This forum post aims to
- Propose the decentralization of Dexter through the use of XPRT for governance
- Kickstart a discussion on new ways for LP incentivization on Dexter with XPRT to accelerate growth
Dexter launched in January 2023 with a mission to be the liquidity hub of Persistence, the cosmos app chain for LSTfi.
Since its launch, Dexter has been aligned with Persistence and has contributed significantly by achieving the following milestones:
- Launched as the first CosmWasm product and the first DeFi lego piece on the Persistence core-1 chain
- Increased on-chain activity with $4.3M+ volume and $13k+ swap fees generated to date
- Onboarded 2,291 traders and 2,109 liquidity providers so far
- Bootstrapped deep XPRT liquidity on Persistence for the first time
- Introduced the concept of Persistence Community Owned Liquidity (PCOL) for Persisters to bootstrap and own initial liquidity on new pools (PSTAKE/XPRT, USDC/USDT, USDT/XPRT currently) on Dexter
- Launched five pools for stkATOM, XPRT, ATOM, PSTAKE, USDC, and USDT liquidity
- Significantly improved the LSTfi experience on Persistence (and in Cosmos) for users to liquid stake ATOM on pSTAKE and participate in DeFi by providing stkATOM liquidity on Dexter
- Built and improved CosmWasm tooling extensively on the core-1 chain for dApps to leverage in the future
XPRT, through its governance power, has been a significant enabler for Dexter’s success. Proposals 15 and 20 approved the Dexter team to upload and instantiate code on the Persistence Core-1 chain permissionlessly.
As a CosmWasm product, Dexter’s codebase (uploaded permisionlessly, as mentioned above) consists of various smart contracts that create new pools, add LP rewards, etc. These contracts have their own ‘admins’ who have permission to perform specific actions of that contract. ‘Admins’, as of now, are various multisigs comprising Dexter team members.
While this was done for a less complex and faster launch at the time, the Dexter team acknowledges that this possesses a Centralization Risk as it relies on multisig participants to act in good faith of Dexter, thereby, Persistence.
The Dexter team proposes decentralizing Dexter to mitigate risk and bring more transparency. And when it comes to making decisions related to Dexter, who would be better than Persisters through XPRT governance? Dexter’s sovereignty is best placed in the hands of XPRT holders/stakers, governed by the XPRT token. Dexter will, therefore, NEVER have its own token–for governance, incentivization, or any other purpose.
Decentralizing Dexter would involve replacing Dexter’s contract admins (multisig addresses) with a new ‘Governance Admin contract’ that can be triggered solely through on-chain proposals, giving XPRT governance control over the following actions/parameters on Dexter:
- Creating new pools on Dexter
- Adding reward schedules to any pools on Dexter
- Changing fee or pool parameters
- Upgrading Dexter’s contracts like Vault, Multistaking, Router, Pool Types, LP tokens
- Instantiating any new contract
- Executing privileged functions in a contract, like changing parameters that affect the protocol
Notably, a portion of Dexter’s revenue (30% of all swap fees generated) and an emergency trading halt functionality (to act quickly and in time if required) will be with a multisig consisting of Dexter and Persistence contributors.
Besides its power of governance, XPRT has also been a major enabler for traction. Dexter received a 450k XPRT grant from the XPRT community pool for LP incentives to bootstrap early liquidity and fund marketing, BD efforts, and other operational costs.
LP Incentivization through XPRT has been largely successful, as can be seen by the significant milestones mentioned at the start of this post. At the same time, XPRT tokens for incentivization from Dexter’s grant (Proposal 13) and the XPRT Liquidity Bootstrapping incentives (Proposal 21) have reduced in the last months.
The Dexter team acknowledges that another XPRT grant or Community Pool spend for incentivization is not a sustainable, long-term solution. Through this post, the Dexter team wants to start a conversation with Persisters and get their thoughts, ideas, and feedback around how XPRT can be used for incentivization on Dexter.
Simultaneously, the upward trajectory of traction is expected to continue, with new additions and improvements coming to Dexter soon.
- Instant LP Unbonding Feature
- Dexter Analytics
- Integrating Dexter’s liquidity with DEX Aggregators like TFM, Skip Protocol, and Squid
- Launching new pools
- Strengthening security for LPs with additional safety measures
- Persistence Ecosystem and Dexter become more closely tied and aligned
- Strengthens the power of XPRT for governance
- Increased XPRT token utility through its role in increasing Traction
- It paves the way for other dApps (in the future) to launch without the hassle of a token and prioritizing protocol features
- Mitigation of centralization risk of using multisigs
By being responsible for Governance and Traction on Dexter, XPRT will become the defacto token of Dexter. The Dexter team requests everyone to actively participate in what could be one of the most important things we discuss on the Forum and share their feedback by answering the following questions:
- Do you agree with the proposed decentralization of Dexter?
- What do you think of this strengthening XPRT’s governance power?
- What are the different ways in which XPRT can be used to incentivize liquidity on Dexter uniquely?
Following the discussion on 1. and 2. points above, an on-chain signaling proposal to decentralize Dexter will be put up, considering relevant inputs from community members. Given this signaling proposal is passed by XPRT governance, two proposals (for the Governance Admin Contract mentioned in this post) will follow to complete the proposed decentralization of Dexter.
Simultaneously, discussion is expected to continue on point 3., finding better alternatives and developing new, innovative solutions for incentivizing liquidity on Dexter. Following a significant amount of discussion, hearing the community’s ideas, and gauging feedback on what seems to be a preferred way to proceed, a separate on-chain proposal will be put up to change how liquidity is incentivized on Dexter.