Feedback Request: Potential Direction for Recovery

Community Chatroom (DISCUSSION)
102

personally, i think you raise a valid point but as a whole we should focus on a network wide solution.
eth staking is coming for many months now. not sure it is going to come anytime soon or if users are going to find it very appealing.
link staking is also been on the horizon for some time.

our goal should be to be able to increase fees so they are over IL and deficit.
when this happens, it wont matter if a specific token moons anymore.

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103

Tks for you answer.

Finally, I think decision making should be driven by data, and not some random assumptions. That’s exactly what brang us to the current situation…

Before taking any decision, we should be able to say things like “ok, given the current situation, if we implement this solution, then, based on passed data, we could expect such a result in X amount of time”.

As a software engineer, this something I always do. You can’t scale if you take all your important decisions and implement them just because you made some personal assumptions based on absolutely nothing.

I don’t see any of this currently and this does not reassure me at all.

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104

At this stage the idea of the proposal is to understand which general path we intend to go down.

The next stage is a more detailed spec on how everything will work likely followed by simulations that would provide the type of data and math you are looking for.

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GM

Updates:

  1. I edited the proposal to use the Vortex instead of BNT burning.
  2. I added the following to the original post and would greatly appreciate feedback.

@mikewcasale - can you update the awesome graphics?

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106

I agree. Let’s just kick up the vortex to 90% in B3 since that seems to be a common factor.

My understanding is that it isn’t even on in B3 yet. So the team also needs to prioritize that.

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107

The current status is that the BNT is collected here:

But it is not being burned as the V3 Vortex is not complete - it’s just being collected.

I am not sure if it makes sense to complete it now, and then change it shortly after.

108

Glad to see the additions to this proposal relating to fees. I think that a priority based on making people want to use Bancor is the only way through this rough patch. Figuring out a way to generate more fees through the protocol seems like it should be the priority since the IPL is in disarray at the moment.

I keep coming back to the same thought. Without IPL what incentive does anyone have to use Bancor? I’m having a hard time answering that. So any efforts and proposals should be geared toward clarifying and proving how that question will be answered.

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110

Thanks Yudi for this extension and comments. I want to propose an addition to the new liquidity section. Not to include only new tokens, but Eth, Link and other current pools’ tokens with deficit can be introduced for new liquidity as new pools such as “Link Pool 2 New” (which can be treated like new liquidity pools without the deficit and to include in the new mechanism) the case that would generate more liquidity as well.

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111

yep will update shortly

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112

I’ve been reading through all the proposals and a ton of great ideas here. Wanted to provide some non-technical perspective on where I think we are:

  1. Looks like all proposals are going after the current main problem, which is the deficit. Although there’s some disagreement on the mechanisms, I see it as everyone is on the same page and moving in the right direction. I’m seeing a lot of quick moving, positive momentum on tackling this aspect.

  2. Also see good considerations for both near-term corrections to the protocol, while also considering the long-term ramifications of each action. Honestly impressed with the level of high-level thinking and discussion going on. The overall sentiment seems aligned that we want to get things corrected, while also setting the stage for a healthier and more robust protocol for the future.

  3. For all the disagreement on here, they’re all directionally productive. This is a clear difference relative to the mosh-pits of Discord and Telegram right now. This is where the problem solvers are, and for everyone that’s contributed with thoughtful proposals, from a non-technical person, I greatly appreciate all of the time and effort. I’m just on the sidelines throwing out high-fives where I can.

Thanks everyone!

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Much appreciated @PaperStreetCapital

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114

diagrams are now updated

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115

Yeah currently in v3, there’s no vortex burning but the network fee are actually accumulating in the contracts.
So even though nothing does anything with the network fees, they are still taken and kept in a separate bucket.
I think it makes sense for us all to get to a conclusion re. the solution before we go and implement the previous vortex plan though.

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116

That’s an option but keep in mind the following -

  • v3 was designed in such a way that there’s only a single pool per token (something you can only do when you have single token staking)
  • multiple pools of the same token means that the liquidity is distributed, so less efficient
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119

Whoa very important point [quote=“thedavidmeister, post:98, topic:3787”]
v3 the goal is to amplify fees that we know will never outpace IL without amplification, and is more direct as the protocol first sells TKN to buy BNT then moves the BNT to the vBNT owned liquidity pool, taking it off the market for every other TKN
[/quote]

120

When a position of TKN is deposited into a pool, it is not sold to pick up a BNT position. BNT is minted equivalent to the TKN position being added. It is only through the process of trading that any trades between TKN and BNT takes place…no different than any other DEX with ETH as their universal numeraire. That minted BNT position is then burned upon TKN exiting the protocol, or burned when BNT staked position are added by users. The burner only affects fees collected that come from the trades taking place.

