Proposal: TRAC-BNT fee change schedule and performance analysis

The Automaton was created to vote consistently and predictably, so that vote delegators have a reasonable chance of guessing which way the Automaton will vote, without having to refer to this page every week. The current rules are:

if pool = ETH and 0.05% < proposedFee < 0.15%:
    vote = FOR
elif pool != ETH and 0.1% < proposedFee < 1.0%:
    vote = FOR
    vote = AGAINST

To maintain consistency, the Automaton will continue to observe these rules. However, if the DAO passes the vote for the proposed $TRAC fee changes, I will consider that to be ample evidence that a change in the Automaton’s behavior for fee changes is warranted.

Therefore, the Automaton is voting AGAINST the proposed fee schedule, as it ventures outside of previously established bounds. If the DAO passes this decision, this voting logic will be revised.

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Sator $SAO Tweet confirmed.

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Boba Network $BOBA Tweet confirmed.

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Urgent: Permanently Disable Deposits on the Old Reserve Rights (RSR) Token

The Voting Automaton will vote FOR disabling deposits on RSR.

Proposal: Set trading fees to 1% on LPL-BNT pool from current .1%

Following the success of the TRAC fees proposal, the Automaton will now take a more liberal approach to fees governance. Rather than have a concrete voting strategy, it seems sensible to wait for the results of the current fees experiments to conclude before arriving at a new set of guidelines. Therefore, at least for now, the Automaton will vote FOR all changes to fees. Moreover, I will pursue a dedicated channel to discuss results.

The Automaton will vote for the proposed fee change to LPL.

Proposal: Increase trading liquidity on wNXM-BNT pool to 2M BNT

The wNXM pool is among the most consistent revenue generators on Bancor. The Automaton will vote FOR the proposed increase in trading liquidity, and single-sided capacity.

Proposal: Set trading fees to .2% on CEL-BNT pool

As above, the Automaton will vote FOR the proposed fee change on CEL, and will support all proposed fee changes until clarity with regards to fees/volume ratios are established.

Whitelist BBS Token with External IL Protection

The Tweet from the main BBS account has been confirmed. The BBS Twitter account has been proactive leading up to the proposal (see: here, here, here, here, here). BBS is a social content system, similar to Reddit, where potential ad revenue generated from community content is bid on by BBS token holders. The model is designed to create a fair revenue model where the value of the content is realized through the purchase of the ad space it represents. This model is very much aligned with the web3 values and decentralization, and is an interesting use case for cryptocurrency.

The BBS token is relatively new, and not well established yet. Usually this would make it very difficult to whitelist; however, the BBS team has committed to using the Bancor3 external IL protection mechanism with the Bancor3 launch. It may have been better to wait for the external IL function to be available; however, this may be a moot point. The team is providing the BBS tokens themselves, and migration from v2.1 to v3 does not result in IL compensation, should any have accrued. So while it is not the ideal solution, BBS is ready now and wants to use Bancor as its default exchange. So long as we are not expecting the team to withdraw before the Bancor3 launch, and the external IL protection agreement is honored, it really doesn’t make much difference.

The asking trading liquidity is 100K BNT - which is a lot for a new token project. That said, it is not surprising to ask for the “largest small coinvestment”, as the author of the proposal has clearly indicated that they are a mass-market facing product.

The token is a standard erc20, with no apparent security problems. In sum, the proposal feels early, but ultimately the balance is positive. The BBS website, and the BBS market seem to be experiencing some impressive growth. The “Crypo Banter” channel has nearly 20,000 users, and represents a potential accessible demographic for Bancor if we become the default liquidity source for BBS.

The Automaton will vote FOR the whitelisting status of BBS.

Proposal: Whitelist DerivaDAO token (DDX) Plus 100K BNT Trading Liquidity

The Tweet from the main DerivaDAO Twitter handle has been confirmed.

