Proposal: Migrate V2.1 Surplus and Open Withdrawal

Snapshot Date: Sunday, October 16, 2022

Voting instructions

Vote FOR to grant the DAO mult-sig signers the authority to migrate v2.1 POL Surplus to v3 and re-enable direct withdrawal from V2.1 per the 4 phase migration strategy detailed below.

Vote AGAINST to take no action.

Summary

The purpose of this proposal is to come to a final resolution to v2.1/3 migration and surplus discussion that has been ongoing for over 110 days. This topic has been extensively discussed and the proposal is in alignment with what seems to be the community consensus for a path to resolution.

The previous discussions are linked below for your ease of reference and based on @NIX 's detailed 4 part migration analysis within. For ease of reference, the historical chats are provided below:

4 Phase V2.1 POL Surplus Migration and V2.1 Withdrawal Strategy

Phase 1: Cooldown Period

  • Provide a 1 week cooldown period for v2.1 LPs to make a final determination to migrate to v3 or stay in 2.1.

Phase 2: Permanently stop migrations to v3

  • Remove the ability for v2.1 to migrate to v3 permanently after the cooldown period has lapsed. This prevents gaming the system to minimize an LP’s potential losses. After this phase is complete migrations from 2.1 to 3 are permanently deprecated.

Phase 3: Move v2.1 Protocol Owned Liquidity (POL) Surplus

  • POL is protocol-owned-liquidity, delineating the surplus owned by the 2.1 LPs vs. what is sitting in the system which can be moved w/o much friction since the protocol owns it. The goal is to move this portion.
  • Move the POL surplus for v2.1 pools in surplus per XRX’s analysis (see above 4 part post in “Summary” section). POL surplus is what is owned by the protocol

POL Migration Data

  • Analysis Block: 15542900
  • Pools with Surplus POL: 42
  • Total POL Surplus to Migrate: $8.9M
  • *V3 Deficit improvement after Migration: ~17%

The below table shows current v3 surplus (red) vs. the v3 surplus post-migration (green):

Phase 4: Reopen v2.1 withdrawals

- After POL surpluses are migrated, reopen the ability to withdraw from v2.1. LPs withdrawing from v2.1 will experience true impermanent loss, not the additional re-balancing losses based on XRX solution.

Conclusion

Coming to a resolution on the 2.1/3 migration debate is a critical step to alleviating the v3 deficit and honoring protocol obligations for legacy LPs in 2.1. The 4 phase strategy provides a clear end to the debate, allowing the DAO to focus all resources on further improvements to v3 and the new v4 protocol which will soon be shared. Thank you for your consideration and I look forward to coming to a solution.

5 Likes

Should the B3 vBNT Vortex be turned on first to continue to lock down BNT?

Amazing, thank you for doing this. Looking forward to voting yes on this proposal.

1 Like

Thanks for putting this together. I’m not sure what voting against this means to be honest. It kind of covers two different directions in one vote, i.e. its not just a vote against the “For” action, but a separate action in and of itself. I’m likely misreading it, so thanks for the clarification.

This proposal is not detailed enough imo to cover all possible solutions presented in the thread. Also not sure why you would include the v2.1 withdrawals here.
I’m not sure if I misread your proposal, but:
It doesnt matter if you vote YES or NO, you will still vote in favor of enabling the v2.1 withdrawals, so you are kinda forcing an outcome that the DAO has no control of. I doubt this is a valid proposal that can be put up to vote.

Personally, I view the proposal as comprehensive and addressing not only the core migration issue, but also adjacent/subsequent areas of impact associated with the migration. I have followed the migration issue for months in discourse, in telegram, and in private chats and believe this measure is one of the most positively impactful proposals for the DAO and is really unique in its ability to propel the protocol forward on a number of important fronts: providing relief to v3 LPs, burning BNT, and setting a path to ultimately sunset v2.1. I would like to see support and constructive criticism for this proposal that ultimately results in its successful passing.

1 Like

Regardless of my position on either of these issues, I think it is a mistake to group these two things together in one vote. I would much prefer to see these things litigated separately.

3 Likes

The AGAINST vote is specifying that neither withdrawals or surplus migration would occur.

I will reword this to take no action to make this more clear.

I was just explicitly calling out that withdrawal/surplus migration would not occur in the against.

I edited it now to make it clear no action is taken. Hope that helps.

