The Axelar (AXL) community can utilize the Terra Liquidity Alliance (Eris Protocol) to maximize returns and contribute to the growth of the Axelar ecosystem through the smart yield farming strategy. Below is a well-laid-out plan on how we can achieve this:
1. Main Opportunity Summary
High-Yield Incentives: Get up to 300%+ APY in LUNA rewards for staking Axelar-whitelisted assets (i.e., AXL, wrapped assets such as wBTC/wETH through Axelar bridges).
Scalable Rewards:
$6.2M/year if LUNA is stuck at $0.30
$62M/year if LUNA recovers to $3 (price recovery x 10).
Zero Unbonding Period: 0 day unlock time period provide instant liquidity access eliminates the risk of impermanent loss and facilitates speedy movement of capital.
2. Strategic Execution
Step 1: Leverage and use Low-Cost Borrowing
Source Funds: Borrow blue-chip or stablecoins (e.g., USDC, ETH) at <5% interest from:
Mars Protocol (Terra-based lending).
Axelar-Linked Chains (such as Ethereum, Cosmos DEXs like Osmosis).
Collateralize Axelar Assets: Collateralize AXL or Axelar-wrapped assets to maintain exposure to AXL’s upside.
Step 2: Be Rewarded with LUNA in Eris Protocol.
Deposit Liquidity: Invest borrowed assets and Axelar assets into Eris pools (e.g., AXL-LUNA, wETH-LUNA).
Auto-Compound Rewards: Reinvest LUNA rewards into Eris Axelar assets or Terra DeFi, such as the use of Prism in synthetic yield plays.
Step 3: Hedge LUNA Volatility
Trade part of your LUNA rewards to stablecoins or AXL to minimize the risk of losing money.
Options/Perps: We can easily Hedge exposure on LUNA price via Deribit or Injective Protocol. In this way their is very low downside risk.
3. Advantages to Axelar Community
Liquidity Growth: Increase AXL ecosystem TVL by onboarding high-yield-seeking capital.
Cross-Chain Synergy: Strengthen Axelar’s role as Terra’s interoperability counterpart, driving adoption of wrapped assets (e.g., wAXL on Terra).
Revenue Stream: Redirect a % of yield profits to Axelar DAO treasury for ecosystem grants or buybacks.
4. Minimizing Risks
LUNA Price Exposure: Maintain LUNA holdings at 20-30% of the rewards earned; invest stablecoins or AXL.
Liquidity Slippage: Use stablecoin-heavy pools (e.g., axlUSDC-LUNA) to minimize IL.
5. Community Action Plan
Governance Proposal: We need to move or community needs to propose that Axelar DAO utilize treasury funds (e.g., $1 million) with this approach.
Educate Users: Organize workshops/Twitter Spaces with Terra/Eris teams to outline mechanics.
Partner Officially: Partner with Eris Protocol for Axelar-specific reward boosts or pool incentives.
6. Future Goals AXL as a Terra Bridge: Set Axelar as the primary gateway for transferring cross-chain liquidity assets between blockchains into Terra 2.0, drawing in users from Ethereum and Cosmos. It will result in volume spike in Axelar assets around cosmos.
Sustainable Flywheel: Terra liquidity alliance massive incentives and Axelar community participation can trigger and support Axelar’s utility → Increased TVL → Higher AXL demand → More staking/ecosystem activity.
By doing this, the Axelar community is able to enjoy Terra’s liquidity rewards while hedging against risk and increasing cross-chain Liquidity. Swift action is necessary to maximize rewards before LUNA price recovery draws in more extensive levels of participation.