilisation
Most fees accrued by Equinox will be used to buy back and redistribute ECLIP/bECLIP tokens by default. However, through governance, alternative strategies can be explored, such as:
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50/50 Buyback and Swap: Buyback half of ECLIP tokens, swap the other half, and provide liquidity for a ECLIP-NTRN pool.
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Buyback and Burn: A portion of ECLIP tokens can be permanently removed from circulation.
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Instant Redemption Pool: Allocating tokens to a pool that allows instant redemptions from eclipASTRO.
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Peg Pool Rewards: Additional rewards can be directed to the peg pool, either by distributing ECLIP or maintaining ASTRO as a reserve.
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eclipASTRO Pool Rebalancing: Protocol-owned liquidity (POL) can be used to help re-peg in the eclipASTRO pool or deeping POL liquidity.
ECLIP Token Utilities
The ECLIP token will serve as the governance token for the Equinox platform and will also hold multiple utilities across the broader Eclipse ecosystem of products. These utilities are detailed in the docs and in the link attached to the top of the page.
Read this for more details on the ECLIP token
The road ahead
Unlike Convex, Equinox will not function as a standalone protocol but rather as a foundational layer that enhances DeFi products built on top of it. The launchpad will be the first product to leverage the benefits of Equinox, with future products planned, such as vaults that could utilise Equinox’s voting power when involving Astroport LPs. Additionally, the bribing market and the pre-commitment marketplace are in development, where users will be able to trade future voting power in exchange for pre-launch airdrops. Eclipse will continue to innovate and find new ways to enhance its utility.
Following the launch of live vaults, the Cosmic Foundry will be introduced. This feature will allow users to split their bECLIP into multiple utility tokens represented by derivatives, providing more affordable and liquid access to voting power, further increasing Equinox’s appeal.
Rationale
The approval of this proposal will provide a valuable buffer to the Eclipse Equinox model, particularly in its early stages. While the model is designed to operate independently of this additional LP support, the extra liquidity will enhance stability and inspire greater confidence among large ASTRO holders when converting their ASTRO to eclipASTRO, ensuring a stronger peg.
A more stable and robust Equinox will serve as a foundational layer, allowing the development of a strong launchpad moat that will attract higher-quality listings to the network. At the same time, it will provide vital liquidity to support ecosystem projects, further reinforcing the value proposition of Eclipse Fi and Equinox.
In turn, this support will amplify the growth and success of both Astroport and the broader network, creating a flywheel effect that strengthens the entire ecosystem.
The following key outcomes are anticipated:
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Voting Power Boost: Strengthening Equinox’s voting influence will allow Eclipse Fi to have a greater say in redirecting ASTRO emissions, enabling it to attract and support high-quality projects more effectively.
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Stabilised Robust Peg Liquidity: The increased liquidity will reinforce the stability of the eclipASTRO-xASTRO peg, providing a more reliable foundation for the model.
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Improved Participation Confidence: With deeper liquidity and a stable peg, participants will feel more secure in joining the platform, encouraging further involvement from both liquidity providers and users.
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Stronger Support for New Projects: A more influential and liquid Equinox will have an enhanced ability to attract and nurture new projects, driving innovation and growth within the Neutron and Astroport ecosystems.
Metrics & Proof of Viability:
Eclipse Fi Traction and Focus:
- 9,500+ KYCed wallets across zkMe and Synaps
- 20,000+ whitelisters for past launches
- Over $3.5 million in token sales across private, KOL, and public rounds for far
- Has heavily supported projects in marketing, raising, strategy, and helped secure listings on Tier 1 and Tier 2 CEXs
- Native $ECLIP token listed on Gate
- The Equinox product has been open sourced and fully audited, and has received a grant from the NGP.
Eclipse Fi is supporting multichain launches through Neutron as a homebase, and is focusing heavily on growing the Neutron ecosystem, supporting builders, new launches, and looking to position itself as a social and onboarding layer for the ecosystem, similar to Jupiter for Solana, but on Neutron.
This includes initiatives like education, quests, NFTs, and community-building activities, while also bringing in VCs, market makers, and liquidity providers. The creation of marketing growth engines that can bring more users from outside of the ecosystem is also going to be a key focus going forward.
