Hey everyone. So I had a pretty long discussion with Dave in telegram and through that conversation a few interesting data points came to light. As of this post there is about 482,000 BNT sitting around waiting to be used - I’m just going to round this to 500k because it will be there in about 5 days anyway.
- Should we spend 500k BNT on vBNT and burn the vBNT all at once?
- Should we break up the spending into smaller parts over a longer time frame?
- Do we spend all 500k BNT on vBNT? Is there some magic number that is “correct” or “better”?
- So what do we do with 500k BNT?
Lets answer these questions in order.
- Should we spend 500k BNT on vBNT (“vortexing”)?
Burning 500k BNT would mean that 500k BNT is burnt (duh), but swapping to vBNT means that there is a chance to lock away even more BNT. A vortex of 1000 BNT results in 1167 vBNT (as of the time of writing) meaning that we are able to lock up an extra 11.6 % at, essentially, no cost.
But how much vBNT would a swap of 500k BNT get us? A vortex of 500k BNT would result in 420k vBNT. A NET LOSS OF MORE THAN 15%.
This gives s a very robust metric to work with when looking at the vortex: “what is the maximum amount of BNT that the vortex can accept before it becomes more efficient to just do nothing with the BNT?”
- Should we break up the spending into smaller parts over a longer time frame?
This is a decent point to look at - vortexing 50k BNT once a week could allow for time for users to sell their vBNT to the pool and make the vortex a net positive, because at current swap rates a vortex of about 200k BNT would bring the ration up high enough that it isn’t worth it anymore.
So I think a relevant question to ask is: is it worth it to break up the buys when you can’t even vortex 4% of the BNT we have without bringing the ration up?
Personally, I tend to think it would be a lot of legislation for the DAO for very little return. I am quite happy to budge on this position if someone can give me some kind of data-driven argument that “no, people will definitely sell vBNT if the ratio gets too high,” but I don’t think such data exists. Definitely could be wrong here though.
- Do we spend all 500k BNT on vBNT? Is there some magic number that is “correct” or “better”?
So sending 100k BNT to the vortex gets us an extra 9%
But sending 200k BNT to the vortex only gets us an extra 1.5% (check the 200k BNT image from earlier). The extra 1.5% is definitely not worth the legislation especially when a buy of 10k USD of vBNT would drive the exchange into a net negative. Its with margin of error essentially and we should just leave that to the V2.1 vortex.
- So what do we do with 500k BNT?
The data-driven responses are as follows:
A) Send 100k to the vortex and send the rest to be burnt.
B) Send 100k to the vortex and the rest to a DAO treasury which doesn’t yet exist.
C) Send it all to be burnt.
D) Send it all to the treasury which doesn’t yet exist.
I think that the best thing we can do is option C - send it all to be burnt, but this should not be a thing done quietly.
This should be a monumental occasion. We should wait and keep collecting until we hit 1,000,000 BNT. At the current rate that B3 is buying BNT that will happen in 6-12 weeks. Which is plenty of time to get the word out and let people know. And if it does work out that this happens about once ever 5-6 months, then we can start a cyclical hype train two times a year as “OH SHIT BOY ANOTHER MILLION!” shows people that there is enough use of the protocol that someone is paying for routine burns of 1000k BNT.
I think this is a very data driven argument; I would love for someone to pick apart my math/examples/reasoning if they are faulty and I hope that we can generate some consensus around one of these options.
Lastly, my opinion on the vortex - when the B3 vortex is fully built we absolutely should be using it to buy/burn vBNT when the ratio is below 1:1 (i.e., we get more vBNT than BNT when vortexing) and the rest of the time we should be stockpiling BNT for marketing purposes.