Proposal: Extend LM Rewards on DAI/USDC/USDT Pool For 8 Weeks (Attempt #2)

[BurnVictim]

vBNT are not wallets or people.

They are distinct. vBNT exist.

It requires 66% of the active vBNT to decide the path forward.

35% of the active vBNT can call bullshit.

This is how voting with a quorum and a threshold works. A small group of users tried to pass a disgusting and aggressive extension to rewards without regard for the health of BNT. They did not have 66% majority and they were sanity-checked by the small minority.

This is HOW DAO’s are SUPPOSED TO WORK.

The minority here won. They sent it back to the table for a re-work. They didn’t abuse anything or force anything through that others didn’t want. They simply prevented a power coup.

The ego to just propose the same thing again is mind blowing.

My last thoughts. I will continue to monitor the thread before vote comes to see if any sensible changes are made to the proposal.

If no adjustments to emissions are made and a sensible plan for going forward, my vote remains STRONGLY AGAINST.

[Tyler]

Not as concerned about LM extension on stables TBH. My understanding was they would be phased out over time and this has not happened beyond the 50% reduction. I will be voting FOR this regardless to retain the TVL but understand cutting these LM rewards over LINK and WBTC.

[tfns]

@BurnVictim

The minority here won. They sent it back to the table for a re-work. They didn’t abuse anything or force anything through that others didn’t want. They simply prevented a power coup.

Proposals were rewritten with a longer justification. Again, the point of the forum is to debate on the proposals and change them. This is the table for a re-work.

@BurnVictim

The ego to just propose the same thing again is mind blowing.

Again, not the same proposals, the point is to debate.

A DAO must debate on subjects that matter and reach a sensible conclusion before proposing them. Criticising without suggestions or a willingness to debate is simply not constructive.

Care to share your thoughts on a plan for LM rewards?

[Funky]

just lower the rewards (dont tell me this cant be done easily, it has been done already).

APR + Rewards should not exceed 30%. 30% because Compound, Aave etc dont offer more than that, bancor should still offer an incentive to come here and offer more than them. i dont know what the APR for USDC/ USDT on uniswap currently is but we should offer more.

the duration of the extension is completely irrelevant. we should keep them aslong as possible and adjust the rewards to keep APR+ rewards stable.

thanks to IL protection the stable pools offer “risk free” rewards and therefore dont require ultra high rewards.

[bias]

Devs are quite busy at the moment but I remember Mark saying it’s very difficult to reduce them. I hope someone from the team can comment on this point.

In any event, I think stables can stand on their own but I would be for reducing LM on ETH/LINK/wBTC. I just don’t think that cutting them off cold turkey is good with the new features on the horizon.

[tfns]

This is an interesting take and one I hadn’t considered.

[thedavidmeister]

@BurnVictim

This is HOW DAO’s are SUPPOSED TO WORK.

all voting systems exist simply to find out what everyone wants.

if some people don’t vote, then we hope that everyone who does vote represents their interests on average.

if the proposal itself is too divisive then debate and negotiation can hopefully come up with something better

token based voting systems are desirable as they can represent “skin in the game” somehow

they are also undesirable if it is significantly easier for well capitalized participants to simply buy votes (especially temporarily) than to earn votes by participating meaningfully in the system

one issue for us is that we incentivise and actively encourage (Using Bancor Vortex. You can now borrow against your staked… | by Bancor | Bancor) selling vBNT voting rights to leverage BNT (highly desirable when most leveraging options in crypto come with risk of liquidation), so then votes periodically become cheap which is the opposite of “skin in the game”. It means that someone who bought vBNT directly after months of leveraging has ground down the ratio, got those votes for significantly (3x+) less than a BNT LP paid to stake the equivalent in BNT.

look at this graph:

we can see a large and unprecedented spike in the vBNT ratio leading into the most recent vote, after a long grind down, immediately after an unprecedented wider market dump that ultimately brought vBNT under $1, with a peak and sharp dump around the time of the vote.

this all comes at a very strange time, about 1 week after a community call that discussed:

