Proposal: Let LPs have the option to withdraw with ILP at a 1% rate per week

I talked to Yudi about this on telegram. Pleas ad your thoughts, improvements and concerns. For me as a LP this shines some light at the tunnel and would actually resore my faith in the protocol and it would greatly help the reputation of bancor in the long run.

Understandibly ILP cant jsut be turned back on since it would be certain financial ruin for a lot of people. The Problem is LPs getting more and more frustrated by the day. Devs wasting their time with false accusations and death threads. LPs are the ones keeping Bancor alive right now, yet more and more are leaving despoite the 50% loss. → Hence the reputation of bancor and the trust derails more. We are experience another form of death spiral. Just yesterday i think it was over 2 mil. $ withdraw. Less LP less fees.
So lets try to make LP happy again without crashing the price of BNT to the ground.

Proposal: Let LPs the option to select a set amount of TKN they like to withdraw with full ILP.
The Token with ILP will be paid out at 1% rate per week. → the payout will be finished after 100 weeks.
The remaining % is still provided as liquidity for the protocol to use (not in limbo like in the 7 days withdraw period from before)
You can cancel anytime you whish. → the amount u havent withdrawn by now gets restaked.

Benefits:

  • 100 weeks timeframe will prevent a flashcrash
  • This is a nearly 2 year timeframe in which tha bancor devs will have liquidity to work with, even when all of LPs (which of course they wont) will issue a withdraw immediately.
  • a lot of people will cancel the withdraw at some point when they see the new feature beeing actually implemented. → people jsut need to actually see something changing, which v3 isnt just ready yet, but will be in a couple of month
  • it will restore faith in the protocol. → users actually can get out! → will attract new LP. Right now, even if the deificte is fixed i doubt there will be many retail users (which are the majrity users of bancor in my opinion) happily joining for years after this whole debacle.
  • People who are in need for some money right now can actually get it → they wont be leaving for good if the “haircut” doesnt improve (this would be my case).

There could maybe an option for a really small amount of dollar value per week which is fully protected? Ifyou only stake lets say 100 link on bancor the 1% payout per week doesnt make any sence. The payout per week could be sth like 3k $ a week ( aprox. 1500 dollat in BNT) so the price of bnt wouldnt tank too much, if at all.

In the long run Bancor needs LPs and reputation. I can understand the whishes of BNT holder and talking of meassurements which will tank the price of the token even in the miniscule way (like witht his proposal) sucks. But the frustration of the LPs still staying are growing more and more, especially becasue they have no chance to vote on anything relating to their future. pretty much my whole networth is in bancor. I simply dont have anymore money to get 25k BNT to get a proposal going, im basicly broke. Yet i still believe BNT holders and LPs can actually work together and get Bancor back on track.

Please understand that the proposal is a very rough idea of what could be possible. Yudi thought this might work considering the timeframe bancor gets from it. If you have any ideas pleas comment.

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So the question is how that will affect existing deficits - will it cause the deficit to remain stable or will it increase it over time?
Maybe the simulator can help with something like that.
If the most likely scenario is that it will cause the deficit to remain stable, I’m in support.
But that’s a big question to answer that might involve an experiment that will cause LPs to lose money, so it shouldn’t be taken lightly.

For the record, I still prefer product solutions.

Thank you for your response.

This is in no mean a replacement for product solutions (im sure you are aware of this), which i totally prefere in the longrun.
This is just a way to motivate the remaining LPs to stay calm and feel secured. I doubt after implementing features and generating more fees to close the deficite that a lot of LPs will pull out completely (i know i wont)
I personally have no problems with experiments and the risk of maybe losing some funds, becasue sadly im fering im losing anyway more the coming weeks.
But this fear of losing more the coming weeks (at least for Link and ETH LPs) will casue mass withdraw in the next month. → Peoplpe need one reason to stay and they need a reason now, even if the fullfillment takes 2 years time.

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I agree. There should at least be a mechanism to guarantee those staying in the protocol that they won’t lose more money than they already have.

