Absolutely not. This is categorically wrong. False. Incorrect.
You go to war with the army you have, not the army you want or wish to have at a later time. My wish, in this situation, as granted by a genie in a lamp would be to make every TKN lp whole + fees, but that is not a reality. We are not in a scenario in which we are starting from a good position. Every decision we make in this situation will leave someone feeling put-out.
My decision making process is not fueled by some desire to preserve my BNT at the cost of others.
Leaving TKN lps at a 40% loss is totally unacceptable and I refuse to take any action that doesnât lead to the complete restoration of TKN vault balances; that is my motivation. Right now, the best thing for TKN and BNT stakers is to give the protocol - which invented dexes and has outlived tens of thousands of other crypto projects - time to make it right.
There are plenty of businesses and companies which experience times of economic turmoil and run a budget in the red. Bancor is a successful dex that is currently in such a situation and we can recover, but what (I think) this proposal will do is create a situation from which the protocol cannot recover. And so I wouldnât vote for it.
Again I remind readers of Arable, Crown, Phuture, ShibGF, and BBS - all of which are small projects currently making use of deposits and/or the external liquidity protection contract. You say we need to attract future LPs and I agree, but I donât think you realize that we are still getting more LPs of new projects presently.
Bancor is still the best place for new projects to bootstrap liquidity.
well tehre will bo no army left to fight at some point. and i think the LPs are way more important fee and reputation wise than small projexts like ShibGF and such. And companies in the red exist and come out of it yes. But usually its the company in the red, not the users. And if the company fails the workers (users) usually can leave to another company and work there for the same money. Here we cant, if it fails we get nothing. Are the rest of LPs willing to take the risk with no kind of security? I highly doubt that.
Whats way more important now, before we jsut turn in circles here. Can anyone in charge get us some realistic numbers simulated with Parameters like: Current fees, estimated fees in the future, estimated BNT mintin through withdrawal. It just has to be adjusted â the withdrawal will get less and less over time with more fees generated â circle effect â more people stay â more fees againâŚand of course to see the other picture a rough estimation how much revenue will be loss by liquidity leaving with the haircut becasue the deficit % gets too high in their pool
I would do it but i simply dont know how and i would make many mistakes.
Im certain we can find some kind of agreement, which is ok for every party involved. (For now the only completely negativ opinion to this proposal is zeno, if there are other voices i would like to hear their reasoning) It would save bancors face for sure.
Alternatively big mike had a good idea. I think yudi is on it already
Staying is beneficial to both you and the protocol as it helps both parties get what they need: token vault balances restored to parity. So I try to do everything I can - without duress - to get TKN lps and BNT LPs aligned in a mission to restore token vault balances to parity.
It costs the protocol nothing for you to leave and you will take a 40% haircut.
I donât want you to take haircut. I want us to work together to get token vault balances restored to parity.
You are free to leave, but Iâm not gonna vote on something that pays you to go. I donât even think I can vote on a payment plan for you to leave because Iâm not sure the protocol can afford that - and I donât want the protocol to write a check it canât cash.
Lastly, doing the suggested takes dev time. Dev time that could be spent making more revenue earning features.
A quick reminder that this proposal is discussing the option to withdraw with ILP at a 1% rate per week. Any discussions outside of this topic should not be in this thread. There are rules in place for discourse:
tbh the lack of confidence of TKN LP will only make the deficit worse. without confidence there will be no new deposit or buyer of BNT, hence no means to continuously generating fees. There is some merits in the proposal, if the TKN LP are assured they can get the principles back in 2 years, many long term holders would choose to stay in the protocol and provide the liquidity to generate fees. we could potentially see some new LPs.
Agreed. We need some kind of path forward, a perspective giving us hope. We canât pretend like we just have time to develop new features for the next months and can just regain trust afterwards.
So, as I have tried to really digest the pros/cons of such a planâŚmy mind keeps going back to the premise of the proposalâŚwhich is to instill trust via promise to withdrawal at a 1% rate. The argument is that by putting together a throttled exit plan, people will have more confidence in the protocol and stay. If I am over simplifying, please let me know. But I believe that is the heart of this.