• the fact that there is a lot of voter apathy and it is hard to achieve high quality votes
• the voting mechanisms are changing soon to reduce voter apathy and increase turnout
• unspecified broad changes in v3 that include reworking reward structures

on top of that i hear @BurnVictim saying (hope i’m not misrepresenting):

• 90% of the population did not vote
• the minority that did vote believe they do not represent the views of the majority

why is a DAO is “supposed to work” in a way that blindly puts biased data before truth seeking? - for example, MKR is an OG DAO and they voted 98.4% FOR to burn MKR if it is borrowed for use in a governance attack Maker Governance - Burning Borrowed, Attacking MKR in the Event of Protocol Redeployment - November 9, 2020

to me it looks potentially like a handful of vBNT whales buying cheap vBNT to exploit recent market downturns to undermine the majority before the window of opportunity to do so closes due to future changes in overall market conditions, voting mechanics and reward structures

having another vote with re-worked proposals seems totally reasonable, as long as we can get better voter turnout…

[furs]

This raises some excellent points.

[bavi]

This is a good point. Allocating a lower % of the lm rewards from the stable pools to the tkn side sounds like a better idea than basically bringing the rewards to 0 from one day to another. This, as a temporary measure to get the new stable pool system rolled out. The last thing we want at this point is to lose all liquidity in our most important pools (eth/wbtc/link/stables)

I’d suggest to allocate 15% to stable and 85% to bnt side. This will be sufficient to keep the liquidity in the pools and will incentivize people to keep their bnt staked as well. See it as a bandage till all the good stuff gets rolled out (hopefully shortly). We have inflated the bnt supply for months and months, a few more weeks won’t make the difference anymore.

[tfns]

Sharp rise in vBNT staked for governance:

[tfns]

Changes to proposal being debated by the community (happy to gather more, please suggest below):

• Is it really not possible to lower LM rewards emission for some pools?
• For how long should the LM rewards run for?
• What about changing the LM rewards split? I’ve read comments from 80% for BNT side to 100%.
• Stablecoin pools bring additional risk to health of protocol because of IL. Is it reasonable to remove LM rewards from these pools? Especially on the TKN side?

[Henselt]

BurnVictim, aka simp2win on twitter, aka burningm0nks and Samantha (banned) on discord, aka N (banned) on telegram, is a self-serving liar that does not have the best interests of the protocol at heart. His interest in voting down these proposals lies solely in the fact that he has been underwater for months on a large vBNT trade.
By abruptly ending LM he hopes to force LP’s that have leveraged their vBNT to buy it back in order to unstake, thus increasing buying pressure on and the price of vBNT. It is telling that he also wants to immediately push the vortex burner up to 20%, as this is the second part of his plan to quickly increase the price of vBNT for his own benefit. The fact that this will adversely affect liquidity in those pools is of no consequence to him.

This person has consistently demonstrated that he does not act in good faith. He uses multiple sockpuppets across various channels to build a false narrative and manipulate people. He uses half-truths and twisted logic to support his arguments, but conveniently ignores hard questions such as the one in these very threads, about putting forward his own proposal. This is because he does not actually care about the health of the protocol, his concern trolling simply serving as a smokescreen for his true motives.

He has previously attempted to activate LM on BNTees in order to profit from BNT inflation, an action that is completely at odds with his supposed motivation to keep inflation in check. When his idea was shot down he immediately took to social media to badmouth the devs and the community. I have no doubt that he will do the same thing if these extensions pass.

This person is not here to engage and debate with the DAO in good faith. He is here to deceive and manipulate it to achieve his own ends, at the expense of the protocol. His recent actions are nothing short of an attack on a weak DAO with poor voter engagement and should be treated as such.

[glenn]

This proposal has my full support for all the stated reasons that the community has provided. I am also greatly amazed by the Bancor community that has come together these past few days to rally in support of the extension for these pools.

We have seen large amounts (~4.5M so far) of vBNT being staked in the governance contract after the community was made aware of the past recent events. If anything, I expect the Bancor community to come out stronger after this is over. With Bancor V3 around the corner and community engagement at an all time high, I foresee a successful V3 launch that will be met with resounding success.

