i guess i’m seeing the staking option as another “move fees around” option, whereas premiums is “make people pay a subscription for the service” so it becomes a new revenue model in itself if managed well
remember that a 50/50 2-sided AMM doesn’t generate enough fees to cover IL
so to me that implies that “enough” BNT staked to cover IL would be more than 50/50
so to qualify for full ILP maybe you have to stake 1.5 BNT for ever 1 TKN on curve
at that point “single sided staking” is kind of just semantics and reality is that we’re doing something more like balancer with weighted pools to mitigate IL
Keep in mind that this is a very interesting feature for DAOs. They are more interested in liquidity than anything else, and if they can get that with their own TKN without needed to provide a second token, it is very appealing for them.
As an exmaple, see the strong response from the CROWN community.
yup, that’s exactly who i think would pay a premium for insurance
we can also combine the premiums with IL mitigation strategies like liquidity optimization and SFL
in my mind the premium would be paid on the full staked TKN balance regardless of how much TKN is oncurve or used for whatever revenue generation purpose within the protocol
say some TKN moons 100x in a P&D, we should be free to take 99% of that TKN off curve short term and put some of it back when the dust settles, in BNT terms we’re still providing the same trading liquidity even if most of the TKN moves off curve during the moon, so i see nothing wrong with that
Just curious in your scenario - how do we reactively/proactively move TKN on/off curve? Disregarding the actual trigger mechanism - how should we define price change thresholds or a different trigger for something like this?
When IL exceeds a certain %, then funds are moved off curve to protect the majority of users balances // will also limit the IL their position is exposed to ?
I -think- and I could be wrong here, that this would actually make the IL permanent. Though I think it would reduce potential future IL (but also recovery).
a very simple mechanism would be to have a fixed BNT amount that is the liq on curve
say we allocated 500k BNT to some TKN and it mooned 100x, and we still only have 500k BNT on the curve the whole way up, each 1 TKN that we take off curve on the way up makes subsequent IL less, and if we put the TKN back on the curve on the way back down in the same amount i would assume that means the IL is still impermanent as it’s a symmetric process
if we can imagine 1 mechanism that has the property of reducing IL while keeping it impermanent i’m sure we can imagine others also
i think the trigger mechanism is actually important, because if it’s something that is inline with the transaction and atomic then it can happen before the trade completes (e.g. how slippage works) but if you try to take liquidity off curve after the transaction as a response to it, then you run into problems where you have to be predicting the future about what will happen in the next transaction, which can’t really work as you never know if the pump will continue or dump
ILP worked flawlessly in bancor since v2.1 until this most recent fiasco. Therefor ILP did work, but it had one point of failure, and that button was pressed. Therefor bancor should be able to use the existing ILP framework, but with added extra protections to circumvent what happened during the recent events.
Can we not learn from what recently happened and find a way so that this scenario is no longer repeatable?
this combination led towards the recent events
weak market - cant do anything about this
bnt was already weaker than the rest of the market - bnt was previously being handed out like hotcakes to all the big TKN pools which led to much selling pressure. This has already been turned off so we no longer have this problem. However I argue that because there was not enough incentive to hodl and stake bnt, this contributed towards the selling pressure. People would stake tkns, receive bnt then sell. From here we learned that even with a high bnt stake apy%, this alone is not enough to maintain strong organic growth of the token. I believe bnt needs additional features added to the token that will incentivize hodling. People will hodl the bnt tkn if it either makes them $$ & or if it helps to protect their $$ this is an area where we can try to mitigate our problems
ILP was given out to massive wallets whom then immediately sold the ILP BNT for their respective tkns - this is an area which we can try to mitigate our problems
bnt was shorted on various exchanges like ftx - nothing we can do about this
so if we
find a way to incentivize long term organic growth by adding features to the bnt token
control ILP in a way in which a mass exodus cannot lead to catastrophe
then we will achieve
a more resilient BNT as there is buy pressure from outside the protocol which can support the price
in future events where ILP mints excessive amounts of BNT, the sell pressure of BNT is more controlled
add features that achieve this, then I believe bancor will be steps closer to solving the issue of IL
features ?
the new BNT features should avoid inflationary pressures, however, I would argue that if there was an incentive to add +BNT apy ONLY to those who stake BNT, these BNT lp’s are more likely to re-stake their new bnt rather than sell it down, as it would negatively impact their existing holdings. All other pools should not receive any BNT tokens for lp’ing. like the old system, a high bnt apy will help attract new users and buyers of bnt. however in the old system, tkn lp’s probably would have sold off their bnt earnings for more tkn. with this change, bancor would not have that problem
in order to have ILP - the LP would need to stake a # of bnt in order to qualify for ILP. this amount would be based off the size of the tkn position. since the price of bnt flucuates , and Im hoping for a $$ increase, then the amount of bnt needed to qualify for ILP should be a % rather than a # from the tkn position. When the price of a tkn or bnt goes up or down, this will affect the amount of ILP coverage the user has on their position. With this being said, if a large whale chooses to pull out from their position, and this then in turn affects the deficit in the pool, then perhaps this can also affect the ILP % coverage they have when they pull out.
