Okay, I might not be the biggest brain around here, but I check the charts as much as anyone.
This is the 7 day chart for vBNT
This bump seems to be when the vortex went to 40% on V2.1 (expect to move to 70% than 100% soon)
If this is how the market responds, why not burn BNT instead of vBNT?
Seems like it would reduce the deficit FAST
Can anyone figure out the difference in price impact between these options?
Only if you can predict how people respond.
The economic impact isnt huge as BNT and vBNT have nearly the same price
vBNT - 40 cents
BNT - 50 cents
So a 20% discount using vBNT.
But the market seems to only see the benefit to vBNT
Well right now, and correct me if I’m wrong here, the BNT collected stays in circulation - it’s only the vBNT that is removed. So I wanted to know if removing BNT from the circulating supply would have a more substantial price impact than the current model.
Thank for posting @eldude
@lesigh - you are right that burning vBNT keeps the underlying BNT in a position of still providing liquidity.
If/when vBNT exceeds BNT value, there should be an arb available by buying BNT in order to get vBNT. Pushing vBNT price will secondarily push BNT itself.
Does that work if deposits are disabled?
The BNT only stays in circulation in the BNT/vbnt pool.
The TKN → BNT purchase pushes up the BNT price relative to the TKN price.
The BNT → vbnt purchase, pushes up the vBNT price relative to the BNT price. It does NOT impact the TKN/BNT price anymore.
So BNT is being bought back to increase the price.
Then, vbnt is bought at a discount and burned, locking in additional BNT in the protocol forever.
It’s a very genius mechanism that I do not think we should change.
The reason vbnt is going up in price more than BNT is because of 1) there’s a lot less liquidity and 2) the second exchange from BNT → vBNT.
That arb is probably closer to 1.1 these days instead of 1 because the protocol is providing less vbnt per BNT deposit.
Hey @TheOneJM
You are right that the vortex is more efficient - but the market doesn’t get it.
nobody is buying BNT cause of the vortex
Look at the chart in the proposal, this isnt the vortex, this is the market responding
Should this be moved to Level one?
I would like to propose an alternative solution given the current emergency situation at hand. I suggest the following:
If the average vBNT-BNT rate is above .5 for the past 7 days (the check will happen on Sunday at 3PM UTC) then we burn BNT for the next two weeks.
If the average vBNT-BNT rate is below .5 for the past 7 days (the check will happen on Sunday at 3PM UTC) then we burn vBNT for the next two weeks.
If we burn vBNT when the rate is low then we are getting a better bang for our buck. I think psychologically, burning BNT directly is what is needed at the moment. As part of this proposal, I would also like for us to tackle the BNT that has been collected in B3 which is sitting at the moment because there is no B3 vortex that exists yet. I propose that we burn any BNT that is being collected in B3 at the moment. This amounts to the following:
or roughly “164247” BNT as of today.
seems like this proposal could be revisited in light of The Plan that should be announced at least partially tomorrow on the community call
it’s a large change to tokenomics with little analysis as it stands
At the very least, go 50/50 burning BNT and vBNT.
Give the people that don’t understand the vortex what they want and burn BNT.
Keep 50% of the fees to more efficiently make BNT deflationary.
I agree with @thedavidmeister though, this should be tabled until we evaluate the proposal being released tomorrow.
No reason to rush this and this can wait till after any recovery plans are made available. There might be more input from the community on this and it doesn’t hurt to wait.
The problem with vBNT burning is that the BNT stuck in the protocol is still user owned.
Meaning:
The protocol minted BNTs in pools that earn fees are decreasing over time as the (protocol owned BNT)/(user owned BNT) ratio decreases, thus the fees earned by the protocol are decreasing and the buyback amount is decreasing. (depends on total liquidity of course → more liquidity = more protocol owned BNT in pools)
What needs to be considered is the future earnings of protocol owned BNTs in pools. vBNT doesn’t earn fees, more protocol owned BNT in pools does.
P.S.: With the implementation of a global fee structure the earnings from the protocol owned BNT are of little concern.
Burning BNT instead of vBNT is mathematically, objectively the wrong decision to make. Here is why: Why does Bancor burn vBNT instead of BNT? #Bancor #DeFi #Loans - YouTube
Yep, I’m all for the vBNT burn at the discount. After reading the current proposals more so. The protocol is transitioning to all out global fee structure and the fees earned by protocol owned BNTs are becoming irrelevant.
There should be a mechanism to quickly switch the burn to BNT if 1vBNT>1BNT without governance. As the shorting of vBNT is popular, the panic to the other side is also possible and is better to front run this situation.
I actually really like that.
