Overall I think this is a good idea although it might have been executed for other motives. There is currently two proposals about the vBNT burn rate and most likely one of those will not pass while the other one could potentially go into effect (I am not sure, too early to say). I think this proposal can be improved and developed in order to make a more compelling case to the Bancor DAO.
Here are some reasons why in its current state it doesn’t have my support and what I think can be done to improve it.
- My understanding of the vortex is that BNT from swap fees are swapped (the protocol pays fees for this swap) for vBNT and burned. If we have TKN from swap fees then those are swap to BNT (the protocol pays fees for this swap), followed by another swap to vBNT (the protocol pays more fees for this swap) and then burned. What this proposal is seeking to do if I am understanding correctly:
is that 50% of the vBNT that normally gets burned in the final step would be reallocated.
If this goes into effect then the vortex burn rate is no longer the actual burn rate because there is caveat that 50% goes towards something else. Personally, I am of the opinion that the fees that are set aside for the vortex burner should all be used for that specific function and we shouldn’t syphon it for other purposes. Specially since some of these rates could be set dynamically in the future (as was the original intent, perhaps when we are on L2) and having to account for other provisions could end up mucking the smart contract that adjust itself dynamically. What if the DAO decides that in the future we would want a different portion that gets reallocated? This now means that you are now looking at making modifications to the smart contract for this change and potentially deploying a new one.
If you want to collect fees for brand awareness purpose (I still think that it is aiming small, better idea below) then do it outside of the vortex. Leave the vortex as is and bring a proposal to the DAO that collects a small percentage of all trading fees for what you intend to do. Projections of how much will be collected at different percentages can be based on total platform fees collected in previous weeks/months.
- The vBNT that would normally get collected by this proposal is highly variable in price due to multiple vortex factors (people leveraging, burn rate, BNT price, etc…). When you collect the vBNT and by the time that you decide to use it to fund a brand awareness campaign, the vBNT to BNT rate could have gone against or in your favor for when you swap (I don’t think anyone will take payment in vBNT) to BNT or to TKN (some might not accept payment in BNT so you will have to swap to TKN). This means that you are paying fees again to go back from vBNT to BNT or to TKN. I don’t think this makes much sense since you could have collected the fees in their original state (either BNT or TKN) and put them somewhere else until you are ready to distribute them. Ultimately, you are not wasting a portion of the funds that you collect by doing a bunch of swaps that you will have to later undo.
A cool thing about collecting swap fees in their original state is that the fund that you are building will naturally be diversified due to the nature of all the tokens that we support. This is better than having a fund that’s solely composed of one asset (vBNT). This also gives us a large advantage over other communities which have a similar problem of having their community funds solely be composed by their governance token.
- This proposal is good but it is aiming small. I think you will get a lot of support from the community if this proposal aims to develop a Bancor Community Fund (BCF going forward). This is different than the fund that the Bancor Foundation has which the community is not privy to. The BCF would be no different than what other DAOs have:
and would put us on equal footing with other protocols. I could potentially see the Bancor Foundation itself donating some funds to the BCF if we gain their trust and manage it well.
What I think we should propose is the creation of a BCF that would let us utilize the funds for ecosystem, DAO, and community grants (others can be proposed, I borrowed from Curve/Aave). These type of grants would have the common goal of encouraging and developing the Bancor ecosystem and empowering the community. The way I would see this working is for there to be a Bancor council composed of Community Members (they can be rotated and voted by the community) and Bancor team members (decided by Bancor). These folks can serve as a filter for any applications to the BCF. Grant applications that have been vetted by the Council can be brought up to the forums or community calls for any discussions. Those seeking for a grant from the BCF can make their case to the community. Ultimately, the application will be approve or rejected by the Bancor council by simple majority voting. The Bancor council members can incorporate feedback receive as part of this process to make their decision in addition to any personal judgement.
The above is a long read but I think the process to get his started looks something like the following:
- Bring up the creation of the BCF to the DAO
- If the BCF is approved, start the creation of the Bancor council. Vote for community members as part of this stage.
- Create a multisig controlled by the Bancor council.
- Start figuring out how to fund the BCF (collect percentage of trading fees? Bootstrap by printing BNT to the multisig?) and bring this up to a vote to let the community decide.
- Come up with a set of guidelines for the different types of grants. This will involved a set criterias and dollar amount range for each type of grant.
- Advertised the BCF and let people know that they can submit grants to the council.