Proposal: Enable LM rewards on EDEN-BNT pool plus 400K Co-Investment Increase in exchange for an EDEN slot

This proposal is expected to appear on Snapshot for voting on 2021-09-19T12:00:00Z. Make sure to stake your vBNT for voting before this date and time to participate in the DAO decision.

  • We propose that Bancor Network offer liquidity rewards for the EDEN Pool for 12 weeks.
  • Eden Network will use the equivalent USD value of EDEN tokens and best efforts to bid on slot ownership which gives Bancor users prioritisation on their trades for all Bancor Network transactions…
  • We also propose that we increase our co investment into the pool to 400,000 BNT.

This will create a mutually beneficial relationship with more usd volume for EDEN going through the Bancor Network as well as trades on Bancor being prioritised using the rewards value to help secure Bancor as a slot tennant.

Vote FOR: To provide LM rewards to the EDEN pool and increase the coinvestment to 400,000

Vote AGAINST: To make no change

5 Likes

Oh nice! this seems incredible!

4 Likes

Looks good to me, just to confirm - you represent the team yes?

Also make sure to drop this at the top of the proposal so it can go up for voting next week sunday. “This proposal is expected to appear on Snapshot for voting on XXX at 5:00 AM . Make sure to stake your vBNT for voting before this date and time to participate in the DAO decision.”

3 Likes

Thank you - have edited - yes I represent the Eden Network Team do you need any proof?

4 Likes

We need to know how many BNTs for LM are proposed?

3 Likes

can we stop with the short durations? 12 weeks is too short for anyone who wants to stake bnt

2 Likes

Bancor team just confirmed with me, no need ! glad to support this (I reccomended the collaboration with EDEN btw, big fan of u guys been there since about a dollar)

3 Likes

We are requesting the standard LM. 10,000 BNT p/w (Works out to 20,000 with multiplier).

2 Likes

To advance this proposal would be a terrible move by the Bancor community and would be economically negligent to the Bancor protocol. The Eden team, while clearly great marketers, are pushing a deeply parasitic product which seeks to extract rent from the entire Ethereum ecosystem - and Bancor seems to be one of their first targets. It’s imperative we nip this sort of attack in the bud, and even spread awareness to other project teams of the Eden team’s behavior who may be next on their target list.

There are a plethora of reasons why we should not support Eden Network as a project in general. Eden Network is actually (ironically) working towards the very opposite values of what they claim their product creates.


Taken from: FAQ | Eden Network
image

The Eden Network actually decreases earnings for block producers and decreases network security.

  1. Running Eden blocks 100% of the time, as required by Eden Network, is not the most profitable behavior for miners. This has become apparent in recent weeks as miners have dynamically turned on and off Eden functionality. Eden Network has yet to respond with slashing miners as they said they would to punish such behavior.
  2. The Eden Network only works by requiring miners to run an Eden-provided custom forked version of Geth (the most widely used implementation of Ethereum protocol). By requiring 50%+ of Ethereum miners to run a custom version of Geth is deeply destabilizing to the entire Ethereum ecosystem. We are essentially now trusting the very small Eden dev team, who have very little experience writing Go, to write bug-free Ethereum protocol code. If a bug in their code caused the client to no longer perform, Ethereum could more easily suffer a 51% attack.

image

More than 99% of ETH transactions aren’t affected by MEV in any way, and of those 1% that are, very very few are retail traders.

  1. This is because MEV only comes into play when extremely large (slippage inducing) trades occur, which causes arbitrage bots to rebalance the price. It is not profitable for an MEV actor to frontrun or sandwich retail-sized trades.
  2. Tokenless and free solutions already exist for retail users who are placing large trades.
    a. GitHub - mevalphaleak/BetaRPC-setup
    b. https://taichi.network/

image

I hope the irony from the fact that Eden Network is positioning itself as a force against MEV despite literally being MEV is not lost on the reader (it is somewhat genius marketing though). Instead of democratizing access to MEV (in a free, token-less way), it is centralizing MEV (by requiring users to buy a token, where the user with the most tokens wins!)