[tfns]

Proposal updated to add two points from Michael’s stablecoin LM rewards extension proposal (also present in @glenn latest proposal) so the DAO can consider this during the vote

• Upon release of the shadow pools, a new LM incentives program may be considered by the DAO. It is a reasonable expectation that DAO will choose to incentivize these pools; however, it is under no obligation to do so.
• The liquidity mining program for USDC, DAI, and USDT can be ended prior to the completion of the 8 week extension if the alternative shadow tokens pool redesign is deployed.

[tfns]

During the community call on Sunday 30th of May at 1pm UTC, a debate about the LM reward extension proposals is expected. Some suggestions to discuss:

• Given that adding a multiple option proposal to snapshot would involve an update on the quorum and supermajority requirements, a fixed duration for the extensions must be chosen. The community call is a good place to debate this.
• We could propose a shorter LM rewards extension duration with a compromise to debate them but this time with a longer time window before they expire again.
• When can the community expect some details to be released about Bancor V3 to allow for a more informed debate on the next extension vote? If a deadline can’t be given (which is expected), what is the team’s recommendation on the extension duration?
• Many community members have expressed their intent to vote against the LM extension for stablecoins. The USDC/USDT/DAI pools are naturally more expensive to the protocol because they accrue a higher IL than the rest.

These points won’t necessarily be all debated on the community call.

I strongly believe that despite the heated debate on these proposals, the Bancor Dev team should NOT be pushed to release Bancor V3 or details about it ahead of time, be it for business positioning reasons, debugging/auditing/testing reasons, or others.

[EMK]

I do agree to the fact that we should extend LM rewards on the stables, but i suugest that we consider a 6 weeks extension to allow enough time to transition to V3 where we agree on a more sustainable LM rewards programme.

I have for long held the view that the current inflation rate for BNT is unsustainable for the longter. But cutting the rewards on stables completely at this point could lead to significant capital flight.

My view is that the LM rewards should be dynamically matched with the protocol revenue in excess of what is required for IL protection and amount of BNT locked from vBNT burning as this aligns with the net value accrued to BNT holders from the service the protocol provides.

[tfns]

Hey EMK, welcome to the governance forum.

@EMK

My view is that the LM rewards should be dynamically matched with the protocol revenue in excess of what is required for IL protection and amount of BNT locked from vBNT burning as this aligns with the net value accrued to BNT holders from the service the protocol provides.

I believe a new approach to LM rewards is being researched and is in the development pipeline.

About the duration, this is a topic that has had a lot of debate on, and for now the consensus is to set it to eight weeks in anticipation that the shadow pools might (but not necessarily) be ready by Q2.

Does 8 weeks sound sensible to you?

[tfns]

Update

• The consensus on the community call and the team’s opinion was that setting the duration for 12 weeks is sensible.
• This duration would also allow the DAO to direct its focus to other proposals, such as whitelisting and coinvestment quorum and supermajority requirements update as well as setting the guidelines for a delegation system.
• With a long enough duration, it is a guaranteed that we will have more information on Bancor V3 to make a better decision in the next round of extension votes.
• The stablecoin LM rewards extension is set to 8 weeks to keep liquidity in these pools for Bancor V3. These rewards are more controversial as the stablecoin pools incur higher IL protection costs, so the duration of the extension is shorter than 12 weeks to invite another debate sooner and independently from the rest of the pools, should the proposal pass. More information then should be available.

[bias]

After hearing the community call I’m more open to passing a stablecoin extension as is. While I “feel” like stables can stand on their own, it is a huge unknown. V3 is coming in the next few months and we should bridge the current program to V3.

edit: we also had confirmation from Yudi that changing emission rate/ratio is difficult since the contracts are in-flight, and it’s potentially dangerous since a contract error could affect 100s of millions of liquidity. It’s kind of a lazy answer to just say “Well changing is difficult, just renew again” but I prefer the safest/most stable path forward to V3.

[EMK]

Yes, after listening to the community call this afternoon, i think its even better to go for the 12 weeks to give the team time to test out v3 and still maintain liquidity. I have also seen a community member putting together a proposal to increase the vBNT burn rate to 20%, this could also help to moderate the inflationary pressure on the supply.