I used coingecko and wsteth volume since lido has one of the largest LSD by marketcap for the table that was pasted in my previous post.
The USDT and USDC numbers might be accurate but does not reflect the reality of on chain trading. These tokens have MASSIVE liquidity on CEXes as they are paired with every token so it will dwarfed any other token volume and make it look tiny. In CMC look at the CEXes tab for USDT and compared that to DEXes to get an idea. Top 10 entries in the picture here
Bancor is not a US based company and Bancor blocks all US users from accessing the protocol. There are thousands if not 100s of thousands of DAOs that HODL ETH in their treasury
It is highly unlikely for Ethereum to be considered a security since it meets the decentralization requirements to never be one.
Both strategies will generate profit for the Bancor DAO that will be used for buying and burning BNT. I donāt see any more risks with holding ETH over USDC or USDT. I even think that USDC or USDT are more riskier than ETH as the underlying US dollar backing is most likely custodied in US Banks. Most recently USDC lost 10% of its value after one of those banks went bust. Both USDC and USDT can blacklist users and smart contracts if served by the US government.
The Bancor DAO is a global community composed of 4405 holder
My point is a speculative asset vs. non-speculative asset action/investment within a non-profit DAO structure. Non-zero risks in todayās environment is my hesitation.
Itās interesting that you didnāt include the other option I outlined above (option 3) which I thought was closer your original proposal. Did you find it less appealing?
Iām very much in favor of putting this on snapshot after we as a community have some more time to discuss. This is not a small decision.
To be fully honest, Iām not sure which option I prefer yet (which is why I did not participate in the poll you posted) so I assume others are in the same position - but I could be wrong.
I think itās important to establish what happens with the capital before any decision is made on stables vs LSDs.
In Markās original post, the POL is slowly converted into fees as part of the strategy.
With LSDs being less correlated, this wouldnāt need to be the case and fees could be generated while increasing POL.
So my question is how would the trading profits - and profits arising from the anticipated increase in ETH price - be used? They could be siphoned off and sold for BNT (meaning the strategy would have to be regularly altered) or accumulated within the strategy. If the latter, would it be the intention to close the strategy and sell the POL only if it surpasses the deficit in value?
There are 195 countries and governments that could all have different opinions on Crypto. There is no HQ or BancorDAO company besides over 4400 holders that can participate in the DAO if they wish and opened for anyone else that buys BNT. I donāt think anyone has a complete picture of who these vBNT holders are.
The D in DAO stand for decentralized and our only concern should be that we are acting in a decentralized manner when it comes to decision making. This DAO should not be paralyzed with its decision process because some future man in the sky might decide exactly what?
Option 3 is the 1 dollar today in the 1 dollar today or 10 dollars tomorrow question. Bootstrapping Carbon is important and selling everything for BNT at ONCE will be a short lived event that will not help with Carbon adoption.
There should be NO doubts that any and all surplus will eventually be used for BNT burn by buying it from the market.
In the future once Carbon is sufficiently bootstrapped, the DAO can decide to sell all of it for BNT. I see the LSD strategy as hands off once it is created with little or no maintenance.
Upside of LSD strategy and also why I think it is superior to option 3 and stablecoin option
ETH upside since ETH is
20 basis points in fee generation for Carbon vortex
minimum 5% in yield from Ethereum emissions
great for marketing as LSDs are being used by everyone and anyone. This will attract other DAOs, degens, LPs, traders to Carbon with similar strategies
Lido and other liquid staking protocols to take notice. Tradfi will come to DeFi looking for yield and LSDs will see large capital influx. Carbon to be at the forefront of protocols where you can use LSDs.
It is clear to me and other Bancorians that this is the best option for the future of Carbon
Iād like to share some thoughts on this issue, as it touches multiple domains.
In terms of goals, we need to remember that the primary goal is to reduce the v3 deficit.
Secondary goals should be far behind IMO.
In terms of implementation, I would prefer to have a less complex/involved implementation, as always.
I would also really prefer a permissionless implementation as itās the most fair/decentralized option and I think we should stick to that.
In addition, I donāt think we should make a āgambleā for any token, as it might contradict with the #1 goal. I much more prefer a predictable execution.
My suggestion is to use a variation of Option 3 that @foxsteven outlined above:
Function that trades each TKN for ETH on another exchange, based on a decentralized oracle such as Uni v2/3.
Function that creates a Carbon ETH-BNT strategy (limit order) at current market price, based on the same oracle.
The reason for trading for ETH is to prevent lots of smaller (and less efficient) strategies on Carbon that might not get executed, plus it keeps things simpler, with a single pair that can be adjusted later on if needed.
This meets the following goals:
Reduce the v3 deficit
Simpler implementation
Minimal gambling on one token or another
Predictability
Remember one of Carbonās main goals is to reduce v3ās deficit and most time/resources should be spent on that as opposed to on a previous iteration of Bancor - we should go with a simple approach that helps with the deficit and move on.