The DDX token is very standard, and its distribution is better than most. Approximately half of the DDX token supply will be used in liquidity incentives. However, there is an enormous allocation (15%) to an unnamed “investor”. This is likely from the early funding round and quickly becoming an inescapable reality for many token projects. This is at least partly offset by the decade-long liquidity incentives campaign established for DDX. The single investor DDX whale aside, everything else is better than average.

The DerivaDAO manages the DerivaDEX, a derivatives exchange protocol on Ethereum. The function of DDX holders is similar to that of vBNT holders - they shoulder the responsibility of managing the exchange, and its unique insurance fund, among other things. Value accrual to the token is achieved via fees and liquidations. Not a novel use case by any measure, but a compelling one nonetheless.

The requested trading liquidity is 100,000 BNT. This is relatively high, considering the low levels of liquidity elsewhere in DeFi. That said, there is nothing especially frightening about DDX. The token supply is going to inflate, but over long periods of time compared to the status quo for DeFi. Its volumes are similarly low - near zero, for the most part.

In short, DDX is not a home-run for Bancor by any measure, but it is attached to a community that understands the challenge of running a decentralized exchange. The requested trading liquidity is high for DDX, but negligible to the protocol overall. The proposal was also raised by its author on the DerivaDAO governance forum; however it did not garner much attention there.

Altogether, the 100K coinvestment is probably a little on the high side, given the volumes and competing liquidity for DDX elsewhere. The Automaton will support its whitelisting, but is unlikely to support any increase in the single-sided capacity until the market warms up to the token.

The Automaton will vote FOR whitelisting of DDX.

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Very interested in seeing this one pan out.

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Proposal: Onboard Vitadao (VITA) with 100,000 BNT Trading Liquidity

VitaDAO is attempting to address the lack of early-stage research funding in novel biopharmaceuticals. It is among a very small collection of cryptocurrency projects that have a focus on something other than the axiomatic financial primitives. The VITA token is earned by contributing to ongoing work, submitting new intellectual property, or funding the research directly. It is a super-interesting use case, and is targeting one of the highest revenue-generating industries in existence. More importantly, the pain-point they have identified is legitimate; discovery-phase funding has been in decline for decades, and as a result, new drug developments have practically stalled. This is one of the potentially civilization-disrupting obstacles the global community is facing in the near future, and is of a similar scale to the effects of climate change. That doesn’t necessarily guarantee the project will be a success - but its motivation is sound.

The VITA token is fixed-supply, standard ERC-20, with no administrator permissions. The token is reasonably well-distributed, with one caveat. One address received 15% of the VitaDAO token supply in an apparent auction in June of 2020. The recipient had 3.3M VitaDAO tokens at that time (then worth approx. $11M), and still has most of it, despite trading the token regularly. I have reached out to the team to ask about it - an active whale with 15% of the token supply is potentially problematic. Not a blocker, necessarily, but worth inquiring about.

Apart from this one curiosity, the project looks green across the board. The customary Tweet from the VitaDAO main Twitter handle has been confirmed. The Voting Automaton will vote FOR whitelisting, after clarification on the token auction is obtained. I suspect this is part of the funding mechanism of the project, and is unlikely to be much cause for concern.

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Proposal to increase the trading liquidity limit in the ENS-BNT pool to 200K BNT
Proposal to increase the trading liquidity limit in the PSP-BNT pool to 300K BNT
Proposal: Increase Trading Liquidity Limit to 250K BNT on the IDLE-BNT Pool

Both the ENS and PSP pools were created only shortly after these tokens first appeared. Their popularity and strength has been maintained, and the market is certainly coming to settle into “normal” volatility by crypto standards. It is an opportune time to increase the trading liquidity on both tokens. The Voting Automaton will vote FOR the proposed increase in both cases.

The IDLE pool is is also an excellent candidate. The IDLE team have tweeted about the benefits of single-sided staking, and the opportunity to provide protected liquidity on Bancor should this proposal pass. The Automaton will vote FOR the proposed increase in funding.

