Proposal to sell Bancor 3 token surpluses for ETH

DAO Archive (SUBMITTED)
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Expected on Snapshot on July 16th, 2023

This proposal is split from the discussion that has happened in this thread

and Bancorians should read that post to have an understanding about this proposal

TL;DR

  • Pools on Bancor 3 that have a surplus and are disabled to have the surplus converted to ETH

Summary

This is fairly simple and straight forward that will convert token surplus using a

  1. Public Function that trades each TKN for ETH on another exchange, based on any decentralized oracle

Notes:

  • Trading the surplus should only be done on pools where the trading liquidity has already been set to 0
  • 0.2% of the TKN to be provided to the caller as a reward
  • 0.3% Max Slippage

For

Sell Bancor 3 token surplus for ETH

Against

Do nothing.

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foxsteven

A full list of tokens and their quantities to be sold should be added here by Bancor for the community to review. Can it be done this week?

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Yes, I dont see why not.

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Just to be clear, this sounds like the first step in a possible two-step process like Yudi alluded to:

Meaning, do you think there will be an additional vote on what to do with the Eth? Or is this going straight into a Carbon strat?

To be clear I’m supportive of this step, just want to make sure we don’t find ourselves in a fight after this is conducted and we’re all facing the same direction.

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I suggest sending to carbonPOL - a new contract on Carbon where it can be hodl-ed while we discuss next steps.

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Should do the trick. Let me know if you need anything further:

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Got it, I’m on board.

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slicing the process into baby steps would help control the release process and avoid possible issues. it also allows agile progress as steps can be released while still evaluating the next step.

i’m for this plan.

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why eth and not wbtc? or why not a combination of both eth and wbtc?

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This proposal is only seeking to sell the surplus for ETH initially. What happens after is for Bancorians to decide and I have asked foxsteven that there should be three proposals for each option brought up in

this proposal starts that process and gets us one step closer

we are on ethereum, the native gas token is eth, every token has a pool with eth, eth has the most liquidity, and many other reasons.

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we are converting the excess balances into a TKN. are we doing anything with the converted balances? or are these converted balances going to be used towards lowering the deficit / closing the deficit ? will the balance simply sit in a wallet, which will can be used at a later time to do the prior mentioned?

if there is a surplus, it should be converted into a TKN that will best help our situation. eth having the most liquidity or every token has an eth pool shouldn’t be the only factors looked at.

The major factor that needs to be determined is, if we sell the excess balances, which TKN should they be put into that will work best towards the end goal ( closing the deficit ). And I can argue that a balance between eth/wbtc or 100% wbtc is better.

BTC will spark the next bull run . Not eth. Especially in the early stages of the bull market. Nevermind if ( a big if ) btc gets approved for an ETF. In this case, all alts will have a hard time keeping up with btc. eth included. initially.

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All your questions have an answer in Consolidating recent proposals by @alphavalion.

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I took a read through that thread, and honestly some of it went over my head, but it also did not cover all my questions and comments. I saw the list of tokens with a surplus/deficit along with the corresponding amounts, but it wasn’t clear to me if those tokens were either in surplus or in deficit

if we close all of those pools eventually and are left with the surplus, roughly how much TKN $ will we be dealing with here?

In the end, if we choose to take all the surplus, then trade with it in a pool, then we are essentially gambling with funds that could simply go towards repairing the deficit. there is no guarantee that the person who creates the strategy will be successful, and if they are, there is no guarantee that their strategy will outperform simply hodling a good token during a bull run. ( most traders can’t )

The post that you referred to was written in a way in which the surplus would become essentially owned by the protocol, and it would use those funds by creating a strategy on carbon, and with the fees earned, would go to repair the deficit, however I think that those funds rather can also be treated as a direct means to repair the deficit ( buying as you mentioned eth … or wbtc or whatever ) and when the time comes, those can be distributed to those withdrawing.

How much total surplus does Bancor have? I fully agree that TKN’s should be converted into the best asset. Some may feel it’s eth, and others may share my opinion of wBTC ( or others, hopefully not …)
But I am not yet sold onto the idea that we should trade / gamble with these funds which can simply directly reduce the amount owed to stakers.

ALSO

if we convert surplus TKN’s into eth / btc, we also need to determine the most optimal time for each TKN to maximize what we can recover. example … what if we sell TKN surpluses at the absolute very bottom of the altcoin bear market? that would be kind of stupid, no? because if we covert TKN’s into eth or wbtc after they rallied, then we will get that much more bang for our buck.

So there is a LOT to unpack here

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Check the sheet here from NIX to look at surplus quantities. The dollar value changes all the time but probably somewhere around $3m-$5m

There is no gambling. This proposal is converting the token to ETH so that they can later be used to buy BNT in one way or another such as stable strategy, lsd strategy, bnt strategy. This is in the link I sent before. No one is getting any ETH and they will most likely end up as being used to buy BNT and burn. This is what the DAO has voted for in the past as all pools that are in deficit get equally affected.

