(BIP) Increase Vortex Burner to 20% - Active Immediately

This proposal is expected to appear on Snapshot for voting on Monday, 31st May at 7:00 PM EST (11:00 PM UTC). Voting will last until: Thursday, 3rd June 7:00 PM EST (11:00 PM UTC).

(BIP) Increase Vortex Burner to 20% - Active Immediately.

TLDR: Increase the vortex burn to 20% while LM rewards are active. Reduce it when they expire.

A quorum of 20% and a 66% majority will decide the results. Be aware of the above dates and lock your vBNT in time if you wish to participate.

A brief timeline of the vortex.
The initial proposal BIP9-proposing-the-bancor-vortex proposed a Vortex burn with dynamic fees. See chart below.

Upon code design of the initial Vortex - Bancor devs made it clear to the community that a dynamic burn would take significant amount of dev resources - an easier alternative would be to create a fixed burn instead. (BIP9-Flat-Fee)

The new proposal was initiated to switch to a flat burn, mandating a 5% initial burn with increases every 6 months for 18 months - quoted directly from the article “The fee is increased every 6 months in 5% increments for 18 months”
An increase of 5% at the 6th, 12th, and 18th month would lead to a burn of 20% at the end of 18 months. It’s unclear why the writer’s math calculated 3 increases of 5% to result in an ending 15% burn.

Since inception of the Vortex - the vBNT/BNT ratio has steadily plummeted. This could be due to a variety of reasons - although the specific reason doesn’t matter - very small pool size, a wave of leveraged demand that was previously unsatisfied, and high liquidity mining rewards attracts users to heavily leverage their positions repetitively through the Vortex are a few.
After 4 months since the inception - the Vortex vBNT price has steadily found it’s home around the 0.2-0.3 range.

Referencing Table 1 from above - The Vortex with a price at 0.2-0.3 should be burning in the range 20-30% if under the dynamic burn structure.

Given the fact that the majority of Bancor Liquidity Pools are distributing 70-80% annualized LM rewards, plus swap fees - Burning 5% of fees is just simply too low. The Liquidity mining rewards are 15x as lucrative on their own.
The market just saw a significant downturn over recent weeks - many tokens saw dips of over 75% in a two week period. The strength of the Bancor ecosystem relies on permanent liquidity locked within it’s pools. As the network generates significant inflationary BNT rewards to attract liquidity providers - we must focus our efforts NOW to ensure long run success by locking up as much liquidity as possible.

Increasing the burn rate will have a natural upward push on the price of vBNT - which ALL owners of BNT will benefit from. The higher the rate of the burn>>higher vBNT price >> cheaper leverage for users that want to leverage their vBNT. This in conjunction with the increase in amounts burned - entices more users to participate in the vortex and increases the total TVL significantly.

It is important to consider the two main selling points of Bancor:

  1. Impermanent loss insurance - no other protocol allows users to provide liquidity with 100% protection against impermanent loss.

  2. Single sided liquidity - no other protocol allows users to remain exposed entirely to their favorite crypto asset while earning trade fees at the same time.

These two points are significant steps in democratizing AMM services and are the true highlights of Bancor. As members of the Bancor community we all need to do a better job of highlighting these two key aspects of the network. As it stands, there’s just simply no way a liquidity provider could complain about the vortex fee given the benefits that Bancor offers them.

Increases in the vortex fee to this extent will go unnoticed as power users continue to be rewarded by the DAO with significant liquidity mining rewards and/or benefit from Bancor’s unique and world class design. The increased fee will also create a pathway to an eventual increase in size of the vBNT pool - allowing more users to be able to earn yield on their vBNT.

Implementation of the new fees can be done in a matter of minutes.
Screenshot of Yudi Confirming this

Instructions:

Vote FOR to:

  1. Increase the Vortex Burner to 20% for all pools- effective immediately.
    AND
    2 . Reduce the Vortex Burner to 15% - effective when the 72 week liquidity mining reward phase is retired around January 2022.