If not, as soon as Link and Eth will skyrocket with the merge and Link staking coming in september, people will panic and capitulate, leaving BNT in the dust.

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Idea upgrade: You would be able withdraw UP TO 1% of the set amount of TKNS per week.
Meaning your time to get 100% back will be longer, depending how much you pull out per week/skipping a week all together.
Next week you are still only able to withdraw max 1%.
There could be an automated method: Send me 1% per week autmatically.
The metrics can be changed, depending on the health of the protocol but NEVER get worth than 1% per week (2 years for a complete witdrawla in Crypto is the high end the usual LP would be willing to accept i think).
Benefit: Further releases sell preassure for BNT Token.

Don’t you think that this would increase the deficit?

I got this number of 3 k out of thin air. It could and probably should be more in the direction of 1k for sure. which will only be as you know about

All in all i think this will actually help stabilizing the deficit. The weekly payout and printing BNT/tanking the price will be minisculed compared to the loss of missed generated fees because LPs simply left. Not to speak of the continuity of bad reputation which will scare of any potential new LPs.
With it being a weekly payout most of the witdrawals will be canceld sooner or later when people see the process works, their money is safe, there might be even better options to withdraw when the protocol is in better shape, people will actually decide to stay for good if they see over time things have changed → bancor is back on track

Im certain there will be more and more withdraws over the coming weeks following up to smartcon and the merge.
This proposal would actually be a reason to stay, no matter how long implementations with testing and analytics upfront are taking.
Surely the numbers in my proposal can be tweaked.

As i said before i can understand that this is still a bitter solution for everyone involved, for the BNT holders to get some minor setbacks on price, for the LPs to wait 2 years to get their investment back. But without a solution to look up to within a month we are all pretty much doomed and most LPs have left causing Bancor more dmg than printing some BNTs

The number you were refering too was jsut an example for the small time retail investor who deonst have more than 5 k or sth like this staked. But especially those are needed in the future. planty little fishs are better than a few big ones. If they can get somoe money out for sure, which wont hurt BNT too much they are happy, even if it takes them 2 or 3 payouts

I don’t believe this at all. Such an extreme claim should come with evidence.

I strongly disagree with the premise here: it wouldn’t be miniscule. People who staked in the ETH, wBTC, LINK, and stablecoin pools were all paid significant sums of BNT. Now that the protocol is going through a tough time these TKN lps want to get out.

I get that.

I understand that looking down the barrel of a 45% haircut is not a pleasant thing, but I will not vote for, or propose, any idea that tacitly, or explicitly, “accepts” the deficit as an insurmountable failure. The deficit is not an unsolvable problem.

The DAO has just approved maximizing trading liquidity in this proposal and I think this is further evidence of the beliefs of BNT holders. These BNT holders will lose a lot more than 45% if the protocol goes under and people still aren’t jumping ship.

Is this response not what you wanted? Probably. Most TKN lps hate being ‘stuck’ in the LP.

And I get that.

But I won’t vote for anything that will permanently destroy token vault balances by mass minting BNT - which is what I think your proposal will do.

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First im glad about every comment. Thats the whole point of a discussion. Im just confused about the harsh way you oppose this proposal.

Secondly i think there might be some misunderstanding. The devs are getting death threats. at least accoriding to yudi on a comment in telegram this is not ok and should not be tolerated. Not sure how i should prove the devs getting death threats. I just tend to believe them.

