Comment on Sunsetting Bancor V3
This is an excellent proposal - I think it is well-structured, and its intent is clear and unambiguous. However, there are aspects to its content that I want to address, with a view to creating something that is immediately actionable. I have prepared a commentary, and a proposed revision to the original proposal that I now invite for further discussion.
As highlighted in a prior comment, I have expressed my personal views about Bancor’s legacy products already. Both V2.1 and V3 were designed to serve a use case that the crypto industry has mostly rejected. These products were the continuation of the philosophy that on-chain liquidity protocols and projects live to serve the token economy with a spirit of collaboration and mutual support. While I maintain that liquidity remains an obscene obstacle for new tokens and their communities, I no longer have any interest in addressing it. The harsh reality is that there will always be an innate, systemic risk in supporting exchange liquidity for new tokens by offering your own simultaneously as their numeraire. My personal ambitions are to recover the deficits on all tokens permanently, wind down the legacy protocols, and move on with products that speak directly to the demographics settling down into the blockchain ecosystem. Therefore, I am relatively well-aligned with the proposal presented above.
For newcomers, I have prepared a brief overview of the specific mechanics of Bancor V3 that this proposal is partly relying on. This section has been added as an appendix (see bottom of this thread).
The Current Proposal is Incomplete.
In the interest of moving to something immediately actionable, I want to address each item from the original proposal which describes an on-chain action.
1. Disable trading on all these pools by setting the funding limit to 0 (some of them already have this value). This will burn around 92,000 BNT from circulation and reduce the supply by this quantity.
- There are no issues here whatsoever, because this is an action that is already part of the implemented smart contracts.
- So long as there exists a surplus for each of these tokens, removing all trading liquidity and burning the BNT from their pools will lock the surplus state forever.
- Users who have the associated bnTKN will forever be able to withdraw without incurring a loss.
2a. Any surplus token quantities for every token in this list to be removed from the V3 master vault and moved over to Carbon.
- There is no decentralized method to move tokens from Bancor V3 to Carbon, and a description of such a method has not been included with the proposal.
2b. These tokens have a strategy created TKN-ETH in Carbon that will sell them via a limit order at a 5% premium based on the last 30 day time weighted average price or current price if 30 day TWAP is not available.
- This point is predicated on 2a, which currently lacks sufficient detail to implement.
- There is no decentralized method that would allow anyone to compose strategies with funds that aren’t already available in a strategy they control, or in their own wallet, and a description of such a method has not been included with the proposal.
- Carbon has no internal or external price oracles, TWAP or otherwise.
3a. Whatever ETH is recovered from these sales to in the future create a carbon BNT-ETH strategy that creates a buy wall at a 5% discount based on current BNT price.
- This point is predicated on 2a and 2b, and both lack sufficient detail to implement.
- There is no decentralized method that would allow anyone to decompose strategies that they don’t own, and a description of such a method has not been included with the proposal.
- There is no method that allows for multiple strategies to be consolidated into a single strategy, and a description of such a method has not been included with the proposal.
- Carbon has no internal or external price oracles, TWAP or otherwise.
3b. The buy wall to be revised every 7-30 days and when the current price of the buy wall is off by 10% or more from the current BNT price.
- This point is predicated on 2a, 2b, and 3a, and each lacks sufficient detail to implement.
- There is no decentralized method that would allow anyone to edit strategies that they don’t own, and a description of such a method has not been included with the proposal.
- Carbon has no internal or external price oracles, TWAP or otherwise.
4a. Whatever BNT is recovered from takers eating into the buy wall to later be burned after a sufficient amount of BNT is acquired.
- This point is predicated on 2a, 2b, 3a, and 3b, and each lacks sufficient detail to implement.
- There is no decentralized method that would allow anyone to withdraw tokens from strategies that they don’t own, and a description of such a method has not been included with the proposal.
4b. This can be voted via a separate proposal similar to the recent proposal that burned BNT which had accumulated in V3.
- This point is predicated on 2a, 2b, 3a, 3b, and 4a, and each lacks sufficient detail to implement.
- The similarity to the recent proposal re: the burning of accumulated BNT from Bancor V3 is dubious, as Carbon has no such function.
- Carbon’s fee burner implementation via a modified Bancor Vortex contract was described in the final proposal for Carbon (BIP 28), and was approved by the BancorDAO via Snapshot vote in April 2023.
- The procedure is for Carbon to collect tokens, and then anyone can call the fee burner which will then perform the swap via the existing liquidity pools on Bancor V2.1 and V3.