[EXECUTED] Revenue Generating POL Deployment - a flywheel for Terra’s long-term success

[0xPhilipp]

[Update 11.12.] The proposal has been successfully executed and intended target deployments of the initial proposal have been reached. Additionally to the deployed liquidity there is still approximately 1.1 M ampLUNA in the Multi-Sig for deployment, which will be converted the coming days.

[Update 25.11.] - The proposal will be posted on Chain by asking for 30M LUNA, which will lead to a liquiditiy of around ~2.2 M$ with the current LUNA price of 0.073

3-out-of-5 Multi-Sig: terra1kzkrm2a8qquer9dgztg4a3fvhh8d7fudsd7ualae843wsv9plhksv8ea3g

Philipp: terra1vm5azhvaxeanc7auxh02y8jmxrk8tj93f6aywp
MB: terra1qu0ych3xv4455m8p3h8877yeehn2s70newxd7p
Andre: terra1np5em0379k8hc90chdzfsfgjgtm7xk8d0td77t
David: terra1j00tmfa8el568llp3y96dquc9j2fcczmccnsn0
Vini: terra18ruqkccl5tp493uhvra0u6jylrzq8t8dv5qs4c

---

Deploying ~28.5 M LUNA (≈15% CP) into liquidity transforms idle treasury assets into:

• Revenue-generating POL

• Stronger validator alignment

• Deeper liquidity for Terra DeFi

• Compounding or deflationary tokenomics

This proposal is more than liquidity — it is a flywheel for Terra’s long-term strength.

0. Abstract

Phoenix Foundation propose to allocate ~28.5 M LUNA (~$4,000,000 at $0.14/LUNA, ≈15% of the Community Pool) into protocol-owned liquidity (POL) on Astroport:

• $2M into USDC–ampLUNA

• $2M into LUNA–ampLUNA

This move delivers deeper ampLUNA liquidity, stronger validator incentives, and higher fee capture - from arbitrage across Terra’s triangular markets. Only 25% of the allocation is swapped into USDC, minimizing sell pressure while ensuring deep USDC pairs.

Key benefits:

• Arbitrage-driven fees captured directly by the community.

• Sustainable staking economics: moderating Terra’s high native APR.

• Validator alignment: amp governance requires lockups, boosting decentralization.

• Liquidity alliance: strengthens the Terra Liquidity Alliance (TLA) mission of making LUNA the central liquidity asset across Cosmos.

• Dynamic flywheel: fees cycle back into LUNA — reinvested when >$1, burned when ≤$1.

---

1. Preamble

The Community Pool (≈189 M LUNA, including 4.8 M recovered via IBC exploit) is Terra’s most strategic treasury. This proposal deploys ~28.5 M LUNA (~15%) into ampLUNA-focused pools to compound liquidity, generate fees, and reduce reliance on mercenary incentives.

By targeting USDC–ampLUNA and LUNA–ampLUNA, the community captures:

• Direct LP fees

• Arbitrage flows across the LUNA–USDC–ampLUNA triangle

• Long-term value via reinvestment/burn cycle

---

2. Motivation — Why ampLUNA?

• Arbitrage Volume & Fee Capture
  Deeper liquidity across USDC–ampLUNA and LUNA–ampLUNA increases triangular arbitrage flows, boosting fee revenue for community-owned liquidity.

• Minimal Sell Pressure
  Only ¼ of allocation swapped to USDC, far lower than a pure LUNA–USDC plan (½).

• Strengthened Liquid Staking
  ampLUNA gains liquidity depth and peg stability, cementing its role as Terra’s liquid staking cornerstone.

• APR Moderation for Sustainability
  As ampLUNA adoption grows, the 27% staking APR moderates to healthier, more sustainable levels.

• Validator Incentives & Decentralization
  Validators locking LUNA into amp governance gain more weight, encouraging delegation flow and broadening decentralization. This mechanism will be opened up for more validators (>10% commission) in the short future.

• Cross-Chain Alignment
  The strategy to deploy USDC-LST pairs was proven on Neutron.

• Amplifying the TLA Vision
  Directly strengthens the Terra Liquidity Alliance by unifying LUNA liquidity and positioning Terra as a premier DeFi hub.

---

3. Specification

Allocation: 28.5 M LUNA (~$4M).

• Conversion: 25% (~7.125 M LUNA) → USDC via DCA/OTC.