Regardless of the plan, it is the ultimate goal that seems to be unstated, but inferredâŚâpeople will have confidence and stay if you give them the ability to leave slowly over time.â that I believe is where the friction comes.
I donât believe that confidence which will lead to people staying is going to come from outlining a smooth exit strategy. I am not opposed to any exit strategy for anyone who wants to leave, it just canât put the protocol back into a state of decline or else such a proposal works against a recovery. With that said. Confidence will only come from people seeing a promising way in which more liquidity, fees and volume will come to the protocol. Furthermore, I would argue that any promise of a specific plan would have any merit unless such a plan forward was outlined and embraced by the community.
At the heart of it, I believe this would ultimate work against the protocolâs recovery process, even if only at a much lower rate than other plans seen.
The protocol is in a state of decline right now. How much TVL leaves the protocol daily? People are losing hope because from a LPs point of view absolutely nothing had been done for 2 months.
Every single time ILP was paid out, it put the protocol in a decline for the amount that was paid out. It is simply impossible to pay people your due without actually paying it. Whether it comes from swaps as fee or goes out of your liquidity by thinning it.
Also almost all of the past community are raging and attacking Bancor on all possible avenues. Blocking them or censoring them will not remove their posts from the internet and they have some truth to their claims in that the real IL value if calculated by dividing the initial stake by two would be much lower than the current haircut. At least if you allow some kind of reimbursement, be it 1 percent per day or 1 percent per week, it will actually make the constant attacks stop.
Also paying them ILP in a bear market is a much better idea than paying them in a bull market. The protocol is already in decline. Bancor lost a big amount of credibility by disabling ILP and it is one of the OG protocols of ETH. So far all the strategy I see is dragging things on to have LP owners take haircut to lower the deficiency. The 1 percent ILP per day or even per week seems reasonable.
This seems like a proposal that could really be worth revisiting now. Had this method been instituted at the time it was originally proposed, all LPs would likely now be out from the protocol, and happyâwhich in turn would greatly enhance Bancorâs reputation.
Whilst Iâm sure that some protocol loyalists may still baulk at the idea of LPs getting to withdraw a maximum 1% of their funds with ILP per week, I would argue that itâs sensible at this juncture.
LPs were told to give the Bancor team time before considering a plan like this. Itâs been over a year and a half now since Bancor broke, and remaining LPs are in a worse position after all that time. Smaller pools were cleared, but we honestly all saw that was the result of isolated short-term pnd price action, rather than market response to Bancorâs designs and innovations. This has been more than 18 months of opportunity cost, including the reduction of personal deficit by staking recovered funds outside of Bancor
The projects remaining in deficit are in such a position because they have historically outperformed BNT significantly. With several signs pointing towards a market recovery, it appears more likely than not that they would outperform BNT again, worsening the situation.
It was argued at the time this was originally made that we couldnât incentivise LPs to leave the protocol, all TVL was valuable and already draining away. Since then, it has been accepted and unequivocally stated that v2 and v3 are being sunsetted and deprecated, Carbon is perceived as the way forward, so v2/v3 LPsâ liquidity should no longer be treated as the silver bullet to solve the deficit
Arguments are currently being made re: POL buys that the POL purchases should not serve to move BNT price, when relative performance of BNT versus token is currently the only mechanism available towards fixing the deficit. POL buys didnât exist when this was previously discussed, but could greatly mitigate any effect of minimal ILP withdrawals per week
If anything, running the POL buy/burn system seems like a good way to âabsorbâ the maximum 1% of deposit LPs collect in ILP per week, thus preventing it from tanking price and causing the death spiral. Or, if sells outpace POL buy/burn and BNT price goes down, that means greater supply reduction from the next POL buy/burns, so it appears a net neutral at worst.
Could we use POL to buy TKN instead of BNT, or at least use POL to buy each, and offer LPs the option to withdraw 1% per week with ILP as proposed by the OP? The closure of 69 LPs in November was largely due to the PnD of BNT to US$2. Since influencing BNT price is frowned upon, using POL to purchase TKN and allow LPs to withdraw in a controlled manner may be something worth exploring.
We could cap it at 10% ILP, not much but a first step to make LPâs whole. But I am afraid we already decided to burn POL to decrease the supply of BNT a bit.