Prism Protocol v2 Roadmap
Prism v1 Launch Recap:
Prism Protocol initiated its launch sequence on 1st February 2022 with a 4 stage launch process designed to deliver the v1 product.
The launch phase began with the Prism Forge launch mechanism that enabled fair price discovery, and an initial distribution of the PRISM token to over 4,000 participants. Prism Protocol’s take on a fair launch appears to have performed well to date and has already been utilised by other Terra projects such as Kinetic Money & Fan Fury.
After a fair launch price was determined for the PRISM token, Prism Swap was launched with 6 assets paired with PRISM, as well as the xPRISM governance staking vault. Over time, trading volume has scaled proportionately with liquidity as arbitrageurs maintained the peg between LUNA and the Prism derivatives. The Prism Swap AMM has now become the 3rd largest DEX on Terra in terms of both liquidity (~$60m) and trade volume ($60M+ per week on average). If we track this volume of trading, an annualised volume of $3Bn will take place across Prism Swap. xPRISM will continue to enjoy 0.1% of all swap fees accruing back to the xPRISM token. It can be expected that as Prism launches additional refracted assets, the trade volume and total value locked should also continue to increase.
The Terra community has embraced the core utility of the Prism Protocol, refracting yield bearing assets into their principal and yield components, starting with LUNA. So far over 10,000 unique wallets have already refracted their LUNA. Currently, over 6m LUNA is staked in the Prism Vault. Initially, only regular yLUNA staking was enabled such that users would earn the staking yield and airdrops of LUNA at a fraction of the cost.
The launch of the Prism Farm has been a catalyst in attracting TVL into the protocol by offering the best yields on single sided LUNA staking in the Terra ecosystem. Over the course of a year, users will exchange their yLUNA staking yield for a proportionate share of 130m PRISM tokens available in the Prism Farm. At the time of writing there is 4.7m yLUNA and almost 9,000 users participating in Prism Farm. It’s likely that yLUNA farming will become a popular mechanism for protocols looking to accumulate LUNA in exchange for token emissions.
To encourage and incentivize loyal PRISM holders to stake and hold xPRISM, we introduced the AMPS Vault. Users are able to pledge xPRISM in a vault that accrues loyalty points over time in the form of AMPS. AMPS enable boosted protocol rewards in the Prism Farm and have proven to be popular with protocol users — to the extent that over 89% of all PRISM is staked and 85% of all xPRISM is pledged to the AMPS vault. This mechanism will be critical in allowing protocol stakeholders to execute governance proposals in the future and have far ranging benefits to users that are most loyal and engaged.
Analytics (Dashboard, MyPage, Charts):
Alongside the functionality launched in Prism Protocol v1 we wanted to provide the user base and community with as much data and analytics as they need to make informed decisions when utilising the protocol.
We have implemented the following:
- Dashboard — a quick view of protocol health metrics such as TVL, asset prices & market caps.
- MyPage — a single view for users to track their own TVL throughout the protocol, quick links & the ability to claim rewards.
- Charts — Chart any Prism Swap asset against UST, LUNA or PRISM using trading view charts & the associated charting tools.
- Data Dashboard — Working alongside Flipside Crypto we have launched data.prismprotocol.app as a one stop shop for in depth Prism analytics, we will keep building the data available over time.
The final deliverable of the v1 launch was on chain limit orders on Prism Swap. Users can leave limit orders to swap any 2 assets listed on the Prism Swap AMM. This enables users to leave limit orders to buy and sell LUNA using UST as well as take advantage of arb opportunities such as swapping across LUNA/cLUNA, PRISM/xPRISM or trade the fluctuations in the pLUNA/yLUNA ratio. In the first few days of release we have seen ~$800K of limit orders placed utilising this functionality.
Prism Protocol v2:
Now we have looked back on the v1 launch, let’s take a look at the Prism Protocol v2 roadmap…
pAsset Governance & pAMPS:
One of the key properties of pAssets on Prism Protocol is that, where applicable, they will retain the underlying governance rights of the refracted asset. Whilst the power of governance rights has often been overlooked on the Terra chain to date; the emergence of the Astroport governance wars, controversial Anchor governance proposals & the fact that the Terra community pool controls ~$2Bn of funds suggests that governance is going to play an increasingly significant role on Terra moving forward.
With this in mind Prism Protocol will be implementing the ability for pAsset holders to participate in governance, starting with enabling pLUNA holders to vote on Terra governance proposals.