• Deployment:

  • USDC–ampLUNA: $2M (≈14.25 M LUNA value)

  • LUNA–ampLUNA: $2M (≈14.25 M LUNA value)

• Custody: LP tokens secured in governance-controlled multi-sig. (TBD before on-chain voting)

Fee Policy:

• Withdraw accrued LP fees → convert to LUNA.

• If LUNA > $1 → reinvest, compounding POL.

• If LUNA ≤ $1 → burn, reducing supply.

---

4. Expected Outcomes

• Higher Fee Revenue: Community captures arbitrage-driven fees.

• Reduced Sell Pressure: Only 25% swapped into USDC.

• Staking APR Stability: Sustainable long-term yield moderation.

• Validator Alignment: Incentivized lockups & decentralized governance.

• Deeper ampLUNA Liquidity: Stronger peg, broader DeFi integrations.

• TLA Reinforcement: Terra becomes more attractive for external capital.

• Positive Feedback Loop: Compounding when >$1, deflationary burn when ≤$1.

---

5. Risks & Mitigations

• Market Risk: Fee compounding and burn/reinvest mechanics offset downside.

• Protocol Risk: Relies on ampLUNA contracts. Mitigation: ampLUNA is tested and validator-aligned.

• Custody: Protected by governance-controlled multi-sig.

• Returning Assets to Community Pool: This liquidity deployment will run for a period of 24 months, concluding on <date:2027). Liquidity will be withdrawn, converted to LUNA, and returned to Community Pool UNLESS an extension proposal passes governance to continue with this liquidity deployment.

---

6. Implementation Plan

1. Transfer 28.5 M LUNA → Governance multi-sig.

2. Convert ~7.125 M LUNA → USDC via DCA/OTC.

3. Deploy $2M each into USDC–ampLUNA & LUNA–ampLUNA pools.

4. Activate automation: periodic fee withdrawal → convert to LUNA → reinvest (> $1) or burn (≤ $1).

5. Launch dashboard for transparent performance tracking.

---

7. Illustrative Economics (Updated)

Assume $10M monthly trading volume per pool (USDC–ampLUNA + LUNA–ampLUNA).

• Combined monthly volume: $20M

• Swap fees (0.3%): $60,000

• LP share (⅔): $40,000 in fees captured per month

• At LUNA = $0.14:

  • $40,000 ÷ $0.14 ≈ 285,000 LUNA per month

If volume scales to $50M monthly per pool ($100M total):

• Swap fees (0.3%): $300,000

• LP share (⅔): $200,000 in fees captured per month

• At LUNA = $0.14:

  • $200,000 ÷ $0.14 ≈ 1,428,000 LUNA per month

This turns community-owned liquidity into a self-sustaining revenue engine, compounding when LUNA > $1 and burning when ≤ $1.

---

8. Conclusion

Deploying ~28.5 M LUNA (≈15% CP) into liquidity transforms idle treasury assets into:

• Revenue-generating POL

• Stronger validator alignment

• Deeper liquidity for Terra DeFi

• Compounding or deflationary tokenomics

This proposal is more than liquidity — it is a flywheel for Terra’s long-term strength.

---

9. Appendix SOLID

Deploy part of the community-owned liquidity into Solid to create tranches of up to 100,000 SOLID, enabling OTC USDC supply via Ignite.

Benefits:

• Reduces open-market LUNA sales.

• Increases visibility and usage of Solid and Ignite.

• Improves treasury efficiency.

• Enables easier market access to SOLID at a fixed price of 1 USDC.

Execution plan:

• Once Solid lists the LUNA-ampLUNA LP (and LUNA-ampLUNA ampLP) as a collateral asset, up to $500,000 worth of LP will be deposited into Solid to mint up to 20% LTV in $SOLID.

• Example parameters: deposit $500,000 of LUNA-ampLUNA LP (representing roughly 1.8 M LUNA at a 20% LTV and LUNA ≈ $0.14) to mint 100,000 SOLID.

• The minted SOLID will then be used to establish SOLID → USDC OTC markets via Ignite from Boost DAO.

---

10. Appendix ERIS

ERIS is committed to opening up Amp Governance to a broader set of validators and removing the existing commission-based participation barriers by adjusting the delegation formula.

Currently, only validators with commissions of up to 10% are eligible to participate. In addition, there is a sharp drop-off in delegations once a validator exceeds 25% of total stake, which has incentivized some validators to create sybils to circumvent this limitation.