Proposal: Change the fee in the BAT pool from 0.2% to 0.5%
Proposal: Change the fee in the AMP pool from 0.5% to 1%
Proposal: Change the fee in the PSP pool from 0.2% to 0.5%
Proposal: Change the fee in the LINK pool from 0.2% to 0.5%
Proposal: Stablecoin pools fee experiment and analysis

As per the new paradigm, the Voting Automaton is voting for all proposed fee changes, until sufficient data is available to inform a new policy. Therefore, the Automaton is voting FOR all five of these proposals.

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Proposal: Activate Proof of Attendance Protocol for all future Snapshot proposals
Proposal: Add HAL plugin to Snapshot

The Automaton is pro-community governance, and will support any and all proposals that are thematically aligned with increased engagement, without sacrificing integrity or security. The POAP introduction is low-overhead, inclusive, and does not interfere with the evaluation of proposals’ on their own merits. Therefore, there are no identifiable issues to allowing it.

The HAL plugin is similarly easy to approve. This will allow for automated notifications to be built in to the Snapshot process, and ought to help support our ambitions for a more involved community government.

The Automaton will vote FOR both proposals.

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Proposal: Whitelist DAO Maker (DAO) with 100,000 BNT Trading Liquidity

DAO Maker is an excellent project. Its focus is on the “start-up” phase of tokenized projects, which has been a stubborn issue since the ICO era. The project aims to further decentralize the venture capital and reduce the financial risk for both investors and the token project. It is a healthy influence in crypto, and the industry is better for the service it provides.

Importantly, there is room for further collaboration between DAO Maker and Bancor in the future, as fledgling token projects progress out of their incubator phase and start to establish liquidity alongside their peers. Think of Maker DAO as the “training wheels” of establishing a token, where the first holders get access to it, and distribution can begin in a healthy, quasi-limited fashion. Then, when it is ready, Bancor could become the next stage of its market development. You don’t have to squint very hard to see how this could become a natural graduation into whitelist status, especially with the additional features (such as external IL protection) offered by Bancor3.

The customary Tweet from the team has been confirmed from their main Twitter handle. therefore, the automaton will vote FOR the whitelist status of DAO Maker.

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Proposal: Onboard Vitadao (VITA) with 100,000 BNT Trading Liquidity

As a follow-up to the transaction highlighted on the previous post, the participant looks to have paid 1347 ETH for a minimum of 1,531,702 VitaDAO tokens, and received 3,367,500 at the auction conclusion. There was no price for the VitaDAO token prior to this auction, and the valuation dropped 60% shortly after establishing an initial price. This looks like a typical presale. Thanks to @DarkKnight for illuminating these details.

The team has confirmed that the wallet belongs to a highly motivated supporter of the project. It’s not a big issue - the token has established liquidity on Balancer, both as a 50/50 pool and an 80/20 pool, and also on Uniswap V3. Even if this user had nefarious intent, the damage they could inflict is massively tempered against the available liquidity. The 80/20 pool on Balancer has $1.7M in liquidity, but due to the skew in the curve, can absorb a disproportionate quantity of selling pressure on the VitaDAO side. Price manipulation tactics are still a risk with such a whale present, but their on-chain activity does not reflect any such desire. If anything, they are guilty only over being highly enthusiastic. Fingers crossed they are interested in providing liquidity on Bancor.

The Automaton will vote FOR the whitelisting of VitaDAO.

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Urgent: Temporarily Disable Deposits for $TRIBE and Permanently Disable Deposits for $RGT

The automaton will vote FOR the discontinuation of $RGT deposits permanently, and $TRIBE deposits temporarily, pending the completion of the token merger.

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Extend LM rewards in the Stablepools (USDC, USDT, DAI) for 6 weeks

The Automaton LM logic has not changed:

if PriorLM == False and StrategicPool == True:
Elif PriorLM == True and TKN == 'LINK', 'WBTC', 'ETH', 'USDC', 'DAI', 'USDT':

Therefore, the Automaton will vote FOR the proposed extension on stables.