Equinox is a foundational piece of the ecosystem of products, with upcoming product plans for vaults and yield aggregation that can build on top. It serves as the backbone to help support projects and drive liquidity .
Goals on ASTRO locking and maths (target for LP depth)
The target for the ASTRO lockdrop in our modelling is approximately 40 million ASTRO, representing around 15% of the current staked supply. This is just a target and the reality could be different.Depending on participation and potential Neutron deposit in LP vault, this could reach 60 million.
The more ASTRO locked the more powerful the model, and so ideally these numbers need to sit above 20 million ASTRO in the vaults to be overly effective, but the model will still be able to operate on less.
We modelled a conservative 50-50 split between the single-sided vault and LP vault to heavily focus on peg stability. A Neutron deposit from this prop could allow for a slight skew toward the single-sided vault, increasing the voting power while keeping a buffer on the peg.
For detailed calculations, we have created the following calculators:
This breakdown explains the calculator we developed to measure the voting power efficiency between ASTRO and ECLIP tokens. The first image shows the preset targets used in the calculations, and the second image displays the outcomes.
Important Note: If the ECLIP token’s price decreases against ASTRO due to emissions or external factors, affordability increases even further. This becomes especially significant when bribes are involved—the more ASTRO is locked, the stronger this effect on voting power efficiency through staked ECLIP.
Using similar modelling, targets, and number assumptions, we analysed the APRs for the lockdrop, focusing on both the initial incentives during the lockdrop and the ongoing rewards afterward. The flexible deposit options were used as a reference to guide these calculations.
The model demonstrated strong APRs and figures for 40 million ASTRO, using conservative splits and assumptions. While the lockdrop rewards are lower, these are upfront rewards, so it’s more appropriate to highlight the initial ROI instead of APR. The ongoing APR for the ongoing rewards throughout the year will fluctuate over time.
Lastly, the peg pool is modelled using a stableswap pool with a very conservative approach, incorporating a custom Amp range. The target ratio for single-sided eclipASTRO to LP depth is set at 60:40. We plan to adjust the Amp ranges in the future to better accommodate changes in the assets within the pool.
Liquidity Wars: Key Numbers and Stats
Governance aggregators tend to lock between 10-50% of the ve protocol they are built on top of… However, models vary slightly, so these figures aren’t always directly comparable. For instance, Convex has distributed over $240 million in fees to its users so far. Below is a breakdown of the ongoing liquidity wars across the space, showcasing the amount locked and the percentage of supply controlled by various aggregators:
While our model differs slightly—we’re more than just a governance aggregator—we’ve taken a much more conservative approach to modelling the peg. Our flexibility allows us to prioritise peg health over purely maximising voting power value.
Here’s a link to the DeFi Wars dashboard for more insights:
DeFi Wars Dashboard
GTM Rollout
The primary launch focus of Equinox is securing the necessary voting power and launching while maintaining a strong peg. In the early stages, the launch window offers significant advantages, particularly in the absence of the Astroport Bribing market, less available options will exist for ASTRO stakers. These opportunities allow us to release an internal bribing market and to redirect more incentives toward the LP vault, further stabilising the peg during the launch phases.
The introduction of the internal bribing market will drive early adoption and increase the utility of ECLIP/bECLIP token rewards, which are distributed as additional incentives to the vaults alongside boosted ASTRO. The ultimate goal is for emissions to be driven primarily by system-generated revenue, similar to the model used by Convex.
How We See Ecosystem Launches Shaping Up
Currently, there is a lull in demand for liquidity and token launches within the Neutron/Cosmos ecosystem, but we anticipate this will pick up in the coming months. Our focus will expand beyond Neutron projects to target larger initiatives across the interchain that are seeking liquidity solutions and that might be suitable for listings on Astroport on Neutron.
In the early stages, our business development efforts will concentrate on collaborating with local projects that either have tokens or are preparing for token launches. This includes point programs and supporting various pool types they may want to incentivise (e.g., Amulet’s amATOM-ATOM pool).
