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
ETH pool on Bancor v3 might have a surplus in the future
This proposal is looking to set the funding limit to 0 if it goes into surplus in the future
This is fairly simple and straight forward. Setting the funding limit to 0 on a Bancor 3 pool means that it no longer trades as there is no BNT liquidity allocated to it. Any BNT liquidity currently allocated to the pool is burned.
Set the funding limit to 0 on the ETH pool if it is currently in surplus. Otherwise, if at any point in the future of this proposal passing the pool goes into surplus then the funding limit can be set to 0.
I think we should consider ETH separately - if BNT goes from lots of liquidity on chain to very little - could have unexpected consequences.
We should consider how best to handle this, for example - wait for 5% surplus and move used funds off curve but keep surplus in ETH/BNT for liquidity. (This is an example, not a well thought out approach). LP can obviously withdraw at any point. Another idea would be to use some of the POL ETH. Again, nothing thought through fully or planned, but I think we should take our time and carefully consider ETH.
This is off the top of my head, and I’ll be happy to work with you on a plan for ETH - but I think we need to be careful with this one.
I want the DAO to vote on this proposal. I think all of V3 needs to be shutdown once the protocol goes in surplus. If the Bancor DAO wants to maintain some amount of ETH-BNT liquidity then this should NOT be on V3 but on Carbon. Bancorians should understand that V3 and v2.1 are protocols to be sunset and not to be maintained alive.
If there will be unexpected consequences when the ETH pool is shutdown after it goes in surplus on v3, then the team should be thinking ahead on how to build ETH liquidity that’s protocol owned.
Can the Bancor DAO create a x*y=k ETH-BNT pool on Carbon? In some weeks, there will be an ETH surplus that the Bancor DAO will need to decide how to use. A small portion of that can be use to create a uni v2 style eth–bnt pool that’s owned by the protocol. Any fees from trades in this pool will further go towards BNT buy and burn.
This would be a better use of the ETH as compared to the shortsighted proposal to outright buy BNT with all of the surplus at SPOT price. The DAO will get frontrun and dumped on with such a naive proposal.