Under the proposed change, the drop-off mechanism will be removed, and the delegation weight will instead scale dynamically with validator commission. For example, a validator with a 10% commission would require twice the validator power (VP) compared to one with a 5% commission to receive the same delegation, while a 20% commission validator would need twice as much VP as a 10% validator.

At present, Amp Governance is still managed by an old multisig. This governance extension depends on coordinating with the current signers to upgrade the Amp Governance contract.

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11. Appendix Astroport

Astroport commits to allocating 50% of its team’s revenue share from Terra pools as Astro Wars bribes (voting incentives). These incentives will be distributed proportionally to the trading fees generated by each pool, ensuring rewards scale with real liquidity and protocol activity while reinforcing alignment between Astroport and participating LPs.

Illustratively, if a Terra pool generates $100 in trading fees, $66 goes to LPs and $33 to Astroport. Of this, the Team share (~$16.6) would allocate $8 (≈50%) as Astro Wars bribes for that same pool, directly linking protocol earnings to sustained on-chain liquidity incentives.

A joint liquidity deployment between LUNA and ASTRO is currently being evaluated and coordinated to strengthen the on-chain liquidity foundation across both ecosystems. The initiative aims to align incentives between the Terra and Astroport communities, ensuring that strategic liquidity is deployed where it delivers the greatest impact — deepening key trading pairs, improving capital efficiency, and supporting the broader growth of the Liquidity Alliance (LA).

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Voting Options

• YES – Approve the $4M POL deployment into liquidity pools with fee burn/compound cycle.

• NO – Reject and keep CP unchanged.

• NO WITH VETO – Reject and penalize malicious intent.

• ABSTAIN – No opinion.

[Unhappy]

Only thing I’m not in favour of is more Luna sell pressure..

[Unhappy]

Bro let’s make 20 percent liquidity alliance take rate to go the pool voters. Let’s light this thing and turn it into a deflationary vacuum for Luna

[cryptobull]

I support this above proposal.
It would be much better if a shared $1M LP agreement between Astroport and phoenix foundation is materialize.
Each party own there half.
They provide Astro and we provide LUNA from CP.

Increase this proposal from $4M to $5M.

we need these pairs also

ampluna-Astro

LUNA-ASTRO

[0xPhilipp]

Totally agree with you on this one. The sale will happen via community OTC, trying to execute with minimal market impact.

[Unhappy]

Really only negative I see considering how suppressed Luna price is.

[Hors]

Great proposal, i only wish we get above 10 cents per luna for na OTC trade though. As a luna staker via LSD i would also like to lower luna inflation while under 1$ to minimize the amount of tokens coming to the market though. Right now staking yield is way too high compared to other BCs. Luna was always known for its Burn / deflationary mechanisms which were its greatest strenghts. So great job for proposing the first in line of many such possible cases.

[ConcernedLUNAtic]

Truth be told, this is really disappointing.

The lack of inclusion of other projects’ LSTs and the constant feeding of inflation into ampLUNA reeks of double-dipping, and it’s become boring.

It was a mistake to place our trust in you.

[Solid]

Running Solid validator and a team member in Solid/Capa I strongly support this proposal to deploy ~28.5M LUNA into Astroport’s USDC–ampLUNA and LUNA–ampLUNA pools. It boosts liquidity, aligns validators, and drives fee revenue with minimal sell pressure. The Solid integration, minting up to 100,000 SOLID for OTC USDC, is a smart move to enhance $SOLID’s utility and Terra’s DeFi ecosystem.

//Daniel

[nirmal]

This looks like a strong step toward building a self-sustaining economic flywheel for Terra.
Deploying idle CP assets into productive liquidity while keeping sell pressure low and maintaining a reinvest/burn mechanic is smart treasury design.
Would love to see clear tracking dashboards and monthly performance updates once this goes live transparency will make this even stronger.

[Rebel_Defi]

Increasing TVL within Terra ecosystem improves metrics. Trading fees returning value to the community pool is value accretive. ampLUNA validator set have to fight for delegations by locking LUNA therefore validators who show the most support towards the Terra ecosystem are rewarded by extra delegation share.

Astroport returning a share of the fees generated as votes for Terra pools in the AstroWars is a nice integration. Great to see minting of SOLID as part of this proposal as well. Multiple integrations could be the spark this Phoenix needs to rise again!

Before voting, would like to know who the multisig signers are. We’ve all ‘trusted the bros’ one too many times in crypto.

