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) Reallocate 50% of Vortex Burner vBNT for Bancor Brand Awareness Campaigns
TLDR: BNT / Bancor brand marketing/SEO/paid ads/influencer activity is suboptimal and a bigger budget for this should be funded by reallocating 50% of the burned vBNT to drive improved brand reception and market awareness
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.
Bancor brand awareness is trailing other DEX products like Uniswap, Sushiswap, and Balancer on important DEX KPIs, like trade count, unique user count, and pool turnover.
This is a core problem, and fixing this is vital to Bancor’s long term success. Unless Bancor’s brand awareness increases, thus increasing pool APRs, once LM expires liquidity will vanish to find new yields. The awareness problem is very likely part of the reason why pools that have superior liquidity are still not getting their fair market share of trades:
As can be seen above, although Bancor owns 60% of the market on LINK <-> ETH Liquidity, we are only garnering ~25% of the trading volume. The same problem exists on other pools where Bancor has superior or parity liquidity when compared to our DEX competitors:
Other popular DeFi brands participate and pay for influencer ads. For the last year, one of the most popular DeFi newsletters, Bankless, has had AAVE and Balancer paid ads in each of their newsletters.
We need to be there as well, and this is how we can pay for it.
Increasing Bancor’s swapping functionality awareness to the greater public through marketing will further increase pool APRs to sustainable levels that will no longer require LM to keep liquidity in the pools.
Instructions:
Vote FOR to:
Reallocate 50% of Vortex Burned vBNT for Bancor Marketing Purposes in order to increase market-wide Bancor awareness and thus pool APR
Not against using fees or other revenue for the cause, but the burner is meant to be a liquidity locking device. I am voting against any burner funds being diverted from the burner vault.
I think the most efficient course of action is the Foundation would provide someone to cash in the funds towards various marketing/brand advancement purposes, and give the DAO an update on how the funds are being spent each month.
There are also several members of the community (not me) who’s core competency is in the area of marketing and branding, and they could serve as advisors for this fund.
I’ve had several members of the community reach out to me in support of this proposal but are not active discourse users. Apart from a few early dissenters, whos concerns have hopefully been met by edits to the proposal, I feel this should go good to go to level 2. Does anyone else have any feedback on the proposal?
Agree with this. We could increase the burner first, then assess the impact of such an increase, then put up this proposal at full 10% vBNT burn rate. Allocating 50% of all vBNT burnt is a considerable amount.
Also, this might set the precedent to turn the VortexBurner into a grant distributor, which is an interesting use case for it.
After first opposing the concept, I’ve come around to support the idea. In addition, I think that with the current surge in community engagement it would be a good time to formally propose something.
Fascinating! This is something we should definitely explore further.
I did yeah, thank you for raising those up, they are definitely related to this proposal and a good read.
On that topic, and to clarify, what is suggested right now is to essentially allocate 5%*50%=2.5% of swap fees for marketing and brand awareness. If the vBNT burn rate is raised to 10%, then 5% of swap fees would be going towards this campaign.
Finally, it might be important to occasionally review how much % is being allocated, as the total value will depend on swap fees, vBNT price and vBNT burn rate. A cap on the max vBNT that would be put towards the campaign could be considered.
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.
I think @glenn raises some really good points. I’m also not very receptive to a % of fees accumulated that is a function of several other parameters that will be changed by the DAO in the future.
Another reason to debate this and push the proposal for next week?
I agree. The deflationary effect of the burner is reduced if you don’t actually burn the vBNT.
BCF is interesting but I wonder what purpose that would serve that the Bancor Foundation couldn’t do. For example with community grants, I believe those already exist and are paid by the Bancor foundation (as Nate mentioned on the call today, there are content grants, data analytics grants, and developer grants). To the point of marketing, does the Bancor Foundation pay for marketing? If not, why not? Seems perfectly within their purview to create a “marketing grant” that some enterprising people could take advantage of.
Before I would consider voting for something like this I’d like to have some idea how the money would be used and who would be implementing this strategy. Many traditional forms of marketing don’t work in the decentralized space. Is this something Nate can do? Are we hiring an SEO expert? Someone who is highly knowledgeable about crypto market? Does such a person exist? Does influencer based marketing work in crypto? How would we actually get metrics that prove that? I am far from a marketing expert, I just don’t yet understand how we can prove that certain marketing efforts actually work without KYC.
I see it as making the process more transparent and also in the spirit of decentralization. At the moment, I am not even sure how someone goes about making a pitch to the Bancor Foundation about getting their idea funded or become a recipient of a grant. The idea of the BCF is to make that process more transparent and potentially have those individuals pitch their ideas via our governance forums, some other medium (online web form), etc… Ultimately, I still think that the Bancor foundation would participate in the process but additionally they will have the help of the community as well.
There is some precedent from MKR doing something similar with their DAO:
This is also why I think this proposal needs to be developed. We know that @tfns mentioned coinbase earn which has been brought up previously as well. Coinbase earn appears to be cost prohibitive but something like rabbithole (also mentioned here) could potentially be better (I think this is more in the spirit of DeFi as well). @tenzent has brought up brave ads which I also think would be a good way to use funds for brand awareness.
Ultimately, I think this proposal has quite a few components and should be split up. I think the first step is to gauge the community interest and whether they would want proceed with a brand Awareness campaign (simple yes/no snapshot vote, we don’t even have to worry about funding at this stage). If the results are favorable, then the next steps would be to figure out how it is going to be funded (we print BNT to a multisig, collect fees from swaps and divert them to to a multisig, reach out to the Bancor Foundation to see if they can help, etc…). Next steps would be to brainstorm different ideas for brand awareness campaign and narrow it down to a few candidates (we can create a poll in governance and ultimately narrow it down to a few options that can go up for vote on snapshot). Once that happens we can proceed with the option that the DAO finds more attractive.
We don’t necessarily need to reduce vBNT burning to fund this. The foundation can fund activities like sponsoring newsletters and we are experimenting right now with various forms of paid marketing. I’ve been meaning to reach out to Bankless - they haven’t been as responsive lately. If someone has a solid contact there, we are more than to re-connect. @DarkKnight
This proposal was in response to the 20% vBNT burner proposal that didn’t pass. I think it is OK to move to the deprecated proposals section. As is, I think this proposal needs more work if we do want to bring up to vote in the DAO (I don’t think the OP is inclined to bring it up anymore given the outcome of the vortex vote).