Can I suggest for this option 3 that instead of creating a Carbon strategy at current market price that we apply a 5% discount? BNT Buy order = current BNT market price - 5%
The order will be there and ready to be taken when BNT falls in price which means that it can act as a support for the token. When there is more ETH that comes from the Carbon vortex, it can simply be added to the existing order for bigger buying power. I prefer the DAO to buy BNT at a discount vs. spot price since we can burn more BNT and it provides support for the token when the market is falling.
What I suggest to foxsteven is to put all these options for the DAO to decide. Option 2 is similar to Option 3
Function that trades each TKN for ETH on another exchange, based on a decentralized oracle such as Uni v2/3.
Step 2. Split ETH 50-50 into two LSDs such as wSTETH and rETH
Step 3. Create a strategy around this which is very easy to do as these two tokens trade almost at parity. From richardsonmark
if I pick with my eyes this should be buy at .95 and sell at .97 its that easy. I also shared a better idea earlier
take the last 30 days and get the average price. If you want to have two limit orders add 2% to the average price and make that the sell high limit order. Subtract 2% from the average price and make that the buy low limit order.
If you want to have range orders then have the sell high limit order be 2%-4% above the average price and the buy low limit order be 2%-4% below the average price.
Step 4. Nothing else to do, strategy will continue forever on replay
This proposal needs to move forward as the community is waiting on next steps. Uncertainty and indecision is never good for any protocol or project. There is no luxury of time that is available either.
I see no one objecting to the surplus tokens being swapped for another asset. I suggest then that the first proposal is to do that and convert it to ETH using whatever method you want to use. We can continue the discussion around how do use that ETH and whether that is using it for a stable, eth lsd, or bnt strategy. I think we can make all options available to the community and have the DAO decide via snapshot using three proposals.
I donāt want to drag this process for more than 30 days and expect that we should have a proposal for converting the surplus to ETH for the 9th or the 16th of this month.
Post a proposal to convert the surplus to ETH based on a Public Function (for example what @yudi posted in the discussion above).
The ETH should be sent to and held by a new contract that is part of Carbon: carbonPOL.
Notes that should be included:
Trading the surplus should only be done on pools where the trading liquidity has already been set to 0 (the protect LPs in those pools).
These types of actions usually require an incentive for users to call the public function (and pay the gas). I suggest letting the caller take 0.2% of the TKN. (for example, there are 10,000 TKN - someone calls the public function to sell for ETH and the caller gets 20 TKN and 9,980 TKN are converted to ETH and sent to carbonPOL. I have no objection if you use a different number there.
Min return - When TKN is being sold for ETH, how much slippage is acceptable before simply reverting the tx? Some long tail tokens we should expect this to be a bit higher than some of the more well known tokens.
This will need to rely on a decentralized oracle such as Uni v2/3.
Agree with this, and to add on to suggest to separate the components of the proposal into different votes to avoid having a foundational decision (i.e. should we do this or not) tied to a specific approach, very similar to how @mbr proposed Carbon.
OK, in agreement for using the suggestion with Yudiās method and then sending the ETH to carbonPOL. I think Min return should be between 0.2 and 0.5 as this is what aggregators use as defaults.
I am looking to continue moving forward with the strategies. The token surplus is already in the process of being converted to ETH. The next vote should be on how to utilize the surplus.
I see no new strategies mentioned on how to utilized the surplus and that means that the DAO should choose from three options
First proposal for the stable USDC/USDT strategy as outlined by richardsonmark in the first post
Second proposal for ETH-LSD/ETH-LSD strategy like wsteth-reth as outline in post #31 and other posts here by me
Third proposal for BNT-ETH strategy as outline by foxsteven in
I recently listened to a recording of @mbr from twitter and he said the following about an ETH-LSD strategy
I have been playing around with a bunch of different pairs uhhh and from a strictly statistical arbitrage perspective ummm RETH and wSTETH are a phenomenal pair to tradeā¦its uhhā¦its like one of the LAZIEST umm trading strategies that Iā¦think I have ever developed and I am uhh convinced laugh laugh that you can make it like an institutional grade uhh product out of its uhhh its that predictable
I recorded from another phone and made available an mp3 of the 3 min clip for anyone to listen. The last 30 seconds is the extracted quote
I want to hear from @mbr if he is now in support of the ETH-LSD strategy and if Bancorians should even consider a stablecoin strategy? I put this in a previous post for the benefits of an LSD strategy:
The stablecoin thing lacks support, I consider that conversation over.
There is no easy way to manage an ETH-LST strategy at the DAO-level; LST-LST strategy might be possible, but we are still dealing with the problem of how to convert the POL and vortex fees into ETH securely and in a decentralized manner. I see this consolidation of value into a single token as a necessary component to the path forwards. However, to then begin another process for exchanging it into something else for the purpose of building a strategy at the DAO-level is maximally inefficient.
The priority is to continue to address the deficits - to that end, I would think that swapping the ETH back for BNT and burning it is preferable. This can be done on our own BNT/ETH pool, or by creating a disposable limit order for BNT on Carbon, and I expect both can be done with relative ease via a public function with appropriate limitations and parameters.
