Emergency shut down plan for wBTC pool

I am suggesting that it is important for us to devise a plan specifically for the wbtc pool for the following likely scenarios

  1. BTC either goes on a major rally
  2. if the BTC ETF gets approved.

In both events, its likely that BTC will greatly outperform BNT, and that the deficit would also skyrocket out of control.

We can ether shut down the wbtc pool in the event of an etf approval , we can shut down the btc pool in the event that the wbtc deficit increases by X %. Other suggestions would be welcomed.

We should not wait until the damage has been done to then attempt at figuring out what to do next. This is the relaxed mindset that got us into this mess. ILP failing was a known possibility, but failing to have a plan and react to its failure accordingly was what truly caused this big mess. Lets not go there again

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How will investors be compensated while a shut down would take place?

who are the investors? no one is currently receiving any compensation

shutting down / pausing / freezing the wbtc pool would simply just stop the protocol from additional losses from a known potential threat.

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Alright, sry for the misunderstanding. I tought it was some mining or staking pool.

It’s an LP pool, but the DAO voted to divert 100% of fees towards the protocol to buy/burn BNT, so shutting the pool down wouldn’t result in any lost income for anybody, no matter how much trading occurs in the WBTC pool.

Yes, agree that this proposal makes sense, especially with Bitcoin halving coming up within 6 months. WBTC is one of those pools where the deficit value is so large that it feels effectively un-recoverable if it goes any higher, based on what we’ve seen over the last 16 or so months of deficit.

My opinion is that the percentage increase % trigger (or a "deficit reaches X% trigger) makes more sense. When the Cointelegraph fake news tweet came out in October, BTC boomed 10%+ in a matter of minutes, even with no major legit news outlets reporting it. I can only imagine real news would have the same, or greater, effect. Plus, I’m not quite clear how a pool could be speedily shut in the event of news. Like, what’s the specific trigger to automatically confirm that if we don’t expect someone to manually monitor newswires 24/7 and click to shut it down? “Reuters_reports_Bitcoin_ETF_approved=true”? Whereas I would hope that it’s easier/more feasible to automatically run a WBTC pool percentage deficit calculation in the system.

There is no need.

Once the pool shuts down there is no way back. The emergency shutdown procedure is already in place, and its an opt-in process.

Simply withdraw.


How? Where? How did you do it?

The difficulty is that a pool shut-down is essentially permanent.

The best case scenario is that:

  1. The pool is shut down and
  2. the price of BTC rallies hard, then
  3. the BNT/BTC price ratio returns to precisely where it was before the pool was closed,
  4. therefore allowing the pool to be re-initiated before
  5. a capitulation in BTC relative to BNT, thus resolving the deficit and allowing the pool to be closed forever.

However, some things to consider:

  1. This is a cumbersome and high-touch process, requiring near-perfect timing.
  2. If the BNT/BTC price ratio never returns (3.), then the pool is never re-opened. In which case, the outcome is the same as just withdrawing.
  3. If the BNT/BTC price ratio is overshot (3. and 5.), re-opening the pool may incur a significant arbitrage trade that may be difficult to justify, or at the very least will result in a lengthy governance process.
  4. Perhaps the opposite occurs, and the BTC rally is either a) disappointing or b) relatively non-existent or c) continues to underperform BNT as it has since Q2:

The short version is that:

  1. It is reasonable to expect that if the wBTC pool is closed, it will remain so forever.
  2. Even if we timed the re-opening precisely at the BNT/BTC price ratio stipulated above (3.), it makes no difference if the pool was open or closed in the interim. In fact, we would be slightly worse for wear, as closing the pool would mean that whatever value could be captured from the spread is simply not available.
  3. The only reason to close the pool is to signal that its present state is the absolute best it will ever be, in which case
  4. simply withdrawing achieves literally the same thing.

Great answer! Do you know what kind of pool it is? staking/mining? Can you get to the contract? Maybe we should set up a small fund or similiar for all the withdrawls. Does Bancor have a treasury?

This is from my email back in 2021. Probably a different pool, but I think I invested in a couple of em.

" Proposal: Increase Co-investment Limit to 2.1M BNT on the ROOK-BNT pool

  • This proposal seeks to increase the Co-investment limit from 1.6M BNT to 2.1M BNT for the ROOK/BNT pool.
  • KeeperDAO is looking to deposit a portion (~6400 ROOK) of their treasury on Bancor. Opening space in the pool will allow for these funds to be deposited on Bancor if KeeperDAO’s proposal passes in their governance.
  • A larger ROOK/BNT pool will reduce price impact and therefore attract more trades from retail users, aggregators, and professional market makers to Bancor.