With 306m LUNA staked in total & over 6m LUNA in the Prism Vault, pLUNA holders already account for 2% of the total Terra governance voting power. Given that typically 50–70% of staked LUNA votes on governance proposals, realistically this means pLUNA accounts for more like 3–4% of active Terra governance power. We anticipate that this voting power will continue to grow as Prism attracts more TVL, but also as Terraform Labs (TFL) sunsets their Terra Delegation Program and unstakes an additional 60m LUNA over the next few months.
All LUNA staked in the Prism Vault will vote as a single block determined solely by pLUNA holders. To facilitate this we will introduce the concept of pAMPS which will work in a very similar way to the existing AMPS Vault.
Users who wish to participate in Terra governance will be able to pledge pLUNA to the pAMPS Vault & in return they will earn pAMPS. pAMPS will accrue over time and boost their voting power in Terra Governance proposals. Essentially, users who pledge pLUNA will accrue the governance power of the pLUNA which is not in the pAMPS Vault. For example, pLUNA being used as collateral on money markets or pLUNA being provided as liquidity. pLUNA voting power will be distributed depending on an individual’s weight in the pAMPS Vault.
As the voting power of the Prism Vault continues to grow & as more entities vie for funding or liquidity from the Terra Community Pool, bribing pAMPS holders could be a cost efficient way for third parties to sway votes in future Terra governance proposals.
As the protocol refracts additional assets that have governance power, each pAsset will have a separate pAMPS vault such that holders of that pAsset can increase their governance power over time.
Refracting Additional Assets:
One of the most important aspects to continue the growth of the protocol is to refract additional assets. There are 3 asset types that Prism Protocol expects to be able to refract in the short to medium term. These are Astroport LP tokens, Terra dApp governance tokens & bAssets. Let’s discuss these in turn…
Astroport LP Tokens:
Starting with the liquidity pools on Astroport with the highest amount of liquidity, soon Prism will allow you to split LP tokens into yLP & pLP. Alongside this, for the first time on Terra, Prism will provide charts for LP tokens priced in UST.
Factors that users may consider when speculating on particular pLP:yLP ratio include existing LP incentive schedules, governance changes, as well as Astral Assembly gauge voting.
yLP holders will be able to stake their yLP tokens in exchange for any token emissions paid as incentives to liquidity providers & swap fees in the form of the assets in the LP token (i.e. the yLP token for LUNA/bLUNA LP will receive ASTRO, LUNA & bLUNA).
pLP holders will have the option to swap pLP for additional yLP to create a leveraged farming position. They will be able to provide to the pLP/PRISM liquidity pool or simply hold the pLP so they can recompose their LP tokens in the future.
If the yLP:pLP ratio becomes significantly skewed towards the yLP token, the Astral Assembly, or the underlying protocol who’s LP has been refracted, will be incentivised to buy up cheap pLP tokens to lock in liquidity in perpetuity.
Terra Governance Tokens:
Prism intends to allow users to refract Terra governance tokens, initially focusing on those tokens with the highest market cap such as ANC, ASTRO & MIR.
These assets will have similar properties to the existing refracted LUNA. yAsset holders will be entitled to the governance yield & pAsset holders will own the underlying governance rights and be able to pledge them to pAMPS Vaults to increase their governance power.
To date we have been discussing refracting assets in perpetuity, however the Prism Litepaper & foundation of the project was also focussed around the ability to swap variable-rate yields to fixed-rate yields over a specified maturity period. This would allow a user to refract a yield bearing asset, sell the yAsset for a period of 1, 3, 6 or 12 months & regain the rights to the asset in full after the end of the maturity period by holding the pAsset.
Implementation of this requires creating a bespoke AMM that handles assets with maturities, or using an order book design. Research and design of this solution is ongoing, but we are closing in on a finalised design and order books will be coming to Terra with Vertex protocol. It is likely that the first assets that will be offered as a fixed maturities will be aUST and LUNA.
Widening the Scope of Limit Orders:
The limit orders contract has been launched exclusively for use across the Prism Swap AMM & the 6 assets currently existing there. In the near future users will be able to place orders in either UST, aUST, or LUNA for any asset across multiple Terra DEXes. This will help generate additional revenue for xPRISM stakers since at least 0.1% of each swap will be paid as a limit order fee back to the protocol.
Given Prism Protocol has created new types of asset derivatives on the Terra Network, there is plenty of opportunity for other Terra projects to utilise these derivatives within their protocols. Let’s take a look at some of the potential use cases:
Prism is actively working with Edge Protocol to create a protocol owned money market (POMM). This will enable Prism assets to be supplied by asset holders, to be utilised as collateral & to be borrowed. Because this money market will be protocol owned, this means that part of the fee spread between the supply & borrow rate will create a new revenue stream for xPRISM holders, as well as providing additional utility to Prism assets.
