What is Apollo, why hold $APOLLO and when staking?

Bruce -

Welcome! Today we wanted to answer a few of our most common questions since we launched two weeks ago; what does Apollo do?, why hold $APOLLO? and when staking?

TLDR

What does Apollo do?

Apollo is a DeFi protocol built on Cosmos that tokenizes yield opportunities, enabling composability, while supercharging yields without inflationary incentives.

The APOLLO design creates a deflationary and self-sufficient $APOLLO token from launch, that incentivises liquidity by harvesting volatility from the crypto market.

Tokenized

  1. Apollo can effectively take any yield source, wrap it in a Vault Token and compound all rewards/yield.
  2. A good example of this is stTIA/TIA LP, which will be earning NTRN, ASTRO and future STRD rewards, making it more difficult to integrate this LSD into DeFi protocols.
  3. This is just one example, there are plenty of yield sources that can benefit from tokenization.

What LSD/T providers do for staked tokens, Apollo can do for almost any source of yield.

Composable

Vault Tokens enable these Yield Positions to be used throughout DeFi, such as:

  1. Lending, Looping and Borrowing
  2. Yield Splitting
  3. Minting of CDTs
  4. Volatility Farming

While Apollo will be working with 3rd parties to integrate Apollo Vault Tokens for most the above, we will be launching our own Volatility Farming, as it’s currently unavailable on Cosmos.

Supercharged

  1. If you want to understand more about how Apollo is “Supercharging Yields, please read:
    https://articles.apollo.farm/the-relaunch-of-apollo/
    https://articles.apollo.farm/supercharging-lsd-yields-on-cosmos-part-ii-the-captain-of-sustainable-lsd-yields-2/
  2. In short we will “supercharge” the base yield of the Vault through Volatility Farming and then increase the utility through integration, such as through leveraging and splitting of  Vault tokens.
  3. Apollo also currently has ~2m xASTRO, that will be used once vxASTRO launches to further boost Apollo LP yields and this voting power likely incentivise (VT)/APOLLO pools.

Without Inflationary Incentives

Apollo doesn’t do points, promises of airdrops or inflationary rewards, we just do good old fashioned yield, with some new twists.

By utilising methods such as Volatility Farming and working with partners to create unique vaults tailored to their needs, Apollo has been able to build a sustainable business model with a deflationary token from launch. Apollo’s starting focus is on LSD LPs because this is where we see the biggest need for sustainable yields, however Apollo has the ability to tokenize pretty much any yield source.

We have our homebase for $APOLLO and initial Vaults on Neutron (Astroport), but will be expanding to a variety of Cosmos chains in the near future.

Why Hold $APOLLO and $APOLLO Utility?

APOLLO is a deflationary utility token that will be central to Apollo's volatility farming, with staking launching in the near future alongside Governance.

From Launch

The main focus of $APOLLO initially is to be the central liquidity token for the Apollo Volatility Farming. This is done through the creation of (Vault Token)/APOLLO pools, which will result in all arbitrage volumes being routed through APOLLO LPs, generating fees/taxes, which will be used to:

  • Incentivise our Vaults
  • Burn APOLLO
  • Reward LPs (50% used to buy back APOLLO to compound).
  • Apollo Development

The more liquidity that APOLLO can attract into our (VT)/APOLLO pools and the more volatility between the VTs and APOLLO; the more arb opportunities there will be and greater the fees, making it more attractive it will be to LP  (VT)/APOLLO pools. APOLLO will also grow proportionally to the amount of VT/APOLLO TVL due to 50/50 LPs.

Our (stTIA/TIA)VT/APOLLO pair will be our first Volatility Farm

Benefits of being a (VT)/$APOLLO LP

VT/$APOLLO LPs are crucial to the success of Apollo’s volatility farming and could be subject to IL (impermanent loss). Therefore they will be compensated through a % of the tax, which will initially be set at 25%.

The below table shows some estimates with the aim of demonstrating Apollo's potential to sustainably generate yield from volatility and highlighting the resilience of the APRs as TVL grows. Based on this, APOLLO LPs on average could be earning 20% APR sustainably, before any additional incentives. Currently, this would place the average APR as the highest yielding pool on Astroport (on Neutron), with the more volatile pools having a higher APR.

IL can also be used tactically, such as if a user is bullish on both tokens, looking to hedge some exposure, or using LPs to scale into and out of APOLLO positions  based on price movements, into a large variety of LP pools without having to pay a Buy/Sell Tax.

*To note, as Apollo grows it may be necessary to also expand beyond just (VT)/APOLLO pairs, to attract increasing amounts of liquidity.

Why no Staking?

Apollo has so far burnt over 100k APOLLO in 2 weeks, which could have been directed to Apollo Stakers and would be providing a sustainable APR over 6%  (based on half the supply being staked) only two weeks in.

However, while having the ability to stake APOLLO could  attract more holders, burning APOLLO benefits both APOLLO holders and APOLLO LPs equally (by removing 3% of the sell-pressure from every sell), whereas staking only benefits stakers. As APOLLO LPs are critical to the early growth of Apollo, it was important to maximse the benefits of LPing.

Staking will launch soon alongside decentralised Apollo Governance.

Governance and Staking

Governance will also be enabled for APOLLO in the near future and will allow APOLLO stakers vote on proposals, such as:

  • New yield sources to tokenize
  • Integration Priorities
  • New Development Priorities
  • Token swaps,
  • Warchest Deployment, etc.
  • vxASTRO Voting§

As well as manage key parameters, such as:

  • Buy and Sell Tax rates
  • The % split of taxes (ie: Burn, to LPs and to stakers)
  • APOLLO Buybacks vs Tax Distribution

These parameters will be crucial as it will determine how successful Apollo is at farming volatility to boost yields, so in return APOLLO stakers will be rewarded with a % of the tax.

Apollo Revenue Streams

Currently Apollo earns revenue from two main sources:

Trading Fees through APOLLO pairs (Volatility Farming).

Apollo currently has a 3% Buy and Sell Tax, with the current Tax split of:

  • 50% to burn APOLLO (100% Sell Tax)
  • 50% to Apollo development (100% Buy Tax)

With the release of our Volatility farming, these LP pools will have the following Tax split:

  • 50% to burn APOLLO (100% Sell Tax)
  • 25% to the VT/APOLLO LPs (50% Buy Tax)
  • 25% to the Apollo Team (50% Buy Tax)

As Apollo develops, APOLLO governance will set the tax rate and allocations to ensure the long term decentralisation and success of APOLLO.

You can learn more about our Volatility Farming and how it works here.

Performance fees on Apollo Vaults.

Apollo also has a 15% performance fee on our vaults, meaning every time rewards are compounded into Vaults, 15% of the rewards go to the Apollo Warchest.

Additional Revenue Streams

Apollo will continue to add new revenue streams over time.

Apollo Warchest

The directive of the Warchest is to manage POL (protocol owned liquidity) to ensure their is liquidity for APOLLO and to maximise liquidity into Apollo’s volatility farming through direction of vxASTRO rewards and POL. The Warchest currently sits at ~$1.2m (non APOLLO) with a further ~$500k in APOLLO (tracking page coming soon). APOLLO stakers will also manage the liquidity provisions of the Apollo Warchest with the launch of Governance.

APOLLO Long Term

APOLLO will most likely be highly volatile at launch, however as APOLLO matures it will become less volatile due to the depth and variety of (VT)/APOLLO LP pools. As this happens, APOLLO will begin to offer broad exposure to the crypto market while functioning as collateral and simultaneously continuously earning yield from volatility.

The only certainty in crypto is volatility and Apollo will harnesses this.