We will continue to nurture and support these projects, building a strong pipeline of builders so that when demand for liquidity increases, the necessary infrastructure will be in place and ready to go.
Potential Model Adjustments
Peg stability is crucial, and while we’ve thoroughly researched and modelled it, the true test will come with real market implementation. Given this, we anticipate constant monitoring, interaction, and adaptation to ensure we strike the right balance.
This may involve making minor adjustments, such as redirecting fees to support Protocol-Owned Liquidity (POL) or peg liquidity, or rebalancing the system. More advanced measures could also be implemented, including stability pools or partial redemptions in the case of prolonged depegs.
Potential risks
Non exhaustive list of potential risks.
DepeggingRisks and Confidence:
Depegging is a possible risk for Equinox, but it is also one that can be effectively managed. The peg is primarily a matter of confidence, and mechanisms are in place to maintain or rebalance it when deviations occur.
Unlike liquid staking derivative (LSD) peg pools, well-known in Cosmos for their arbitrage opportunities, the Equinox eclipASTRO is permalocked, meaning traditional LSD unbonding arbitrage strategies don’t apply. However, Equinox has an advantage over LSDs by offering boosted yield over the base staking asset, which can increase confidence in maintaining the peg, and provide enhanced arbitrage opportunities in the case of any peg deviation…
Measures to Mitigate Depegging:
1. Stableswap and Set Ratios:
Equinox will utilise a custom amplified stableswap pool designed to keep the peg close while allowing some deviation. The emissions plan is modelled to ensure a conservative liquidity split between the single-sided and LP vaults, prioritising liquidity depth and stability over voting power maximisation.
2. Time-Locked Options:
Time-locked positions for both the lockdrop and live vaults are intended to spread out the redemption of eclipASTRO over time, reducing the pressure on the peg pool, particularly in the early stages of the vaults’ launch.
3. LP Provision Proposal:
This proposal aims to further solidify the LP vault liquidity, mitigating depegging risk and boosting confidence in the system’s stability.
4. Advantages of Early Vault Launch Stability:
During the early stages of vault launch, prior to the launch of the bribe market, Eclipse is likely to wield greater influence over voting power. With reduced competition for voting power in the absence of bribes, Eclipse will be in a stronger position to direct more liquidity incentives towards the peg pool. This will make liquidity provision (LPing) more attractive, helping to stabilise any redemptions from the lockdrop and supporting overall system stability during the initial phases.
5. Rebalancing Mechanism:
In the event of a depeg, the system is designed to increase the attractiveness of re-entering the vault. As users unstake eclipASTRO from the single-sided vault, the APRs for both eclipASTRO and ECLIP/bECLIP rise due to fewer vault participants, while the same amount of incentives continue to be distributed. This helps to draw demand back into the system.
Additionally, any peg deviation would make eclipASTRO cheaper for arbitrage, offering a dual advantage of benefiting from both price discrepancies and higher yields in the vault. Eclipse Fi governance could also vote to shift single-sided rewards from eclipASTRO to ASTRO or use loop the ASTRO through the pool to repeg and to further support rebalancing efforts.
6. Future Measures:
Plans are underway to introduce a stability pool, funded by a portion of ASTRO revenue. This pool will allow users to swap back in exchange for a slashing fee, creating another layer of protection against depegging. There are other possible measures currently being measured and researched aimed at giving users greater confidence in the peg and the stability of the model.
7. Black Swan Event Protection:
Since each eclipASTRO is fully backed by underlying ASTRO and the system operates without leverage, governance could have the option to intervene in extreme scenarios, such as black swan events or severe peg disruptions, to protect the system. However, this would be considered a last resort, as such actions could undermine the core principles and long-term effectiveness of the model.
Low Participation in Bootstrapping:
Another risk is low participation in the lockdrop or vaults, which could occur if there’s insufficient confidence in the peg or the future value of ECLIP tokens. This would result in lower locked ASTRO, reducing the voting power controlled by ECLIP.
To mitigate this:
- Education and Clarity: Ensuring users understand the peg mechanism, ECLIP token utility, and benefits is key to encouraging participation.
- Incentives: The size of incentives should be large enough to attract minimum needed participation.