[David]

I support piloting deployment of Communitty Pool into value driving assets for the following reasons:

• Luna accumulating in the CP is declining in value with ongoing inflation, this is a waste of inflation and not protecting Community equity
• Luna sitting in the CP is not doing anything more than locking up some of the supply but for no real practical value
• Best use of Luna inflation is in expanding the economic backing of Luna. lots of ways to do this I guess but incentivising development as well as the accumulation of inflation resisting assets are 2 major ways that should be happening

I specifically support this proposal for at least the following reasons:

• it’s structured as a trial project with a finite time frame. This allows for it to sunset if it’s not productive

• it’s built around the most prominent assets in Terra - Luna, USDC and ampLuna (arguably the premier LST).

• it makes yield for the CP which will be compounding. This resists inflation and builds asset backing behind Luna as it’s direct economic value in the blockchain.

• It incentivises partnership and engagement from 2 other protocols: Astroport (the main dex) and Solid (our decentralised stablecoin). We need active building from these protocols (and more in time). Thank you to Astroport team for being willing to contribute a portion of their fees to supporting the pools with Astrobribes

• It’s pitched at a sensible scale to have theoretical impact whilst leaving strength in the CP

  • The significant boost to liquidity is of a scale that makes it feasible for offchain whales to look at executing whale sized transactions through the onchain pools with lower fear of slippage and arbitrage traders will benefit from greater opportunity to exploit marginal differences between on and off chain pools.
  • Further, it will enhance the Terra Liquidity Alliance and, I am hoping, will create LPtoken assets that can be safely used as collateral assets (self repaying??) in future lending protocols on Terra

• While it’s not something I personally like doing, many people in crypto like to burn assets to control supply which makes burning a good PR tool. This proposal provides a sensible burning mechanism that I can live with because it balances burning a useful economic asset for PR with, my preference, using the useful economic asset to build assets for the CP. Using $1 as a pivot point between burning and investing makes for a nice theoretical floor for Luna price impacted by inflation. Constantly building asset backing for Luna when above that price, particularly with compounding, will continually grow the theoretical backing value of Luna.

If this trial is successful, I would like to see us move to expansion to other LPs - even before the trial ends if it’s obviously working. This should be a mix of assets eg Terra tokens (eg other LSTs, key projects) as well as important nonTerra assets such as BTC/Eth or even real world assets such as the emerging Gold based tokens that have recently been highlighted in community forums.

[dragon]

This proposal definitely has merit BUT we need additions and SAFEGUARDS like:

• Transparent on-chain dashboard / audit / monitoring of revenue, LP performance.

• Clear rules for burn vs reinvest thresholds that reduce discretionary control (so governance can’t easily override them).

• Caps on how much LP capital can be pulled at once (to avoid market shock).

• Phased deployment, with “stop-loss” or rollback options if performance is poor.

• Community oversight / multi-sig decentralization (not concentrated control).

• Conditions on when inflation cuts will happen, tied to revenue / fee thresholds.

• Conservative assumptions on volume and stress testing.

If these guardrails exist, then the UPSIDE is real…

can anyone confirm these?

Thank you

[0xwho]

It makes no sense to implement a burn mechanism if inflation is not abolished

[cryptobull]

When this proposal will move to Vote?

Why it is taking so much time??

[cryptobull]

Deploy minimum 50% community pool liquidity in Ampluna-LUNA pool.

Imagine once luna reaches at $1 the liquidity in system will be $90M+

Overall liquidity in system TVL would be greater than $150M+

DEX Daily volume will be above $30M+
Daily Buy and burn will be……………………….

[Heisemberg]

I’m on board with this approach. Terra clearly benefits when liquidity grows, incentives are aligned, and the ecosystem’s key players actively reinforce each other.

Validator competition based on genuine ecosystem support helps strengthen the network from the ground up, and the way Astroport channels fee generated influence back into Terra governance is a clever mechanism that pushes everything in the right direction.

Introducing SOLID and expanding cross protocol collaboration shows real momentum. It feels like the kind of coordinated effort that could kickstart a new chapter for Terra.

[0xPhilipp]

First burn calculation has been executed. Burn will happen shortly, as it requires some Multi-Sig signatures.

