Mark is very much part of the discussions already and he’s currently working on the next fee generating feature which I believe we all agree is necessary (and probably more important) than fee distribution.
So I think we should make progress with these two avenues in parallel.
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Nice. Recommend keeping that on the comms, really important to let everyone know.
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Naturally, I expect it on the forums in the upcoming days.
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It is a hard sell as I think many token projects will see it as a negative on their end if they are no longer earning fees in $TKN. If they want to sell $TKN from their reserves or treasury on the market then that is typically voted in by their DAO. Having $TKN being sold for ETH or DAI automatically might make it harder to approve DAO stakes if their members are aware that their governance tokens being earned from trading are sold for DAI or ETH. Obviously, token holders don’t typically want any selling to occur and would much rather have the opposite happen (absorbing tokens to remove them from the market).
The security withdrawal fees would probably need a larger discussion as the protocol has had BNT distribution disabled. I think that now that insurance is not being provided that any security withdrawal fee might have to be performance based as opposed to on the principal. Maybe, this is something that is done when fees as distributed to LPs or alternatively it just becomes part of the vortex (having a higher burn rate).
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@foxsteven should we update the original proposal to include option 3 as well? It is worthy of an addition given that is the one that requires the least amount of development efforts.
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Sure, no prob at all. Let me know exactly what you would like to be included.
Something like the following @teamAsaf FYI
Yield Throttling Model:
This solution diverts the majority of fees to attack the deficit, while simultaneously buying BNT and using it to burn vBNT. Note that version 3 of the vortex is not yet live.
- Turn the network fee on V3 to 95% - This means 95% of all fees generated by trades are used by the protocol and not immediately passed to LPs.
All Fees in BNT and treated as follows:
- 95% sent to vortex
- 5% of fees remain with the LP
All Fees in TKN and treated as follows:
- 95% of collected fees are collected in the token vault & used for building a surplus. These tokens are not made available for trading and are therefore not exposed to any deficits from AMM trading.
- 5% of fees remain with the LP
Example:
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Trader trades WBTC for ETH
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WBTC gets converted to BNT - produces a fee in BNT 95% sent to vortex and 5% to LPs
-
BNT converted to ETH - 95% of fees are collected in TKN and sent to the vault to build a surplus in TKN and 5% is given to ETH LPs
Therefore
- Assume the protocol generates $35,000 per day in fees (numbers used here are for ease of explanation - the math is simple enough anyone can test with their own assumptions - accurate 24 fees can be seen on the UI)
- I have seen that on some dune pages the fees displayed ignore the vortex/network fee
- Total fees would be about $1,000,000 for the month
- About $475,000 BNT gets sent to vortex
- About $475,000 of TKN gets moved to the vault to build up a surplus in TKN
- About $50,000 goes to LPs
Key Parameter
- On the BNT side, the split between the vortex and BNT LPs
- On the TKN side, the split between TKN sent to vault to build up a surplus and TKN LPs
- Note that as the deficit decreases, the 95/5 split can be easily changed by the DAO
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Love this option. Intuitive and simple, and provides in my mind some additional backstop if deficits get out of line. Easy to understand for the common user.
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95% is not enough. Just do a full 100%. There is no purpose of earning yield on Bancor right now anyways. All we want to do is withdraw, so we need to turbo charge the filling up of the deficit. What purpose is there in earning yield right now if you can’t withdraw without your haircut anyways? Put the extra 50k into filling the deficit. I don’t want to have to wait years to be made whole.
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So if I understand well, with 35k$ per day in fees, it would take ~30 months to erase the entire protocol deficit? Maybe even more if a TKN start to skyrocket against BNT price (which will certainly be the case soon with ETH merge and LINK staking coming)? What is your strategy on this case?
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Great option! Simple, intuitive, and with a crystal clear rationale.
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So lets say we go with the Dai model.
How do we incentive LP’s to join pools with deficits?
-
- Would/should they except to earn a bigger % of Dai payouts/higher yield?
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2a. Would giving LP’s to these deficit pools more or less bnXXX token, be a helpful way to earn/track extra rewards?
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2b. When LP’s deposit to pools, is it possible to give variable bnXXX tokens to depositors based on the pool health? Less bnXXX tokens when the pool is healthy, more when in shortfall?
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Once the protocol is whole again(or even the deficit pools are at parity), the protocol can switch to a portion of the vortex fees purchasing the inflated bnXXX tokens from the market.
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Hey, there is a discussion around this occurring in the following thread:
best to keep this thread focused on the potential direction for recovery.
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Hey, pool tokens are based on your deposit and the liquidity in the pool. See the following for an example on how this is done. Note that this uses BNT as an example but can apply to other tokens as well:
Start:
Input: 100 BNT deposit
Output: 100 vBNT + 100 bnBNT which unlocks 100 BNT in pool
After some time:
120 BNT in pool due to fees + rewards
After more time, another deposit from a user:
100 BNT deposit for a total of 220 BNT in pool
Current Shares:
Their share of the pool → 100/220 = ~45%
My share of the pool → 120/220 = ~55%
55% + 45% = 100%
vBNT calculations:
100/x = 55%
x = 181
181 - 100 (what I have in terms of vBNT and bnBNT) = 81
55% = 100 vBNT + 100 bnBNT (my share)
45% = 81 vBNT + 81 bnBNT (their share)
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Is it possible to do the DAI model and Yield Throttling at the same time to turbo change refilling the deficit? We should act as if we are in a race to refill the deficit because once token values start going back up again, which ETH and LINK definitely do over the next year. It could be even harder and take even longer to refill. We need to stop discussing alternative methods and just implement these already and get to filling in the deficit, otherwise may as well just take a haircut right now. It would be horrible to be stuck in Bancor as our tokens begin mooning and our haircut percentage just gets worse. We need guarantees that if Bancor cannot refill the deficit on it’s own, that the foundation will step in and bail them out.
Otherwise instead of getting the community to expend mental effort trying to solve Bancor’s problems, we should just start a class action lawsuit against the foundation and legally force them to bail us out. The way I see it, the foundation not wanting to bail the protocol out is in incredibly bad faith. The team should be working on solving the obstacles that are in the way of the foundation bailing them out, and not just relying on users to solve their deficit problems. Relying on users to solve your problems will not restore trust in Bancor, and mostly everyone here will leave as soon as we are made whole. The only way to restore faith in Bancor is with a foundation bailout. Bancor will be dead in the water if there is no bailout, or no fast method for filling in the deficit that doesn’t take years.
Ty Glenn.
With a new DAI model, I can see how the treasury can buy back TKN to make LP’s whole over time. But what about VBNT LP’s? How would they be made whole? Should/Would we be expect to give them BNT back when they withdraw? As all VBNT LP’s will never withdraw their full initial stack again correct?
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There are many options.
We could based on DAI on the staking ledger as opposed to the vault for example.
That’s assuming no other changes, improvements, upgrades etc. which isn’t the case.
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