Lastly this proposal is not “acceptting the deficit as an insurmountable failure”. Im pretty certain Bancor will get out of this, it just will take at least a year, propably more.
Here comes my proposal in: A lot of people chose Bancor v3 in the first place becasue of the promised security (me too). This security is now gone (which saved the protocol so its fine!). Yet still you need to see the POV from these retail investors like me. We are scared. We see our haircut rise more and more. The result is anger, frustration as we can all see in the discord and telegram.
This is really damaging the reputation for Bancor and not only for this crisis but for long after.
If we/ the DAO cant think of some fast measurements a lot of people and liquidity will leave (me included). The way we keep them? The selling point! Security.
Surely there is no way to turn ILP straight on. This would be suicide.
But i think with a securtiy plan over nearly 2 years this wont happen. More LPs = more fees generated.
Not everyne will pull out. And those who will “pull out” will only get 1% per week. Which BNT should be bale to absorb.
Further im certain as time goes by, new feature are implemented, the fees rise, the deficit gets reduced more and more people will cancel their withdrawal. Remember, the TKN in withdrawal can still be used to generate fees the whole time! There is no sudden bank run.
Surely there is room for adjustments in the numbers. Someone smart should run some simulations if this is realistic. Thats jsut not a reason to completely denie it beforehand.
If we dont make it automatically the logistic reason alone is why people wont be able to withdraw 1% every week. Do you have time for 2 years every week to get your coins out of bancors and selling them? At least the normal users wont nor would they care enoguh if they jsut knew their TKN are safe and they can jsut do it some other time.
This will spread out any BNt minting and selling immensly, while people are still LPs and can help bancor this way to get back on track.

The big players like celcius are gone. There will be a lot of withdrawals coming even if this proposal in some fom get aproved. There wont be a doomsday. Just security and restoration of Trust -Y polishing our image.
Personally If this would get approved i would go in withdrawal and get 1% whenever i need it not every week. I jsut want to know im getting it and im happy. If nothing will be done which RETAIL can SEE Protocol is in much more trouble.
If you have any ideas how to tweak these nnumbers or if you get some simulations going i would be really thankful.

p.s. i totally understand that this is not a solution which will be profitable for BNT Holder right now. But it isnt good for LPs either. 2 years is really long for something we were promised was available all the time. Everyone loses on my solution BUT only loses a little bit and we are still working together on the problem and we are seeing it as one problem. Right now its basically a fight between LPs and BNT Holders. You see the results. A nasty shitshow. And in the long run both parties will benefit from a proposal like this.

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Another thing which should be done is: If you are NOT in withdrawal mode you get more apy than someone in withdrawal mode = more motivation to not stay in withdrawal mode.
If you go in withdrawal mode and want ILP you have to wait at least 1 week for the first transaction.
every other withdrawal is ofc possible, you just take the haircut

I think this model may have a bit of merit to it. Something along the lines of a vested ILP would at least give some confidence to LPs as well as future depositors. I can understand from a developer and technical standpoint that it may not be the end-all-be-all solution, obviously requiring the continuation of other on-going approaches, but it will serve as a huge confidence boost in the protocol and a well needed reward for current and future liquidity providers. Would love to see some more discussion on this type of approach.

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But I won’t vote for anything that will permanently destroy token vault balances by mass minting BNT - which is what I think your proposal will do.

I find this interesting, considering the entire premise of ILP and Bancor V3 was to print BNT to cover IL. Also, lets imagine that ILP never had been turned off and “extreme market conditions” didn’t take place. I imagine there would be more than 1% of liquidity being withdrawn each week from the protocol consistently. So I’m a bit confused as to how you can disagree with a proposal to bring back the very feature that attracted so many to Bancor V3, especially in a form that is much more sound and safer than the initial implementation.

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It does seem safer and more sound, but these are just terms that describe a lessening of negativity. If the old ILP model was a “-9” then this new model is a “-3” - yea its not nearly as bad but it still isn’t good.

I want plans and courses of action that are positive for the protocol - not just a slow, inevitable bleed and eventual death.

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The deficit is increasing faster for some pools which can reach 100% or even higher. The 1% gives over 2 years runway for bancor to recover while the LPs having an ILP but spread for longer period i am with the 1% to be fair and against a dollar value which is meaningless for high net worth LPs.