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I do think that anytime anyone chooses to put their funds out into any particular strategy, those funds are being " gambled " with… but with hopeful odds in the strategies favor. There is also risk associated with this as well. Any moment funds are placed into any protocol, they are immediately put at some level of risk.

the dao already voted on how to spend the surplus? (buying BNT )

3-5$M sounds like a nice budget to get quite a bit of work done. I had hopes that the bancor foundation would use its piggy bank to market the shit out of carbon. But if for some reason the foundation isn’t willing to do their job, then I’d say to buy and burn bnt with 95% of this and spend 5% of the surplus on doing a well coordinated mass marketing effort of Carbon. ( really these funds should NOT be used for this purpose, but clearly the foundation is pinching pennies and cheaping out on carbons release ). I deterred from the main topic at hand, but just thought I’d throw this idea out there.

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How can the Bancor DAO tell other people to use Carbon if the Bancor DAO itself is not willing to use Carbon? My preference has ALWAYS been to use Carbon for ALL operations. This helps Carbon in TVL, strategies, volume, fees, and many other benefits.

That is a separate step that comes after this and for the DAO to vote. All fees are going towards BNT buyback and burn to help with the deficit. This is important for all TKN and BNT LPs and using surplus funds for anything else goes against these efforts.

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This is a separate topic. I have seen some threads on twitter, sponsored ads, and videos so something is happening. Carbon is a very different product than what is out there on DeFi and marketing has to be done smart to have the best results. The last thing I want to see is funds being spent on having random shillers that engage in pump and dump schemes talking about carbon. Lets not talk about this here.

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I agree that if we put the surplus fees to work, this should be done so via Carbon and not any other protocol. But this also comes with a caveat. I am entrusting the surplus fees to the person who is deciding on the strategy, and for that person to maintain a strategy that will outperform simply just holding eth or wbtc.

example: lets say we put all the funds into eth, and from there apply those funds to a particular strategy. What if BTC rallies hard, leaving eth and alts in the dust? Sure the strategy may have earned some fees along the way, but in this scenario, it’s unlikely that the strategy kept pace with btc’s rally. Of course this scenario is not likely to play out until the bull run officially starts, and in a sideways choppy market, the strategy will more than likely outperform ( depending on the person who designs it ). But the success relies solely on the person, rather than the protocol.

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To be fair to @alphavalion, we were all having this discussion nearly a month ago in the initial thread he posts at the top, and he addresses the same concerns/issues there.

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I just read the previous thread, and I did see that you raised some similar concerns.

I do agree that the surplus should be converted into a TKN which we believe will outperform the market. If the trend was bearish, then I would vote stables, whereas now, I am more leaning to sideways up and down and eventually turning into a bull market. Therefor it makes more sense at the present time to spend the surplus on TKNs rather than stables ( if you agree on this market outlook )

Then then leads to the question of, which TKN will give the greatest performance, which also comes with the least amount of risk. To myself, there are only 2 options here, BTC and ETH.

Before we begin on discussing any strategy, it is appropriate to first determine which TKN will have the greatest gain in price, as the gains here will likely…or certainly… outperform any trading strategy over a 2 year period. Bitcoin is the safest coin from a regulatory standpoint. Ethereum % wise, given past cycles, should $ outperform BTC. However with each passing cycle, the difference between the two closes.

Every market cycle will differ from one to another. And if this market cycle, at any point, is fueled by a spot BTC ETF, then I am suggesting at that virtually no alt will be able to keep pace with BTC, at least initially. But the spot BTC ETF is a big “if”. No guarantee here.

I do not feel that throwing all of our eggs into one basket is the right way to go.

Splitting the surplus into both BTC and ETH is IMO the way to go. and if we put those funds to work via Carbon afterwards, they should be done so in the safest way possible.

I don’t think that the surplus funds should ever be put into a btc/bnt or eth/bnt strategy… unless we are betting on BNT losing value to either TKN pairing. if anything, these 2 strategies would likely earn $, but we’d also be shooting ourselves in the other foot by doing so. I’m not going to pretend to be some master trader, but the person or persons who choose to take on the responsibility of actively managing the surplus should be. Things aren’t as simple as buy low and sell high. What happens when you sell high and the prices keeps going higher? We’ve all been there.

to sum things up

  1. the surplus should be converted into a TKN that will be safe and outperfom the market. If the TKN won’t outperform BTC, then the funds should be placed in BTC. I vote for a split between ETH & wBTC
  2. if the funds are placed into a strategy, a real pro trader should be actively managing these ensuring they are outperforming simply buying and hodling btc or eth.
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My larger point was that this was hashed out for a few weeks, and now the proposal is live on snapshot.

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