Proposal: Remove Primordial Pool Rewards instead of reallocating

Proposal: Remove Primordial Pool Rewards instead of reallocating

This proposal is expected to appear on Snapshot for voting on June 19, 2022. Make sure to stake your vBNT for voting before this date and time to participate in the DAO decision.

To pass, this proposal needs a quorum of 35% and 80% FOR votes.

TL;DR

  • Eliminate the 980,000 BNT that were reallocated from the ‘Primordial Pools’ to BNT stakers

Overview

This proposal seeks to amend the previous proposal “Proposal to End BNT Emissions for the “Primordial Pools” and Reallocate the Same Emissions Budget to BNT Staking”.

Keep our Friends Happy

The recent vote to reallocate 980,000 BNT rewards from Token LPs to BNT holders has left many Token LPs with an unfair feeling. They were promised rewards, which are now being taken away.

I propose a peace offering—we simply eliminate these rewards.

It is my hope that this proposal will at least slightly help mend the feeling of betrayal I’ve heard expressed by token LPs at their expected rewards being taken away.

Voting Instructions

FOR
Do not create a Standard Rewards program for BNT.

AGAINST
Do nothing. The BNT pool will receive 980k BNT over 6 months as Standard Rewards.

1 Like

I think the intuition here is that when LM isn’t resulting in new growth (it hasn’t for a long time considering pools have been capped, and volume hasn’t been growing on v2.1) then it’s just reslicing the pie instead of growing the pie

if we’re just reslicing the pie then we’re pitting LPs against each other, which will expend energy and resources to achieve nothing but these “feelings of betrayal”

ultimately all LPs benefit only if fees increase, and fees come from volume

whether you care about APYs or IL insurance, both of these things can only come from revenue

perhaps some future phase of bancor will have other revenue streams, but the platform needs to survive every day between now and then

the reason there is fear about cutting off inflationary rewards is because the b3 APYs barely cover the gas and withdrawal fee of stake/unstake and the v2.1 volume was never super high compared to prominent competitors for any sustained period

it is possible that less fees means less LPs means less fees, which is a scary thought for all, so it clearly takes some guts to propose and vote for this kind of change

the main benefit of LM rewards at the moment and for some time, hasn’t been to drive growth, it’s been to help sweep the relatively poor platform performance of v2.1 under a rug so that we can continue in a kind of “holding pattern” to give the devs space to finish coding v3

this has been a totally valid benefit as some rug sweeping has been needed to cover for a 12+ month release cycle, but the question is whether it would be valid to continue with the same approach for the coming 12+ months

the LM program simply borrows against the future, so the soon-to-be-live release and subsequent (hopefully more frequent!) releases need to pay for themselves AND ADDITIONALLY pay down the debt incurred during the lifespan of LM during v2.1

more rewards now means future releases have more debt to pay
fewer rewards now means the bar is set higher for current releases to compete

my main criticism of this proposal is not that LM rewards are good but that pragmatically the “current release” is still v2.1

  • the pools are not launched to v3, still in manual testing phase and with active bug bounties and near daily reports of bugs coming in and being investigated
  • LPs haven’t made their decision to migrate or not, so fuelling a potential emotional “rage quit” over “rugged rewards” seems like it is playing with fire
  • “show don’t tell” as they say, we expect fees to be higher in b3 due to improved product but until we see higher fees, all LPs are being asked to migrate on faith rather than data
  • every day that the ecosystem is fractured between v2.1 and v3 the split itself represents ever increasing risk

i do find it weird that on one hand we’re delaying whitelisting all the pools until every token is individually simulated and rigorously tested, while on the other we’re just proposing and voting completely new BNT tokenomics into existence every few days it seems

8 Likes

First, thank you for the thoughtful response - I thought you made great points.

I just want to clarify that my motivation for writing the proposal was to amend the vote that seems extremely likely to pass: Snapshot

If the vote passes, the current result will be:

  • BNT stakers will now receive the 980k BNT that was previously going to Token LPs
  • 30m BNT auto compounding - no change
  • 50k BNT rewards match - no change

I’m proposing we change it to:

  • 980k BNT removed
  • 30m BNT auto compounding removed
  • 50k BNT rewards match - no change

So assuming the previous vote passes - LPs are already going to have that feeling of ‘rugged rewards’. My proposal seeks to soften that blow with a “don’t worry, none of us are getting rewards now”, while simultaneously eliminating a rewards system that is going to cause “bad” inflation.