2 Likes

Requiring v2.1 withdrawals to allow surplus migration is an interesting negotiation. However a simple vote on migrating surplus without changing v2.1 withdraw status is also possible.

Agree, just keep this proposal focused on the migration of the surplus. This would make the DAO decide on whether the surplus belongs to v2.1 or to the protocol. Coupling this with the withdrawal makes little sense to me. Maybe put it up in a separate proposal to make the DAO decide on whether opening v2.1 withdrawals, migrating v2.1, closing migrations or a mix of them.

IMO, this proposal is focused on the migration of the surplus AND the opening of withdrawals, as it is a package deal, based upon de discussion in the linked threads.

The original discussions focused on forcing the V2 LP’s to migrate to V3. Many people (including myself) objected to this; we requested to withdraw our LP from V2 as we did not agree to any migration. An alternative solution was proposed, to let Bancor use the V2 surplus to help V3 LP’s, but then we would let the V2 LP’s withdrawal from V2 (with V2 IL). The 4-phase plan is designed this way to make sure V2 LP’s cannot have it both ways (wait out the surplus migration and see what works best for them - they have to decide before), which I agree on.

Based upon your post history it is clear you are in favour of a complete forced migration, so it makes sense you would want to break up this vote into separate votes, as that makes it possible to migrate the surplus/POL now, but then maybe force a V2 migration anyway later on.

As mentioned, for me this is a package deal, and I would like to vote on it as such.

3 Likes

v2.1 users opted to stay, so it’s their decision, their funds. You can only hold them locked in the protocol, which has been the case for many months now, or simply allow users to claim them. Protocol owned liquidity however obviously belongs to the protocol and can be voted by DAO.

So the v2.1 withdrawal perspective here is to whether hold these funds locked any longer, or allow users to withdraw them. Voting to do something other than allowing or disabling withdrawals with these funds would amount to seizure, which is something centralized governments, banks and courts do.

4 Likes

I think this solution is the best way to move forward. I like the wording as calling the surplus POL as in ‘‘Protocol owned liquidity’’ automatically recognizes the rest of the v2.1 funds are user-owned-liquidity, which means the DAO has no right to spend, move or seize.

Moving protocol owned liquidity to v3 to help recovery seems like the best ethical solution with POL, and allowing v2.1 users to withdraw user-owned-liquidity seems the only legal solution free of controversy anyways.

I think this solves the v2.1 drama, taking a first solid step in speeding up recovery in v3 while protecting the reputation of Bancor in terms of respecting users’ rights to their funds.

2 Likes

Hi @infoparity .
Thank you very much for pushing this forward! I agree with your reasoning.
However, (as much as I’d like to take credit and prove me being smart), I am not the creator of the analysis. It was @NIX who created the data insights.

2 Likes

Based on the feedback here, I have put up a clean proposal to migrate the entirety (everything that exist in v2.1) of the v2.1 surplus to v3. I think this serves as a good alternative to this proposal:

1 Like

Can you explain exactly what this means?

I suggest we clarify in the proposal too so when people see it on snapshot they can fully understand.

1 Like

I’ll add a summary to this section on @NIX’s posts I point to in the proposal (they give very granular detail into the economic health of 2.1/3 post migration).

POL is protocol-owned-liquidity, delineating what is owned by the 2.1 LPs vs. what is sitting in the system which can be moved w/o much friction since the protocol owns it. The goal is to move this portion.

Will add a summary in a couple hours and will reply to this so you can read through once I post it.

2 Likes

If the proposal is split into 2 parts then I think this is the path to resolution:

Proposal 1: Move 2.1 POL Surplus

  • migrate 2.1 POL surplus to v3 per @NIX’s analysis
  • 2.1 to 3 migrations remain open

Proposal 2: Open 2.1 Withdrawals

  • permanently close 2.1 migration function
  • permanently open 2.1 withdrawal function

With the bifurcated approach migrations have to remain open during surplus migration or else this is forceful seizure of all 2.1 LP funds by the DAO.

This is something I could get behind as long as Proposal 1 Migration it specifically adds a mechanism saying that if this passes the following week Proposal 2 immediately goes to vote.

Thoughts?

3 Likes

One thing I wanted to quickly add @infoparity is a quick thanks for putting in the effort here to get a proposal together. I know this can feel like a pain in the ass, so I appreciate the time here.

7 Likes