Proposal: Remove Primordial Pool Rewards instead of reallocating

DAO Archive (SUBMITTED)
21

I will sell out BNT position if no 980k and 30m reward. Why should I hold BNT and endure the price drop just for the interest rate of 1% to 3%? It is reality.

1 Like
23

Hey just wanted to clarify that I removed the part in this proposal regarding the 30m auto compounding as it was pointed out that this is non-inflationary (it’s redistributing protocol-owned BNT to BNT holders).

This proposal is now only to remove the 980k.

2 Likes
24

why cant we have a LM program that guarantees a certain APR? lets say the target is 5%, so if APR from fees is 3,1% the LM will fill the missing 1.9% in BNT

1 Like
25

The rough rate we are looking at with auto-compounding turned on for BNT is 10%~

Maybe we can get around this in a happy medium by instead of minting 980K BNT we shift them from Auto Compounding Rewards so that we’re left with 29M BNT Instead. That way we are also staying true to our original BNT Rewards budget. Tokenomics proposals definitely should be put under a bit more scrutiny perhaps we should have a longer waiting period on BIPs.

Furthermore I think we can also reach some sort of less inflationary but just as impactful amount of rewards for token LPs. Out of the 980K BNT Which we could deduct from the auto-compounding mechanism to still be net neutral we could allocate the same amount of rewards as before just over a one month period after which the Bancor Network I assume should be fully operational.

If we honor the first month of LM using the proposed to BNT We’re left with 740,000 BNT for BNT Stakers and 240,000 to Token LPs. Personally I think we could also remove Stables from the list. This would also stay more or less within the 75:25 Split mentioned in BIP-18.

3 Likes
26

I believe the main issue is that these rewards would be a net negative for our ecosystem.

I think we can simplify the main benefits of rewards into two goals: encouraging migration & increasing liquidity.

Encouraging migration: This might not require rewards at all. If it does, I believe a short burst would be more impactful than a 6-month long program. I think our best move here is to wait and see if people migrate.

Increasing liquidity: If we are already reaching the max threshold of trading liquidity, adding rewards is neutral at best for Token stakers*, and very negative for BNT holders.

*As APR increases, more people will be encouraged to deposit, which will drive APR down. But the additional liquidity isn’t being used, so it’s not adding any value & eventually we will probably reach a similar APR but at the expense of BNT holders.

I think it’s time to see what Bancor V3 can do naturally aspirated.

7 Likes
27

Where is this number from? The BIP-18 charts top out at 7% https://europe1.discourse-cdn.com/standard20/uploads/bancordao/original/2X/1/1af4475badf8dbe6ea7d196f4289e6fdfd5cd9d5.png

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2 Likes
28

Are we good to move to Level 2 and clean up proposal requirements?
@tenzent

1 Like
29

I’m in full agreement, minimising BNT rewards for TKN pools is a good thing.

So cancelling the Primordial pool rewards is a step in the right direction.

Don’t get me wrong, we need people to migrate from v2.1, and sooner is better. However, a blanket BNT distribution could be very wasteful as it attracts more AUM to pools than we actually need for optimum B3 economics.

Over the last 6 months DeFi yields have dropped, if we target 10% on any ERC20, we will get AUM until it’s diluted down to the market rate (+/- a risk premium).

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So, we don’t NEED to offer high rates, and if we try to, we give away BNT (freshly minted or from reserves) with little benefit other than growing AUM higher (and possibly higher than optimum).

So, what can we do?

  1. Wait and watch how B3 AUM grows.
  2. Stop allowing deposits to v2.1
  3. Communicate the benefits of migration (marketing, direct communication to whales and DAO’s with POL).
  4. Start the Matching BNT : TKN Liquidity mining programme when the time is right.
  5. Increase the vortex fee on v2.1 to divert more fees to Bancor.
  6. Freeze trading on smaller v2.1 pools. Then migrate any Bancor protocol owned TKN to B3.
  7. Offer a gas subsidy for migration (ideally in ETH) - flat rate, or calculated on actual cost.
  8. Adjust v2.1 and B3 pool fees to encourage trade on B3 (Double fees on v2.1, and increase the vortex to 65%…)
  9. Targeted liquidity mining on specific pool migration when we identify a need (based on observation of v3 behaviour).
  10. Targeted BNT rewards to allow pool fees to be reduced on select pools.

However, I think the priority is to stop, take a step back and observe B3:

:100:

The UI has been updated to 7 day averages. We are benefitting from market volatility, but B3 is generating unincentivized income.

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3 Likes
30

v3 is a new system - the rewards during the beta were there mostly to support the beta, test things and have enough LPs so that we can see how things perform.
But now that the protocol is out beta and all pools are live, I think we should give it some time before allocating more tokens for rewards - it might not be necessary and we already know it can potentially harm the protocol in the long run, plus we can always vote to reinstate the rewards program at a later stage, so I don’t think we should rush.

3 Likes