Vote AGAINST to:

  1. Continue with the plan for the Vortex outlined in [(BIP9 ADDENDUM) The Bancor Vortex vBNT Burner: Proposal to Switch to a Flat Burn Rate
    The fee is increased every 6 months in 5% increments from the time of the original Vortex Launch.
5 Likes

Sounds good to me. Just increasing the 20% timeline by 8 months, punctually removing the extra 5%?

4 Likes

Accelerating the burn schedule during the inflationary period seems like the right balance. Cheap vBNT buy-backs that give holders more borrowing power while also locking BNT forever driving up pricing pressure for all holders. The flat 5% seems to have minimal effect because of LM rewards and the pent-up demand for leveraging. As the author says, if there were a dynamic burn mechanism in place it would be upwards of 20-30% right now. We should fully support this as it benefits all BNT holders.

4 Likes

I think this is a bad idea. BNT investors have used the Bancor Vortex with the expectation of 5% increase every 6 months and have used the leverage that Bancor provides with that in mind.

This would literally screw investors that have trusted Bancor enough to use the vortex system. Locking them out of the BNT because we think that the vbnt ratio is too low is not a good way to treat BNT holders.

Full disclosure: I am LONG vbnt from .55.

6 Likes

This would literally screw investors that have trusted Bancor enough to use the vortex system. Locking them out of the BNT because we think that the vbnt ratio is too low is not a good way to treat BNT holders.

What about the “investors” that voted the original Vortex creation proposal through based on the original dynamic burn metrics?

What about every trader that sold their $ETH and $BNT with 0.1% swap fees? They were thinking they could buy back with 0.1% and the DAO raised fee to 0.15%?

What about every LP who deposited thinking that their LM rewards would be extended?

Sometimes its just the way she rolls.

The Bancor DAO is a fluid system - votes can change it.

Anyone who wishes to participate in votes is able to do so.

1 Like

^Found simp’s new account

5 Likes

You’re correct. The Bancor DAO is a fluid system and it fluidly decided to move away from the original Vortex proposal to the flat fee that we have today.

1 Like

A vote to move from a “dynamic” to “fixed fee” is no different than a vote modifying the rate/timeline of the burn. Else, you have a broken DAO.

1 Like

I agree. I’ll be voting against this measure.

3 Likes

If you don’t like this proposal. You can always buy more vBNT to down vote it.

3 Likes

^found simp’s friend

2 Likes

@mods/admins DarkKnight is clearly a spam/troll account. Not sure why such accounts are allowed on the forum. 3 posts on this thread now with no substance other than attempts to stir up the crowd

1 Like

there are people on the other side of vbnt and buying it (necessity for the vortex use) that are down 50% . I don’t see why there needs to be consideration of those that are already short vbnt as they understand the risks and probably have been winning at the cost of the other side.

1 Like

There are a few costs associated with using the vortex.
The first one is the direct price at which you sell your vBNT.
The second is the price at which you are able to buy it back.
Third being what you do with the funds in the meantime between 1/2.
The fourth is one that many people have taken for granted.
The result of selling your vBNT is that you have given up your power to voice your opinions through votes in governance.

1 Like

^hyperbolic victimhood - simp spotted

2 Likes

A big part of it is that by spiking the Burner up to 20%, you will be lowering APRs across all pools to save Simp’s underwater vBNT trade.

Lower fee APRs is NOT a great way to get more people to stake into Bancor to increase our TVL.

Arguably, we can burn more vBNT at a lower peg over a longer period using a slow burn than we would by spiking up the price of vBNT.

6 Likes

This exactly. Many people reacting with emotion right now. It’s a clear and obvious benefit to the network.

1 Like

agreed, isn’t 5% burn rate at .25 peg the same as 20% at a 1:1 peg?

1 Like

With lower APR for LPs across all pools.

1 Like

Low vBNT = weak DAO .easy to exploit. DAO only as strong as the total value of the vBNT staked.

I would be happy if vBNT can maintain something reasonable, ~0.8BNT for starter. It was at 0.25BNT last week. People could literally bought 4 vBNT for 1 BNT…

1 Like