if we buy and hold bnt… we all want to make money from it. anyone who purchases bnt and takes on the risk should be entitled to some potential profit. Even if the protocol itself holds bnt, it should also be eligiable to these profits. lets think about where these profits can come from
ILP didn’t work flawlessly though, it was being tracked on a cash basis (dune showed mints/burns only) without showing the surplus/deficit of liabilities building up in the protocol invisibly
the deficits existed in v2.1 and were simply calculated and displayed by the v3 migration
everything i’m saying is aligned with what you’re saying isn’t it?
“control ILP” => you have to calculate it to control it, and as i mentioned above, you can’t simultaneously market “single sided staking” and also “ILP if you stake enough BNT to cover it IL”
all i’m saying is do all the same calculations denominated in TKN instead of BNT so we can have ILP and also still have “single sided staking”
yep what youre saying is alligned, im just writing down my thoughts and brainstorming as I do
I editied my post above and added this
in order to have ILP - the LP would need to stake a # of bnt in order to qualify for ILP. this amount would be based off the size of the tkn position. since the price of bnt flucuates , and Im hoping for a $$ increase, then the amount of bnt needed to qualify for ILP should be a % rather than a # from the tkn position. When the price of a tkn or bnt goes up or down, this will affect the amount of ILP coverage the user has on their position. Therefor as the user maintains their position at times they may need to buy additional bnt in order to maintain full coverage. With this being said, if a large whale chooses to pull out from their position, and this then in turn affects the deficit in the pool, then perhaps this can also affect the ILP % coverage they have when they pull out. ← since the blockchain knows when an event like this occurs, when the whale removes their position, can the protocol not then do the math and see what happens to the potential deficit then dictate ILP based off that?
tl:dr - so ILP is based off of the lp needing to stake x amount of BNT tokens, but also ILP coverage is also affected by the possible deficits that may occur when a user pulls out
I think that everyone in this community should add some ideas here because the more that time passes, the more I realize that we are all being idiots by not figuring this out. We should NOT be putting 100% of all our faith, time and efforts into carbon. We should put at least some efforts into fixing the BNT token itself.
The BNT token is an ugly token, not needed, who fkin cares. Back then you could buy the BNT tkn, stake it and get amazing APY%, risk free, Bancor was the shit. Now all BNT is used for … is nothing… since we use vBNT for voting… and even with that … who really cares? and Bancor went from being the shit … to just being shit.
Lets give this tkn the right incentives again for people to once again want to own it.
The only time where the deficit improves is when people decide to buy the bnt token. So why are we not putting any efforts into something that can steer the crowds in this direction?
Fast lane, Carbon fees … those are great at helping BNT sink slower. Eventually if carbon picks up, then it might help push the deficit in the opposite direction. But we don’t have time for that. Time is not on our side, rather its a race against time, because once the BTC bull run commences… thats it.
This whole deficit problem is a BNT problem. Every good attribute and reason to want to own BNT was removed… and every good reason to use Bancor as an LP was also removed… Lets do something with the BNT token so that people may want to own it again. I have listed ideas at the top, and look forward to hearing new ideas from the rest of you. Making people want to own the BNT token can fix this deficit faster than Carbon can.
when the time comes, rather than a simple buy and burn mechanism, id actually prefer to see rewards accrued when staking ( in a separate pool, not paired against anything ) . Now keep in mind we still have a long way to go to fix the deficit, but I don’t think its too early to have these conversations.
We could plan for the future and decide this now, and even perhaps this decision could help in repairing the deficit. Quite frankly if I heard that all future revenue goes towards bnt stakers, that might give me or others a reason to pick some up beforehand. But of course prior to any of this, we’d need to have a long and well though out conversation with much of the communities engagement.
Keep buying and burning for now because there is not much else to do.
Down the road, if you stake BNT you should receive a share of fees in the form of regular or special dividends. However, to avoid inflating BNT by issuing any dividend in BNT we could issue the dividend in a cryptodollar like USDT or USDC, or possibly ETH, to deliver real world value to BNT stakers. If we can start working towards an incentive to buy and stake BNT, to your point, people may start to buy the rumor.
yep continue the current status quo until the deficit is removed. and also 100% the rewards should be paid in one of your 3 options there, completely agree.
the other option I had in mind would be ; carbon earns a fee off each trade, and the arb bot earns fees off each arb opportunity, so staking BNT could also simply give you a piece of each profit made from the bancor ecosystem, and BNT stakers would earn a basket of TKNs
personally I’d prefer to be paid out in eth or stables, but this was just another idea that crossed my mind