- Post-Lockdrop Appeal: As the primary method for maximizing ASTRO yields, Equinox vaults are expected to continue attracting significant participation even after the lockdrop. Furthermore, with the upcoming launch of a bribe marketplace through Equinox, ECLIP will become the gateway to controlling voting power and earning bribes. This will enhance Equinox’s ability to redirect incentives toward the peg pool, making participation even more appealing for users.
Perceived Value of ECLIP Tokens:
If users perceive low demand for ECLIP tokens, it could negatively impact their risk-reward assessment and discourage participation in the vaults. However, the strong utility of ECLIP, especially in terms of controlling voting power and earning bribes, should help sustain demand, keeping ECLIP closely linked to ASTRO’s value. Additionally, other products within the Eclipse ecosystem use ECLIP as a utility token, further boosting its demand. This includes token launches through the Eclipse launchpad, which increase ECLIP’s utility when the launches are of high quality and actively engage the community.
Smart Contract Risks:
As with any DeFi project, there are inherent smart contract risks. To mitigate these:
- Audits: Regular audits will be conducted to address risks and prevent exploits. Current contracts are audited by Resonance with the lockdrop audited by Oak. Eclipse Fi will also be posting a bug bounty on immunefi.
Within 1-2 months post launch, Eclipse will plan to apply for an Neutron audit grant through OAK to perform further code audits. - Open Source Code: The codebase will be open-sourced before launch, promoting transparency and community oversight.
LP impermanent loss risks:
Impermanent loss is always a potential risk when providing liquidity in a stableswap LP, and it’s relevant in the event of a downside depeg of eclipASTRO. This would occur if the pool becomes imbalanced with an excess of eclipASTRO, resulting in a withdrawal that provides more eclipASTRO and less xASTRO than the original deposit ratio.
While this risk is inherent in liquidity provisioning, and enhanced by the irreversibility of eclipASTRO minting, the peg maintenance measures outlined below are designed to minimise and counteract this risk of impermanent loss in the LP. These mechanisms aim to maintain balance within the pool and reduce the impact of a depeg event on liquidity providers.
Implementation Details:
1. Forum Discussion and Governance Period: This proposal will undergo a Forum discussion period, followed by a formal governance vote lasting 14 days. If successful, the plan is to execute the governance proposal on Sunday, 10-11-2024, at 23:01 UTC, shortly after the launch of the Equinox vaults.
The following steps outline the technical processes, security measures, and governance standards in place to ensure transparency and full alignment with Neutron DAO’s operational practices. This process will maximise community engagement and ensure a smooth transition into the execution phase, adhering to the DAO’s governance framework.
2. LiquidSig Setup and Management: LiquidSig, Neutron DAO’s liquidity and incentive management committee, will oversee the allocation of 8 million xASTRO tokens for Equinox. LiquidSig operates with a Council for decision-making and an Ops team for execution, ensuring decentralised oversight. Responsibilities include converting 50% of the xASTRO into eclipASTRO, pairing it with the remaining xASTRO, and staking the resulting LP tokens in the Equinox vault.
LiquidSig will require majority approval for any transactions, ensuring that no individual signer can act unilaterally. All actions, including token conversions and LP staking, will be fully transparent and accessible for community review via Neutron’s blockchain explorer.
3. Contract Execution and Token Handling: The specific contract addresses for converting ASTRO to eclipASTRO and for creating the LP tokens will be detailed in the live voting proposal. Upon approval of the proposal, the xASTRO tokens will be transferred to LiquidSig, and the conversion process will begin. Half of the xASTRO tokens will be converted into eclipASTRO, paired with the remaining xASTRO, and staked in the Equinox LP vault.
4. Monitoring and Adjustments: LiquidSig will monitor the performance of the staked LP tokens in the Equinox LP vault, assessing metrics like TVL, APR, and voting power from the ECLIP/bECLIP incentives. Any adjustments to the liquidity, such as rebalancing, will be handled through governance-approved decisions to maintain transparency and ensure long-term stability.
Key links:
Intro to Equinox
Lockdrop Details Blog
Equinox videos
Calculators
Platform Link Lockdrop
Github
User Docs