Proposal: Reallocate LM rewards on EDEN pool to 100% BNT - 0% EDEN

DAO Archive (SUBMITTED)
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This proposal is expected to appear on Snapshot for voting on 2021-10-10T12:00:00Z . Make sure to stake your vBNT for voting before this date and time to participate in the DAO decision.

EDEN - Eden Network - Reallocate LM rewards on EDEN pool to 100% BNT - 0% EDEN

TL;DR

  • Reallocate LM rewards on EDEN pool to 100% BNT - 0% EDEN
  • Eden Network’s utility has fallen greatly since the proposal to enable LM Rewards
  • Eden Network fails to consistently keep Bancor’s tenant slot, despite their promise to do so
  • Eden Network’s effective hashrate has decreased from 53% to 36% in the 2 weeks since enabling LM Rewards
  • Eden Network’s value proposition is now a net negative given the recent release of free and better alternatives to Eden Network’s private transaction RPC
  • As such, we should protect BNT from unnecessary inflationary pressure

Eden Network’s effective hashrate has fallen from 53% to 36%, a 32% decrease.

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This, in conjunction with Eden Network’s failure to keep BancorNetwork as a slot tenant decreases Bancor’s proportion of protected trades from ~10% to 4%.

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The LM we are printing on the EDEN side is no longer worth a 4% service rate.

Eden Network fails to keep BancorNetwork as a slot tenant:

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^BancorNetwork (Bancor: Swaps | 0x2f9ec37d6ccfff1cab21733bdadede11c823ccb0) is not there as of 12:41 PM EST October 7, with the most recent bid being over 2 days ago. Additionally, from the graph above, we see that Bancor Network was not a slot tenant until Sept 29, despite the vote for LM ending Sept 23.

Eden Network is failing to keep up their end of the deal.

Eden Network’s value proposition is now net negative given the recent release of free and better alternatives to Eden Network’s private transaction RPC

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Flashbots released a free alternative to Eden Network, available to normal users in the form a private mempool RPC, and a developer API so that trades made thru the Bancor UI can automatically use the flashbots RPC. Flashbots has a 90% hashrate vs 36% hashrate of Eden, resulting in better protection and faster trades than Eden Network, for free.

Q & A:

We can’t reallocate Eden rewards percentages after the initial proposal, right?

Actually, we can. The Bancor DAO can act accordingly, at will, in order to protect the health of the protocol. The initial proposal for LM was assuming certain Eden Network metrics stay constant, and for Eden Network to keep up their end of deal. On the contrary, these metrics have decreased, Eden fails to keep Bancor as a slot tenant consistently, and free alternatives to Eden Network have been released for the same service. In light of the presented new information, it would do the Bancor community a disservice to continue the LM rewards on the EDEN side of the BNT-EDEN pool.

Why 100% BNT, instead of outright cancellation of LM?

As a wise man once said, “LM on BNT side is 1000% okay.”

5 Likes
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Will be voting for this.
It was a stupid idea in the first place to provide LM for eden stakers.
Until V3 we shouldn’t incentivize new pools that don’t clearly benefit the platform.

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I support this. Hopefully foundation learns its lesson here.

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I received some feedback that the point “Eden Network fails to consistently keep Bancor’s tenant slot, despite their promise to do so” was not well illustrated or proven with hard data. I wrote a dune query to illustrate Eden’s Failure to keep Bancor as a slot tenant.

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Bancor has been a slot tenant for roughly half the time we should have been since the LM vote ended. Blue arrow represents when BancorNetwork is an active slot tenant. Red arrow represents when BancorNetwork is not a slot tenant.

Query is here:

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Are we sure it’s a good idea to disincentivize one of the highest volume trading pairs on Bancor?

And are we sure about there being a “free alternative” with Flashbots RPC? According to their docs we need to pay higher gas on our txs to use the RPC. Looks like pay-per-tx to me.

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Hi,

We fully understand that you don’t like Eden and that’s completely fine, you demonstrated that in the initial proposal where we very clearly answered most of your concerns.

Regarding this proposal, it should be invalidated because most of your post is based on false information. For example you state there is an alternative “free service” when in reality this is not the case. From flashbots own docs, they clearly state:

  • Use a high gas price! Getting included in a block through Flashbots is harder than getting included in a block normally because you’re competing with MEV bots for priority blockspace in an auction. To maximize your chance of getting included use a high gas price.