Nebula is a new protocol coming to Terra which will allow users to invest in Clusters, which are a tokenized basket of crypto assets. Prism intends on working with Nebula to create clusters of Prism assets such that investors can gain exposure to multiple Prism assets through a single token. We also hope that Prism assets will be included in Clusters alongside other Terra tokens.
Some examples of Nebula clusters that might be interesting to users include:
- A cluster of Prism LP tokens containing yLUNA/PRISM, pLUNA/PRISM & cLUNA PRISM.
- A dynamically adjusting pLUNA or yLUNA maxi cluster that maintains a certain ratio of p:y LUNA.
- Once more assets have been refracted, a cluster of different pAssets or yAssets.
- A cluster of autocompounding tokens that includes xPRISM alongside other assets such as xASTRO, xMARS & xKNTC.
Nexus Protocol recently began their launch of a boosted Prism Farming strategy. They will allow users to deposit xPRISM in exchange for nexPRISM & deposit yLUNA to get boosted Prism Farm yield without the need to be holding & pledging xPRISM. Full details of the proposal can be found here: https://forum.nexusprotocol.app/t/nexprism-nexus-boosted-prism-farming-details/267
This strategy is likely to be appealing to users who are:
- Holders of $xPRISM, but not $yLUNA
- Holders of $yLUNA, but not $xPRISM
- New participants in Prism Farm who want to immediately be able to boost their rewards
At the time of writing, the nexPRISM lockdrop is on going and has commitments of nearly 845k xPRISM in less than 24 hours.
Whilst Prism has launched with its own DEX, which has proven to be a consistent source of protocol revenue, having Prism assets on other DEXes will provide more exposure, demand & arbitrage opportunities for Prism assets. A forum discussion is currently ongoing and a formal governance vote will be initiated soon for the Astral Assembly to consider ASTRO emissions for various Prism asset pairs.
Another advantage of having Prism asset liquidity on Astroport is that it will enable those assets to be utilised in Mars Protocol given Mars has a reliance on the Astroport TWAP (Time Weighted Average Price) oracle solution for asset pricing.
There are 2 ways that Prism & Mars Protocol could collaborate going forward.
Firstly with the Astroport TWAP in place, Prism assets could be used as collateral on Mars allowing users to deposit & borrow against their assets at the Red Bank.
Secondly, leveraged yield strategies could be implemented on the Fields of Mars. For example a user could deposit LUNA, borrow additional LUNA, refract their LUNA in Prism Protocol and create a leveraged yLUNA staking position allowing them to farm LUNA yield at 2–3x their base position.
On 2nd May Prism NFTs launched on the OnePlanet NFT Marketplace. Over 1,554 addresses have been whitelisted for the NFT mint based on their participation in the Prism launch phases.
There will be 4 tiers of NFT available based on the participation size of the user, these are: Diamond (5%), Ruby (15%), Sapphire (25%) and Emerald (55%).
The mint cost was 1 pLUNA & the secondary marketplace for the NFTs will only be tradable in pLUNA & royalties from secondary sales will be another revenue stream for xPRISM holders.
So far, 627 of the NFTs have been minted and the collection has seen nearly 4,000 pLUNA ($56k) in volume traded.
We are working on giving the NFTs utility on Prism Protocol in the form of a boost to a user’s accumulated AMPS.
Kinetic Money enables users to tokenize their future yield by depositing aUST and minting their synthetic stablecoin, kUST. kUST is freely tradable and enables users to take advantage of the future yield from Anchor Protocol, today.
As yield from Anchor is harvested, the kUST loan is repaid. Thus, these loans are non liquidatable and the user’s only debt is time. As of writing, the current yield on Kinetic Money is 28% APY. This enables a 50% LTV position to be fully paid off in ~645 days or a little more than 1 year and 9 months.
A collaboration with Prism Protocol could potentially enable users to also deposit yLUNA to speed up the rate in which their loan is paid off. The staking yields from yLUNA would be converted and harvested as UST to pay off a user’s kUST debt.
In the 3 months since launch we have strived to continue to release new features for Prism Protocol users & we are excited to bring more refracted assets & more functionality to our derivatives moving forward.
To learn more about Prism Protocol visit our Notion or join the conversation in our Telegram or Discord.