3 Likes

“i do find it weird that on one hand we’re delaying whitelisting all the pools until every token is individually simulated and rigorously tested, while on the other we’re just proposing and voting completely new BNT tokenomics into existence every few days it seems”

  • Well, if they dont test, all the money can be gone fast.
  • if we vote to change to turn on and off LM, no lasting damage other than the LM.

@lesigh - this is very interesting, im gonna think about it and then reply with something smarter than a gut reaction.

1 Like

i understand that testing is required

my concern is that we aren’t taking the same measured approach to tokenomics changes that we do to code changes

i disagree that tokenomics is a lever you can just pull at will, if you get a reputation for “rugging rewards” then the lever becomes much less effective each time you pull it

3 Likes

this is good framing, if the goal is to keep LPs all “on the same team” then it is a bad look to be redirecting rewards away from non voters to voters

3 Likes

Exactly.

I can’t see Token LPs being happy with the current vote. Because we are limited to either yes or no, I feel like a lot of BNT voters - myself included - are going to feel that Yes is simply a better choice than no, even if it doesn’t feel good.

I’m trying to create an alternative that I’m hoping everyone will be able to stomach.

1 Like

I have to say I’m finding all of these proposals to tweak rewards before we get to see what the actual 150 token performance is concerning. I would prefer no votes tweaking tokenomics passed until we complete the actual launch and can get some data in.
I appreciate I might be a minority or too smooth-brained to see what’s coming but I’d prefer we got what we said would be delivered out the door than we start tweaking on the way.

3 Likes

totally, maybe we could have a moratorium on all platform changes until b3 is live

2 Likes

The problem is that the cat is out of the bag. The latest vote is extremely likely to pass, which means that things are going to change no matter what.

I’m just trying to amend the changes to what I believe will be more palatable for everyone.

2 Likes

Auto-compounding rewards are not Inflationary and are used to rebalance the Protocol Owned Liquidity to Staked Positions. I’m for killing all Standard Rewards, but leaving Auto-compounding.

2 Likes

You can’t have the 50k BNT Dual-LM without the 40M LMR Proposal budget. I think keeping the Proposal Single-Faceted will be more productive. Kill the 980k Primordial budget entirely. Then let’s decide what to do with the entirety of the 40M LMR budget.

2 Likes

Less fees [AND removal of LMR] will lead to Vulture Capital leaving and stop diluting APR.

Less fees, means less LPs, means higher APR

2 Likes

You make a great point regarding the auto compounding rewards. I’m going to remove it.

Revised, this will simply delete the 980k Primordial budget.

1 Like

Thank you ser. This doesn’t need to be emotional or knee-jerk. But the Primordial proposal was in no way satisfactory. 6 months with 1% APR is just crazy to propose. Let’s find a compromise on a shorter timeline

2 Likes

I think we need a calmer, all-inclusive proposal. The Total Cancellation was rushed over a weekend and never made it to Phase 2 before being forced onto Snapshot. @foxsteven @mbr
The Primordial LMR was also pushed at a terrible time and not in line with what the BIP-15/18 Migration/LMR stated. @tfns @tenzent

2 Likes

I agree overall with removing that 980k - I voted yes. I’m also open to the idea of a shorter burst of less rewards to encourage migration.

I just don’t see a need to reallocate the 980k BNT to BNT LPs - feels like it won’t be received well & isn’t necessary.

2 Likes

Reminder that any BNT rewards released through Standard Rewards Contracts screw up the vBNT ratio as well.

2 Likes

While I could certainly be wrong, the proposal to reallocate the primordial pool rewards feels like a snap reaction to hasu’s tweets on bancor inflation. Almost like a “hey, we’re ready to prove you wrong that b3 will thrive in providing IL protection and strong rates without needing to significantly increase supply”.

Don’t have a strong opinion one way or the other about it, since there are pros and cons on both sides. Just the gut feeling I get from seeing how this has played out.

1 Like

BIP18 created the v3 LMR Standard: BIP18: Proposed Bancor 3 Liquidity Mining Program

Several proposals came out during the Beta phase that allocated 980k BNT out of the 10M budget set aside using the Standard Rewards Contract. This is looking to correct those “Primordial” LMR and use the TKN side rewards more effectively.

2 Likes