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121

In reviewing these options more, doing some analysis from a development requirement perspective, impact to attracting new users as well as token projects…I am not sure there is a better solution that just leaving the vortex burner cranked up and focusing only on fee generation. Here is why:

Nothing IMO is going to get deficit addressed faster than just burning vBNT or BNT. Plus without growth in fee revenue, neither of those models address the current state any better without adding more fee generation. Lastly, the biggest criticism to all of these suggestions is that of fee generation not being there for any to make a difference. So if those items are accurate, then leaving the burner cranked up and focusing on fees is the best path forward. Here are some more justifications:

  1. The burner option is in place and requires zero development effort.
  2. It is the most efficient way to reduce deficit second to deposits being made or BNT outperforming TKN respective to each pool.
  3. In discussions with people long on Bancor (and YES, many exist but are quiet), it is clarity that is sought and understanding on how this will be handled moving forward. Once that is determined, liquidity is on the sidelines waiting to come from new white listings, etc. Agreed, that new listings do not assist with pools in existence already with deficits, but white listings do account for fee generation that is also beneficial to the entire protocol if results in burning BNT.
  4. The DAI model requires more diligence to vet, and is going to require both more development time, as well as fees to be incurred to process such payments. Outside fees to the protocol is less going to reduce deficit and create surplus. Trading from existing pools for this method is counterproductive.
  5. The DAI model would not be attractive for most projects listed on the protocol as they would prefer to have fees paid back in their own token without having to do outside trading and staking to get it there. I imagine, that is also the case for those who would like to benefit from auto-compounding features that exist today with positions.
  6. The DAI model also offers no deficit coverage for withdrawals during deficit scenarios…which is where we are now and takes away from contributing to deficit reduction by shifting any percentage of fees away from the pools. So, no different than the situation now, other than we are redirecting fees from reducing deficits or increasing staking positions.
  7. Protection fund model is the same in the sense that money is redirected from the pool at some ratio, but placed into a fund that can be used to offset deficit withdrawals at whatever level the fund could support at that time. The challenge here is how to allocate such funds in time of withdrawals in a way that is fair to all should their not be a means of covering a large withdrawal scenario. This is complicated, requires development and ultimately, anything less than 100% coverage to all at any time will not be acceptable IMO and put us right back where we are now.
  8. Leaving the burner option as the solution is immediate, feeds deficit reduction and building surplus fully and in the future can be adjusted to feed more rewards to holders when surplus is great and adjust back if deficit looks to be a threat again. This could possible be improved to happen dynamically based on ratios determined and researched to be the best parameters to work with.
  9. Burner option also leaves everyone getting only TKN back at time of withdrawal and only limits best time to withdrawal based on the deficit condition of the pool. Which still ultimately points us back at fee generation as the answer and doing so shortens deficit reduction time as there are many more productive options for those than creative framework that still requires more fees anyway.

I now believe the answer is to clearly stick with burning and move forward with fee generation, new fee features and deficit reduction through this model which requires no additional dev time, no additional action, and the entire community of TKN and BNT positions can shift focus to ideas and effort with revenue generation.

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122

Regarding your question on lowest trading fees, bear in mind that many of the Bancor v2.1 and Bancor v3 pools already have the most competitive trading fees (0.1-0.3%) of all the AMMs, so aggregators route through Bancor pools very liberally (as they should).

The high vortex fees in the proposed solutions are derived from the aforementioned trading fees only, and do not represent a higher cost of trading on Bancor. So, in the DAI model, it is proposed that 100% of a 0.1-0.3% trading fee goes towards the protocol rather than to LPs, as opposed to 100% of the trade itself, which would of course be less-than-optimal for all parties in the long run.

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123

@yudi, appreciate your comments, but what is Mark’s solution to all of this? It feels like he’s the one person in the world that would know v3 at the back of his hands. If he has nothing, shouldn’t he be weighing in and steering this discussion?

Currently, all solutions assume an infinite timeline for fees to accumulate. As each day pass, the liquidity only decreases, reducing any leverage we’ve got.

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124

What is the continuation after cranking up the burn? Are ILPs coming back, as it stands, any new TKN side depositors will assume the deficit. How do we resolve that? We need reasons for LPs to deposit in bancor, an uphill battle no doubt.

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