Yeah I agree. To stay in the protocol is definitely a high risk endeavor given all of the obstacles that must be overcome. They should allow the LPs to leave with a receipt token that gives rights to some sort of a vested recovery pool that will be funded after the new features are battle-tested, vetted, and proven to generate yield. I don’t like how easily they think this can be done. It’s definitely NOT easy and should be stated as such.
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Yeah it’s clear time is the enemy here, IOU’s/Receipt tokens give us that time, and allow us peace of mind and de-stresses us in the meantime. Even if it took years, if I got a slow monthly payout of a few Link from the recovery pool, I’d be happy to be paid back that way, rather than try to fight a ballooning deficit and watching my remaining 50% accrue even more IL. I think this is the best way to do it, and we should be speedy about implementing it, too much time has been wasted already. It’s been a month and I see no solution implemented yet.
Does anyone have any arguments against issuing IOU receipts to so we can rescue all our hostage capital, and have a clear head and lots of time to solve the deficit problem without it being a ticking time bomb?
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This would be great for LPs but would ruin Bancor as LPs would have no reason to stay. BNT holders would be screwed and thus the proposal would never pass a vote.
The DAO needs to turn on the vortex burner in accordance with one of the proposals IMMEDIATELY. A month has already passed and the situation has only gotten worse. We don’t have time for endless debate. BNT needs to be forcibly pumped and thus lower the deficit to start building positive sentiment among the community.
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Just trying to serious flesh this idea out here. Pulling liquidity with an IOU in place is a double edge sword in a way. You are reducing deficit by taking the haircut and placing the balance of the haircut into an IOU situation (whatever the details of that may be)…however, pulling liquidity also removes liquidity needed to perform swaps, generate fees and work to eliminate deficits. Not sure the short term benefit is worth the long term consequence.
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I think the bones of the concept have merit…going to simmer on it and post any additional thoughts/factors that come to mind. Thank you.
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From the telegram:
"I think the biggest issue is the loss of trust. We need an announcement from the foundation, promising to make the OG LP’s whole if they stay until a certain date. They should put 30k ETH on a public wallet and write a smart contract to distribute the ETH as ILP to LPs on this date. The news alone would push the BNT token up, making the problem possibly nonexistent when the date arrives.
This way LPs could rest assured they will get back their original stack back no matter what, so more liquidity would stay and the protocol would have a better chance to recover. Devs can experiment and if the experiment fails, the foundation makes up for it and fullfills the promise of 100% ILP with the ETH wallet. If it succeeds the foundation can retain the ETH."
Not the worst idea, is it?
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To give people an informed choice on how to manage their risk, I’d like to see each proposed solution, (DAI, Protection, Throttling) wargamed in relation to a token mooning against BNT. The purpose of this would be to provide understanding of the potential timeframes involved in being made whole.
For example;
TKN and BNT hold parity = 25 weeks until the deficit is closed
TKN goes 2x against BNT = 50 weeks until the deficit is closed
TKN goes 10x against BNT = 250 weeks until the deficit closed
etc
As far as I can tell, this is the primary concern of all token holders and is something that has been seemingly underplayed by the team as it relates to the current situation. Putting this front and centre may help to alleviate a lot of the nerves around this problem. Pretending it doesn’t exist is a surefire way to feed the negativity and contributes to the/my own perception that the team is too under-resourced to handle this in a way that will prove optimal for LPs.
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should we at least draft up the DAI model for a vote since it seems to have the most support out of everything here? its a start, right?
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I believe that @glenn was going to post a temp check here, and then eventually on Snapshot.
Is there a specific timeline for the snapshot? Rather than eventually.
Keep in mind that you can also create a poll here or a temp check on snapshot.
Hey guys, I created a proposal here that is relevant to the discussions of a potential direction for Recovery: Proposal: Grant Bancor Team Emergency Powers in Event of a Wind Down
In the event of a potential wind down, the Bancor Team must have the ability to halt all trading and withdrawals from all liquidity pools to ensure an equitable recovery for all LPs.
This proposal aims to give the team such emergency powers. For those who are legal-minded and familiar with how bankruptcy works, this power functions similarly to an Automatic Stay, which prevents a run on the bank and inequitable distribution to creditors when insolvency is readily apparent.
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Got it, there is no timeline for snapshot
What about an ILP Roulette?
To prevent a bank run, and to give BNT time to recover. What about randomly re-enabling ILP on lets say 5% of LP wallets every week, allowing them to withdraw (if they even notice they won the roulette) without creating a bank run situation on BNT. There can even be a 1 week cooldown inbetween each roulette week to make sure BNT can recover from any death spiral.
We need to start adopting more solutions for LP’s because otherwise you leave a very bad taste in everyone’s mouth and LP’s won’t want to use Bancor. All the other fee generation models require LP’s to be present so you can generate fee’s to fill in the deficit. But we know at least with LINK and ETH, those LP’s will take the haircut by the years end anyways for staking. So you are also going to have to reopen deposits and allow new LP’s to stake in Bancor sometime soon to counteract that or you will have an LP death spiral with the deficit. And nothing Bancor has done has been remotely hospitable for LP’s. CryptoKitty had a great idea about the IOU tokens being prioritized as a 2nd priority for payback over the 1st priority for those who stay in. Please check out his proposal thread about it. What about a mixture of priority weighted IOU’s and Weekly Roulette ILP reactivation and also re-enabling deposits so that the fee generation doesn’t death spiral when Link staking starts.
It’s frustrating the Bancor Dao is acting like it isn’t sitting on a ticking time bomb right now.
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@glenn can we get a snapshot for the DAI proposal?
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Alternative option would be a “leaky bucket” approach as I mentioned above in regards to solution #2, but with BNT minting instead of global protocol fees.
I’m not sure that’s the best approach though, cause it can still increase the deficit, but all options are on the table.
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I personally like option 3.
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I feel like we’re all missing the forest for the trees here. 95% of the discussion here is about how to manage the fees, assuming we are already generating the fees, which we aren’t!
The discussions should be more geared towards how to actually generate the fees in the first place. Because if we don’t have the fee generation in the first place, all these fee management tactics like the DAI model, protection model, and yield throttling don’t mean a goddamn thing!
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I agree with this completely. I would rather go this route than pausing the pools route I suggested as time is crucial and an IOU could be easily implemented.
Its not ethical or moral keeping LPs in the protocol by threat of huge loss as deficit grows daily. Look at MATIC, ETH and LINK as of late. As deficits increase the community only gets more restless, which is painful for all involved.
Let the LPs that want to leave, leave with an IOU and the remaining LPs continue sharing fees and receive priority repayment. It’s not fair to assume all liquidity would leave, some would certainly stay for priority and others also for the fees.
This will do a ton to regain community trust, will destress the situation but very importantly the DAO and contributors can focus on pushing out product.
IMO this needs to be proposed to the DAO and voted on
IMMEDIATELY.
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I agree and it was mentioned before - that’s why there’s gonna be new proposals to discuss fee generating features soon while the community is discussing what to do with the fees in parallel.
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