=== get_xcp_profit: Astroport Concentrated LP Fee Tracker ===

──────────────────────────────────────────
Pool: terra145dguwqp5n9r7dmlefyv4yuuua7uaysmj47qleydh67fud0p2y0q8tw7pw
From block : 18695634 (initial)
To block : 19836080
Querying FROM block state (18695634)…
xcp_profit_real @ 18695634 = 1.001048656644804526
Querying TO block state (19836080)…
xcp_profit_real @ 19836080 = 1.002849422400285884
Querying pool state and wallet LP balance at block 19836080…

╔══════════════════════════════════════════════════════════════╗
║ REPORT
║ terra145dguwqp5n9r7dmlefyv4yuuua7uaysmj47qleydh67fud0p2y0q8tw7pw
╠══════════════════════════════════════════════════════════════╣
║ Block range : 18695634 → 19836080
║ xcp_profit_real : 1.001048656644804526
║ → : 1.002849422400285884
║ Absolute Δxcp : 0.0018007658
╠══════════════════════════════════════════════════════════════╣
║ Wallet LP balance : 1855192938745
║ Total LP supply : 1855192939745
║ Wallet pool share : 100.000000 %
╠══════════════════════════════════════════════════════════════╣
║ Asset gains (xcp growth × share)
║ ──────────────────────────────────────────────────────────────
║ Asset : ampluna (terra1ecgazyd0waaj3g7l9cmy5gulhxkps2gmxu9ghducvuypjq68mq2s5lvsct)
║ Pool amount : 5338499435966
║ Wallet gain : 9603.316383 (wallet share, human units)
║ ──────────────────────────────────────────────────────────────
║ Asset : usdc (ibc/2C962DAB9F57FE0921435426AE75196009FAA1981BF86991203C8411F8980FDB)
║ Pool amount : 646333398539
║ Wallet gain : 1162.675802 (wallet share, human units)
╚══════════════════════════════════════════════════════════════╝

──────────────────────────────────────────
Pool: terra1cupwgntu082ypw2ztgtxfzcenexcu6ggp5zzunn3yzfwgrvdcclqgjrjqg
From block : 18695634 (initial)
To block : 19836080
Querying FROM block state (18695634)…
xcp_profit_real @ 18695634 = 1.004309276338487915
Querying TO block state (19836080)…
xcp_profit_real @ 19836080 = 1.005899845994721228
Querying pool state and wallet LP balance at block 19836080…

╔══════════════════════════════════════════════════════════════╗
║ REPORT
║ terra1cupwgntu082ypw2ztgtxfzcenexcu6ggp5zzunn3yzfwgrvdcclqgjrjqg
╠══════════════════════════════════════════════════════════════╣
║ Block range : 18695634 → 19836080
║ xcp_profit_real : 1.004309276338487915
║ → : 1.005899845994721228
║ Absolute Δxcp : 0.0015905697
╠══════════════════════════════════════════════════════════════╣
║ Wallet LP balance : 4833480070160
║ Total LP supply : 5980593548986
║ Wallet pool share : 80.819404 %
╠══════════════════════════════════════════════════════════════╣
║ Asset gains (xcp growth × share)
║ ──────────────────────────────────────────────────────────────
║ Asset : luna (uluna)
║ Pool amount : 10303161632512
║ Wallet gain : 13187.770358 (wallet share, human units)
║ ──────────────────────────────────────────────────────────────
║ Asset : ampluna (terra1ecgazyd0waaj3g7l9cmy5gulhxkps2gmxu9ghducvuypjq68mq2s5lvsct)
║ Pool amount : 3166932268950
║ Wallet gain : 4053.588305 (wallet share, human units)
╚══════════════════════════════════════════════════════════════╝

══════════════════════════════════════════════════════════════════════
SUMMARY
──────────────────────────────────────────────────────────────────────
Pool
xcp_increase | wallet_share | est_fee_share
terra145dguwqp5n9r7dmlefyv4yuuua7uaysmj47qleydh67fud0p2y0q8tw7pw
blocks 18695634→19836080 Δxcp=0.0018007658 wallet=100.000000 %
ampluna wallet=9603.316383 | usdc wallet=1162.675802
terra1cupwgntu082ypw2ztgtxfzcenexcu6ggp5zzunn3yzfwgrvdcclqgjrjqg
blocks 18695634→19836080 Δxcp=0.0015905697 wallet=80.819404 %
luna wallet=13187.770358 | ampluna wallet=4053.588305

TO BURN
ampluna 13657.009797 ≈ 26735.797530 luna
luna 13187.643600
usdc 1162.675802 ≈ 18575.895686 luna
TOTAL (luna equiv) 58499.336816

[Unhappy]

Maybe burning all on-chain transaction fees that are not explicitly allocated to smart contract developers or other governance-approved distributions would be a good compliment to compounding the chain owned liquidity. Compounding and burning would both scale with increased volume and users and would compliment each other.