Sure, BNT price will tank a bit but LP’s will still be better off in the end and this should be all that matters. For them to be in a worse situation than now there must be a huge deficit increase caused by this which I find very unlikely, ILP worked for years and it minted waaaay more (hundreds of millions). It only got unsustainable when there were way more BNT minted in a short time frame than we are talking about now, we are talking about hundreds of millions BNT vs 6m BNT. Here is the BNT inflation years before ILP got turned off, mind it didn’t cause a death spiral at all.
The threat of a death spiral was caused by “hostile market conditions” as the foundation called it in their statement, it is not comparable to minting few million BNT and burning 5x of that.
I think it is weird how you always argue for burning BNT but in this case you completly ignore the burn aspect in your argument. It makes it hard to believe you are argumenting in good faith tbh. I wish you would disclose that you, like every contributor, have a financial incentive to keep the price of BNT high as you are paid in BNT. Correct me if I am wrong here.
This proposal would help LP’s cover their losses and you know it.
Thx for your insight. I hoped this would be easier to implement. But I don’t see how there is no reliable way to know the market price in world where oracles exist. Maybe you can help me understand why it is so hard to implement a price feed using Chainlink. Also as Tony said, it could be done manually, it’s not like we have that many LP’s that this would be unfeasible.
Overall, considering we got promised alleviating the deficit is a top prioriy I think a few months of work are worth it for this proposal. This would help LP’s more than working on Carbon as it failed to generate any significant fees so far.
I dont understand how your technical analsys makes you think that. Please elaborate. We are looking at minting a few million BNT in order to help LP’s AND burn much more BNT. Win win in my books.
I would understand if the output of such migration would be more more BNT on the market, but given we burn 5 BNT for every 1 BNT of reward issued, I struggle to get a sense of your feedback.
Let’s assume that despite this the price still tanks because people who get the reward dump all of those… we would still have eliminated the deficit. Isnt’t that the priority #1?
Let’s assume 50% migrates (i.e. USD17m of TKN) while the rest of the LP stays.
So 17m moved to Carbon, allowing Carbon to x15TVL and likely fees.
Hence
before migration : Carbon that does less than 5k of annual fees is meant pay back a deficit of 40m. Ratio of 1/8000 i.e. LPs in Bancor V2/V3 will never be made whole
after migration: Carbon does 75k of fees to pay back a deficit of 20m (let’s assume 25m if rewards are aggressively dumped). Ratio is 1/266
In other words as a LP i should be repaid infinitely faster because (i) the whole to plug is smaller (ii) Carbon generates more revenues to plug the hole
This is getting ridiculous. How often do you gonna reply with one liners while ignoring the points we raise? It is a dishonest way to discuss this and it seems BNT value is a higher priority for you than LP’s getting made whole.
There is no LP that would care about BNT if the deficit situation was solved but for you BNT seems to be more important than the deficit. Wondering why that is. You dodged a question in Telegram about contributors getting paid in BNT. Just wanted to add this for the context.
I think you, the other contractor’s and Yudi made more than clear where you guys stand. The way you guys discuss this is disprectful to LP’s who suffer because you build a flawed protocol.
A reminder that we have guidelines that need to be followed in order to have a civilized discussion. Please make sure that you are arguing the merits of the proposal.
I was simply adding context and disclosure to help the community understand where the arguments could be coming from. Weird that it says “flagged by community” when you guys did “flag” (remove) it as admins.
Anyways, edited my posts and I hope they are ok with you now. I am out for now, honest communication doesn’t seem to be the priority in this board anymore.
Re. oracles - oracles don’t exist for every token, there aren’t actually reliable oracles for most tokens. Sure, LPs can set their price through the app (manually). Not 100% reliable but better than nothing.
The reason I think this is net negative is a combination of the risk associated with the solution (more involved code in older protocols = more risk) plus my personal faith in that solution eliminating the deficit - I think you’re overly optimistic about that. Not to mention I’m not very fond of solutions which give an advantage to LPs that move first while the ones that stay behind have a lower chance of having the same benefit.
Carbon is now being licensed & deployed on pretty much every popular chain in existence, I’d at least want to give that a chance to reduce the deficit before we’re taking more risk - imagine a new bug that opens an exploit now - that would really be the worst possible outcome. Temporary code really needs to be 100% worth it and in this case I’m just skeptical that it will have the result you’re looking for.