Having 1% offer gives minimum of 1 year with half the current liquidity. Thats in case bancor stays stagnant with no effort to increase liquidity over the period which wont be the case. Since bancor is working to add further liquidity, people and LPs (current / new) have more trust in the protocol since they are not losing money and all other fees generation solutions and techniques coming up. We can estimate liquidity might remain the same or even increase and thats need to be calculated for sure maybe simulate

Token vault balances exist as a function of the ratio between BNT and TKN. A restoration of these vault balances is - necessarily - good for both TKN and BNT stakers. The thing I see as the big difference in desires between TKN and BNT stakers is that BNT stakers want to restore vault balances but TKN stakers want to be paid for the IL they have (with little consideration on the effect this would have on BNT). It is totally reasonable that TKN wants their position covered - it is what the protocol advertised - but the protocol AS IT EXISTS CURRENTLY can’t afford it. It can’t afford it now. It can’t afford it over 2 years. It just can’t afford it.

We need new ways to generate income - which are currently being worked on - and as the protocol makes more income that will go to restoring vault balances which will fix the deficit AND Bancor will continue to exist.

The protocol owes 45 million it doesn’t have. Breaking that up into “100 easy payments of 450k” isn’t the solution. And I would not vote to implement such a payment plan. On the other hand, we have TKN lps who are absolutely furious (as they have every right to be) that they risk a haircut if they withdraw.

The TKN holders can choose to tough it out and stay while we work on this because if they leave then it makes the problem harder to solve. So I won’t give them any incentive to leave.

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you are still assuming everyone would withdraw every week. which wont happen, its jsut not realistic at all. and maybe im wrong here but it would no be 450 k a week but rather less than half of bnt. more than half would be paid out in TKN. assuming the protocol continues, more feature get implemented, people start trusting the protocol again i dont think this number wont exceed maybe 100 k dollar in bnt a week. which really is not that much.

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You are assuming that all LPs would withdraw. I believe myself and many others included (not all) would much rather remain liquidity providers if there was a semblance of security to it. There would be almost no reason to leave after two years have passed, if you were actually confident in the proposals you are linking to. If those proposals and future proposals for revenue generation are as good and as well-thought out as you believe them to be, then why would I have any incentive to leave knowing that I can continue earning while also knowing that my position will be covered should I withdraw in the future?

You are quite literally admitting to wanting to hold LPs hostage until you, as a BNT holder, are in a comfortable position. The true incentive to leave lies in an increasing deficit. If the LINK pool hits 50%, I imagine you’re going to see another massive round of withdrawals. This proposal gives you, the BNT holder, two whole years to improve on the protocol while also incentivizing LPs to STAY in the protocol once those two years have expired. Hell, make it three years, even four and decrease as the protocol recovers. Good faith will have been restored and Bancor can continue to implement things that not only benefit LPs, but BNT holders as well.

While I don’t doubt that your technical comprehension of the protocol is far greater than mine and many others on these forums, you’re forgetting a massive beneficial psychological aspect that a proposal such as this one would carry. Restoring faith to not only current liquidity providers, but future ones as well should be an extremely high priority for any BNT holder. Without LPs, your protocol fails. And without future deposits, BNT is dead anyways. You cannot survive with the amount of liquidity currently being provided. It’s not enough. At some point you need to attract future LPs, and this model may prove beneficial in doing so.

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I think that if we are going to add back any form of BNT mint based ILP, it should be at a ratio relative to the vortex. Ideally it should be less than the vortex so that we’re still getting positive value from it. Maybe allow BNT mints at 50% of what the vortex buys, not sure on what specific #'s would work best

i think you are completely right except i think you are missing (if i interpret your text correctly) one thing which would be.: If you withdraw 1% per day you actually are withdrawing 1% per day. If you dont the 1% stays in the pool and you will need a week longer to withdraw your whole amount. this way the 1% doesnt get stacked up, which in my opinion is a really important point to not flashcrash the bnt price ( you are never able to withdraw your whole amount). equas even more time for bancor to recover. This would also eliminate any big player to fuck the protocol- again maybe im wrong here and someone smarter has some better ideas :slight_smile:
still you are right since a lot of withdrawals would change their might after a cpuple of month when they see progress. people like me ned to actually see stuff not some theorycrafting. We retail investors neither have the time nor the knowledge to get as deep as some others can get.
again my english sucks, but you get the point :slight_smile:

Will there be a product solution assuming link/eth skyrocket soon increasing the deficit drastically?