Next, let me first clear up a couple mistruths disappointingly insinuated by the Eden team during the Bancor community call last week.

image

50% of Bancor users are NOT having their transactions prioritized. This is due to the fact that a slot tenant on Eden Network can only select one contract (in our case, BancorNetwork) to prioritize in a transaction. If the initial transaction message is not calling that selected contract (BancorNetwork), no prioritization occurs! Bancor Network relies heavily on aggregators for trade volume, who have their own separate contracts, and thus no prioritization occurs when they use Bancor Network! By observing the number of trades calling BancorNetwork for their transaction, and dividing it by the total number of trades eventually routed thru Bancor, we can see that less than 10% of trades were being prioritized while Bancor was a slot tentant!

image

Taken from: The Bancorian | A Weekly Summary-September 12th 2021 | by Glenn | Sep, 2021 | Bancor

image

Moreover, it is dishonest to continue insinuating that Eden Network has any effect on tx processing speed. Whether or not Bancor is an Eden slot tenant has no effect on how long a Bancor trade waits in the mempool. Eden Network only affects intra-block ordering. Any anecdotical evidence of “faster transactions” is due solely to EIP 1599, which just happened to release at the same exact time Eden Network revealed their product (what a coincidence!)

The fact that Eden Network continues to fail to respond to these points is deeply disappointing.


Lastly, and more specific to Bancor - this proposal is economically irresponsible to the protocol.

  1. 20,000 BNT in LM per week is $84,400 a week at present BNT market rates.
  2. If we take the 10% prioritization figure as shown above, and multiply it by the weekly trade count thru Bancor, there are at present ~1,600 trades per week that would be affected at all from being the Eden slot tenant.
  3. Taking these two metrics, we are paying $84,400 / 1,600 = $~53 per TRADE for the Eden slot (which most users will not benefit from in the first place, since retail traders are very rarely affected by MEV sandwiching).

$53 per trade is essentially equal to the gas price of a swap on Bancor.

Why would we pay for a service that most users don’t need or know about (and could have for free), when instead we could be paying for their gas swap costs? Do users care more about intra-block ordering, or how much they are paying on gas? My intuition and research say that it’s definitely the latter.

Additionally, Eden Network’s blatant forking of another project, flashbots, has not gone unnoticed. The flashbots team has been actively working on an Eden-like token-less solution that actually does democratize access to MEV and reduce its negative externalities. What little utility Eden token might present now will soon be gone, and thus the price will fall causing massive impermanent loss on the BNT-EDEN pool.

4 Likes

What’s the purpose of LM in this case? most of the DAO is opposed to LM that is not having a direct benefit to Bancor. It’s not clear how this pool benefits. The Bancor slot on EDEN goes to highest bidder, so LM doesn’t help there. The collaboration itself, while good, doesn’t directly benefit Bancor via LM either. Please explain further…

1 Like

@mbr - can someone from core team respond to this? Lots of interesting points. If true, difficult to justify LM…

1 Like

@JTM_Defi - Any thoughts on what was noted above?

1 Like
  • LM incentives help bring liquidity and therefore volume/fees. EDEN pairs are very actively traded - over $10m USD daily volume with the average of 28m USD daily and some days reaching as high as 70m USD based on Nansen data from the start of September.

  • Like our project or not, we are taking an economic approach to MEV. Since launch, there have been a number of parties releasing misleading data based on either not understanding our network rules or for other reasons. We are working on tools to make the data more accessible.

  • Regular traders are prioritized when the BancorNetwork holds a slot. Transactions sent via other means (aggregator and arbitrage contracts), are excluded based on the network rules. Users interacting with these types of contracts can opt-in to receive transaction priority based on staking, or the contracts themselves would need to hold a slot.

  • Ultimately, the DAO should do as it sees fit. If you believe the program will cost more than the benefits to the network and its users, then it should reflect in your decision.

  • Among many considerations for LM programs, this touches on a broader topic about who should be responsible for MEV and its impacts. For example, a protocol for its users, or users for themselves? Eden Network offers options for both, and alternative approaches in case slots are not economically viable for this purpose.

  • The team are huge fans of Bancor, DeFi and Ethereum. We understand that our product disrupts the current landscape of MEV so we have made this proposal for Bancor to try something innovative within a reasonable window of risk.

The Eden Team :heart_eyes: :leaves:

4 Likes

Just wanted to share my thought given that the proposal did pass. I mentioned this in the call over the weekend but I will put it here as well:

  1. The co-investment on this pool should be increased to 2M BNT since it is already full on the EDEN side:

image

and there isn’t any space for TKN LPs:

Note that the pool does have good volume (daily average 6M+) and this would let us capture some of the larger trades since the price impact would be less as the pool grows in size:

image

$53 is assuming that 100% of the rewards go towards the EDEN side of the pool but the split is 70%-30%. The vast majority of rewards are going towards $BNT holders and this number should actually be 53 * 30% = ~$16