There is also an Eden RPC service that has been live since we launched where users can stake 100 Eden (they don’t need to lock them and can withdraw them at any point) and get protection on every dex.

You are right when you comment about Bancor tenancy of the slot, it was outbid many times which shows the value slots have and that Eden Network is working as intended with slots being heavily contended. We are on the first 2 weeks of the partnership and we agreed on 3 months trying to do our best, which we have honored and we will keep honoring

Another good point is the hashrate, that’s true, our hashrate went down from 50% to 38% due to the China situation and Sparkpool closing down. This number is not definitive, for example we expect it to go up when Beepool (a non Eden miner) ceases operations on 15th Oct as some of their hashrate should move to Eden pools.

In any case, that’s not the point of what should be discussed in this post, this is not a governance proposal about if Flashbots is better than Eden, it should be a proposal about how the Eden pool is performing in the Bancor Ecosystem.

  • Eden/BNT is sitting since start on the top 20 pairs in liquidity
  • Eden/BNT ranks 10 in terms of average volume per day, above other incentivized pairs
  • Eden representatives have jumped into some of the community calls for give explanations and speak openly about the project
  • Eden keeps working on improvements and help on transparency and improvement on what the project does and one proof of this is the release of the Eden explorer to help everyone check the blocks on a easier way https://explorer.edennetwork.io

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Taking the above into account, we do believe that Eden/BNT has been a very positive pool for Bancor, even without any commitment on slot tenancy or benefits from Eden Network by looking at key metrics and comparing them with other pools. If you also take into account the added value, it feels like a big mistake to be voting against removing one of the best performing pools that, on top of it, brings extra benefits to Bancor.

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Hey,

I don’t know a lot about Eden itself so I can’t really talk about what Eden does and is trying to achieve as a project. What I can do is talk about how we in the community think about LM rewards atm.

First of all, we’re not canceling the Eden pool! So don’t worry about us removing it. What this vote is aiming to achieve is simply allocate the LM rewards 100% to the BNT side, so the trading fees, IL protection, and single-sided will still be in place for all the Eden LP providers.

So now to the point to why we don’t want the LM rewards.
LM rewards for the TKN side should simply be incentivized by the TKN team itself. Like you guys are doing now at Sushi. Asking the BNT community to pay for these LM rewards is simply a task too big and puts pressure on the BNT price. Of course in some special cases, we don’t really mind doing so, like for our main pools.

Now I know that our current V2.1 design doesn’t allow for third-party LM, but good news the upcoming V3 release will!
When this one releases we would gladly receive incentivization from the Eden team to boost the TKN side of the pool.
Imagine how happy your holders ( and maybe your treasury itself) would be with IL protection, single-sided staking, IL protection, and your generous LM.

So the key takeaway is that we BNT holders really don’t have anything against Eden itself and would like to keep working with you guys. We just don’t think it would be wise to provide LM on the TKN out of our own pockets.

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The fees for this pool since the week of 9/20 have actually been decent given its current size:

symbol total_fees
ZCN $2,325.39
NDX $2,606.15
MPH $3,652.01
UNI $3,903.82
BAT $6,729.54
MKR $6,764.38
GRT $7,217.12
YFI $7,949.19
ALPHA $8,547.19
COMP $9,947.08
AAVE $10,856.16
OCEAN $13,860.02
MATIC $15,822.94
EDEN $18,222.14
FARM $24,584.60
ROOK $25,186.82
SNX $42,015.90
WOO $50,562.52
ENJ $52,804.61
wNXM $56,949.04
REN $60,304.64

I think given that LM is active, we can attract a lot more volume if this pool grows in size. The stats themselves show that it has a high volume that could benefit us at with a larger size pool:

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I had mentioned a higher co-investment initially as part of:

Since I believe that this pool is receiving rewards at the same rate as what the SNX/AAVE pool were so it makes sense for it to also have a higher co-investment as these other tokens. I also brought a proposal to increase the co-investment:

With that said, if Eden is not able to secure a slot for Bancor then I am hoping that once V3 is live that they can consider dropping EDEN rewards to the BNT and EDEN side of the BNT-EDEN pool. Perhaps the split can be 70% to EDEN and 30% to BNT at a similar rate as current BNT LM rewards for this pool. This split would essentially be the reverse of what we have at the moment with BNT rewards were 70% goes towards the BNT side and 30% to the EDEN side.

1 Like