Anyway that’s just my own opinion, and I do want to see the best outcome for LPs, I just didn’t lose faith in the current approach like others, especially after seeing so many pools’s deficit disappear and after seeing the deficit in LINK for example almost closing on its own at one point.
I am not really sure the migration gives any “advantage” to LP that go out first, given that those who go out renounce their IL protection. So I think it’s really a trade off that some will find favourable, other will find bad.
I also hear your point about potential technical bugs, but given the infra of Bancor V2/V3 and Carbon are already there, I wouldn’t expect to increase massively the exploit exposure. And even if we did, it’s hard to believe that the status quo is a better option, given that the deficit keeps widening in $ value and in %.
Rewards are temporary and to my understanding you only get them once you migrate, so if you migrate later, you get less.
Those who renounce their IL protection don’t help those who stay, they simply don’t affect existing LPs.
Re. the technical aspect, I disagree - these protocols are highly complex and changes always have risks associated with them, that’s why I’m in general not fond of temporary changes.
“Rewards are temporary and to my understanding you only get them once you migrate, so if you migrate later, you get less.”
=> Maybe the proposal was not clear enough regarding the mechanism of the rewards:
you get 90 days of reward independently of when you migrate
the program is not meant to be temporary, it’s meant to be a medium-term incentive to reduce the deficit by incentivizing LPs to move on.
“Those who renounce their IL protection don’t help those who stay, they simply don’t affect existing LPs.”
=> Well if we take an example (a bit extreme, but illustrative) of 99% of LPs migrating to Carbon. The remaining deficit of Bancor V2/V3 would be around 400k. In the meantime, and at least for 90 days, Carbon would have 34x more TVL than today and generate 34x more fees than today. We would have a LOT MORE of Carbon fees buying a supply of BNT that has considerably shrinked, hence it should be good at well for LP who decide to stay.
I don’t know why you assume the deficit won’t get worse - as LPs migrate, the deficit gets worse and worse for those who don’t.
The first ones will migrate with lower deficit while the last one will have the worst one.
Comparing the BNT in the pools with BNT minted is apples to oranges and is actually misleading. Burning the former actually doesn’t affect the deficit while the latter will cause the deficit to grow. I find it unfair to remaining LPs, it creates a race between LPs.
And then there’s the hope that the rewards will cover some of the deficit + its decline over time, which will get harder and harder with time.
When a LP decides to migrate, he renounces his/her IL protection and thus the deficit related to this particular user disappears. So in absolute $ value, there can’t be any debate that it won’t reduce the deficit. Or are you challenging this?
I agree with you that in the short term, the % deficit per user that stays could increase, but the ratio decific vs. Carbon fees would be so much more favorable than the status quo that medium term I struggle to see the scenario where such migration is negative for the protocol
No I agree re. the value, I'm referring to the % (and value loss) for whoever migrates later. It’s not exactly a “fair” system since it’s time sensitive, and as always, most people won’t even know about this change and will be surprised to find out it caused more damage to their position - this is the main issue I have with it.
Re. the protocol - that’s debatable. I would imagine most of these LPs would leave Carbon as soon as they can, so the benefit is very temporary and the long term impact might be worse than the current situation.
But in any case, the success of the protocol is secondary to dealing with the deficit situation and the first point I raised is the one I really don’t feel comfortable with. It will be the first time a “race to exit” gives you a benefit.
I get your point and this is fair - all LPs might end up with slightly different outcomes depending on whether they migrate and at which time they decide to do so. But frankly, this is already the case. ETH or BTC pools LPs in Bancor V2/V3 were better off exiting 6 months ago than now. So with or without migration, LPs are already making a view on the market.
I understand that in a perfect world we want to make things as “equal” as possible for everyone, but the issue is that right now we have USD40m+ of decifit, and no real positive way out, and I feel this is a way biggest injustice. And because this proposal tackles this issue I think it’s net positive by a wide margin
Not the same at all - in this proposed change, every LP that leaves, makes it worse for every LP that stays.
Also re. the deficit USD value - it goes up & down with the market, so a higher $ value doesn’t necessarily mean worse situation. Also doesn’t make it easier or more difficult to close it.
