This proposal is expected to appear on Snapshot on Aug 13th 2023, after the required 4 day discussion phase has completed. If you want to participate in this decision, make certain that your vBNT is staked for voting prior to the commencement of the voting period.
TL;DR
Buy back and Burn vBNT using a subset of BNT fees in v3 (100,000 BNT of the current 680k 1.016M BNT)
Intent and prior discussion
This proposal seeks to trigger a buy back and burn of vBNT using 100,000 BNT collected in pendingNetworkFeeAmount Bancor Network v3 . At the time of writing, there is approximately 685k 1.016M BNT that has been collected so far.
There have been multiple governance discussions around this topic in addition to a community call dedicated specifically to BNT vs. vBNT burning: Vortex burn or wait Trial burning BNT
Motivation
This proposal represents the desire to make efficient use of the Vortex while vBNT is still actively a part of the Bancor ecosystem. Using 100k BNT to buy back and burn vBNT at the current ratio will result in approximately 20% higher efficiency due to the current low vBNT : BNT ratio brought on by a recent capitulation of a long-standing large vBNT accumulator.
Current BNT/vBNT ratio:
Current vBNT/BNT ratio:
After 100k Swap:
This will result in 119.866k effective vBNT being acquired and then subsequently burned removing nearly 20% more BNT from circulation than direct BNT burning.
Voting Instructions
For: Perform a one time buy back and burn of vBNT using 100,000 BNT
Against: Do nothing
Its funny I was looking at the contract today. I like the idea here, seems like a good way to take advantage of the spread and do a more effective burn.
I believe there were some issues with not burning the full amount one time when we discussed so would like @yudi feedback on viable or just not as gas effective
Currently, I dont believe the vBNT pool could take the entire 685k BNT sell so have selected an amount to capture a large range of ratio without pushing too high
Iām with foxsteven here, I think that the only metric within the native Bancor tokenomics that really matters until the deficit is fixed is seeing the amount of BNT on a circulating supply graph go down. No matter what the warp magic shenanigans and efficiencies of burning vBNT vs BNT, itās something that only those deep into the Bancor ecosystem are even aware of and concerned about. āHere, look at this graph of BNT supply going down through constant burnsā is an easy and compelling story to tell and sell; the relative vBNT/BNT ratio/locking thing really isnāt.
Existing Bancor loyalists havenāt had the purchasing power or appetite to solve the deficit thus far, so we gotta assume the whole vBNT-actually-makes-BNT-inaccessible-while-not-actually-burning-it-from-supply mechanic is a moot point for recovery. To someone whoās an LP, but not a dyed-in-the-wool protocol fan, itās really just a convoluted and overcomplicated way for true Bancor loyalists to feel like theyāre smarter than everyone else, rather than an appealing or impactful function for everyone else.
Itās not about āfeelingsā itās about Math. The Vortex was created as a 2nd order effect to more efficiently use BNT fees. Voting against using the 2nd order effect is short-sighted when the argument is etherscan doesnāt show the Vortex effect by default. A graph could be created easily that uses etherscan supply - vBNT vortexed to show effective supply.
Itās not that complicated and something that thought and time went into creating and I will continue to use it so long as itās at my disposal.
Iād like to start phasing out vBNT in the near future so see this as one of the last times that we will be able to use the Vortex and itās increased efficiency
The (now) 761k BNT are effectively already bought back and burnt. Not using the Vortex for 2nd order efficiency is short-sighted. I can create a Prop to setup a Dashboard with etherscan supply - vBNT vortexed if itās really about seeing true supply for the right-curves
The vBNT pool has been in surplus numerous times in the past few months. If LPs are paying any attention to their position then theyāve had plenty of time to withdraw and lock in their position out of deficit. The fact that they have not indicated either: They are not āliveā and have abandoned the position or they are aware and feel that fees are worth leaving the position in. Either way Iāll use the pool for the increased burn efficiency.
I will be bringing forward a prop to reduce the vBNT pool TL to basically only leave the PoL Surplus exposed to IL but would like one more efficient burn before then.
This is over-stated and yes, short-term as stated above. This is a single illiquid pool and has the opportunity to create some additional fast-lane arbs during the process for 3rd order effects toward the deficit.
Iāll be taking a look at whether 300k BNT buy on the pool is still viable before moving to Level 1 tomorrow morning. I donāt see any objections that havenāt been brought up before and are all based on āperceptionā vs what the Vortex was designed mathematically to do.
I appreciate the discussion and look forward to see how voters signal on Snapshot.
Yes, but perception is reality in crypto and math doesnāt matter as much if only a small subset of potential BNT buyers are aware of it. āItās not that complicatedā is still significantly more complicated than āBNT supply go downā. If the audience of potential BNT buyers were just robots bound entirely by cold logic, then perhaps āitās about Mathā would be an unassailable argument, but we need to appeal to people too; and those people have literally hundreds of tokens constantly vying for their attention with easy value propositions.
Itās nice to think of making a graph of etherscan supply minus vBNT vortexed, but you also need those figures live on Etherscan, CMC, Coingecko etcā¦ Thereās a lot more complexity to communicating this than making one graph saying āthis number but also actually minus this numberā and all of a sudden everybody considering BNT purchase realises and appreciates the increased efficiencies of vBNT burns.
Please correct me if Iām wrong in any of thisā¦ my understanding of the protocol is pretty limited.
Since staked BNT (in v3 at least) is burned on deposit and minted on redemption of vBNT + bnBNT, the BNT associated with vBNT is already out of the circulating supply.
As I understand it vBNT can only be used to unstake by someone who has already staked it; it canāt be bought from the market and redeemed. Therefore any BNT associated with abandoned positions will never be minted, making the burning of that vBNT a pointless act.
For that reason, Iād argue that the buying and burning of vBNT is actually more inefficient than directly burning BNT.
This pool is literally vBNT that can be bought and used to redeem bnBNT for BNT. bnBNT is also an ERC-20 and can be setup in an LP and sold/bought as desired. You could technically buy bnBNT and vBNT and redeem BNT that you never staked from said wallet.
BNT is sent to v3 and āburnedā, correct, but there are Trading Limits on each pool of āmintedā BNT that isnāt directly a 1:1 of the BNT you sent to be burned in return for bnBNT, but it is a representation and important to think of it as actually existing as it can be leaked from the AMM pool as BNT is outpaced by TKN
The key here is that itās a greater than 1:1 ratio of BNT that will never be minted. Itās 1/vBNT ratio which while under 1vBNT:1BNT is MORE efficient.
I agree with the comments from Steven and I also would prefer to reduce the supply of BNT by the quantity that is now in the v3 wallet which is closed to 900k BNT. Furthermore, the vBNT pool is now in a state of deficit and the DAO should not contribute to making the deficit in this pool worse for those TKN LPs. So in essence, this proposal will have the opposite effect of deficit reduction by making the deficit in the vBNT pool worse for those LPs.
When the ratio between vBNT and BNT is lower (closer to 0.5) and the slippage for such a trade is lower (say less than 5%) then such a proposal is more than just āsensibleā and is much closer to āobjectively corect.ā
But thatās not where we are. I think the value from burning that BNT, lowering the supply of BNT, and pushing that narrative that BNT has a deflationary model THAT ACTUALLY WORKS is the better choice.
I would instead be in favor of waiting until 1M BNT has accumulated and then burning that.