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Proposal: Onboard New RocketPool (RPL) token with 1M BNT trading liquidity

This is a simple migration. The Rocket Pool team is in contact with the Bancor core contributors, and will help to inform the LPs of how to migrate to the new token contract. This is a non-issue; there is no rush to migrate, and it exposes no security threats to the Bancor ecosystem. The Automaton will vote FOR whitelisting the new RPL token.

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Proposal: Incentivize users to migrate to V3 by matching token side LM rewards with up to 50,000 BNT per pool

As per the Automaton’s established, conservative voting behavior regarding liquidity mining:

if PriorLM == False and StrategicPool == True:
Elif PriorLM == True and TKN == 'LINK', 'WBTC', 'ETH', 'USDC', 'DAI', 'USDT':

This proposal is quite generic; there is no list of eligible TKN provided, nor is there a maximum BNT emissions schedule. This and other ambiguous details, including the dates (and no description of why they were chosen), the 50,000 BNT limits (and why this number is non-negotiable), what “matching” token side LM means (e.g. denominated in USD? when and how is this calculated? is it dynamically adjusted?), make the proposal seem half-baked. This is a complex proposal, and requires a great deal more detail than what was provided.

The automaton will vote AGAINST the automatic provision of BNT rewards to any token.

Proposal: Increase trading liquidity on CEL-BNT pool to 1M BNT 5

The comments raised by @CoinAnole are mostly aligned with the Automaton’s risk aversion regarding the CEL token, specifically. Celsius is amidst uncertain times - three of their executives were recently arrested, and they were greatly affected by the security breach at BadgerDAO. For clarity - there is absolutely no reason to suspect that Celsius and its current team members are anything less than world-class. The Celsius product is terrific, and I have great respect for the team. There is little doubt that their continued presence in DeFi will be a strong positive for the industry. All of that said, is this the best moment to be increasing the trading liquidity for the CEL token? Certainly not.

The Automaton will vote AGAINST increasing the CEL pool as the short-term risk seems too great. However, long-term, CEL is less concerning. An increase in trading liquidity should be discussed again in the future.

Proposal: Onboard SHIBGF with 30K BNT Trading Liquidity 2

The Shiba Girlfriend team have been supportive on Twitter (see: here, here, here, here). Sentiment is overwhelmingly positive(see: here, here, here, here, here, here, among many others).

SHIBGF is a meme token; it has no concrete financial or economic purpose, but rather draws it value from societal and cultural sources. Which is not to say that the token has no purpose; some meme coins truly are without meaning, but Shiba Girlfriend represents female empowerment in STEM fields, with a strong emphasis on programming. The project provides financial support to women’s programs around the world, apparently with funds obtained from the Shiba Girlfriend project. Therefore, the token does have an interesting use case a type of crowd-sourced philanthropy. It is possible that the template could provide a generic solution for other charities to follow.

SHIBGF is difficult to manage from a whitelisting perspective. Tokens belonging to this category have a history of increasing in value parabolically, or exponentially compared with the rest of the market; 1000× value appreciation is not unheard of. As such, meme coins are a catastrophic IL risk to the Bancor protocol. However, some of the features of Bancor3 make these risks more tenable. Importantly, SHIBGF is the first proposal to formally acknowledge the external IL protection in a proposal, and seek to utilize it. Further, the team is providing their own incentives on the pool: SHIBGF liquidity providers will receive auto-compounding rewards in the form of SHIBGF. Therefore, from both an incentives and IL cost perspective, supporting the asset is made considerably easier for the BancorDAO.

Importantly, the requested BNT funding (30,000) is very reasonable, and well-suited to the market capitalization of the SHIBGF project. The token distribution is excellent.

The Automaton will vote FOR the whitelist status of SHIBGF, to begin with the release of Bancor3.

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Proposal: Onboard Cartesi (CTSI) with 50K BNT trading liquidity limit

The obligatory Tweet has been confirmed. Receptions has been positive.

Cartesi is an operating system that incorporates standard programming environments such as Linux onto blockchains. The idea is to allow for smart contracts to be created with the support of existing repositories, such as the vast catalogue of tools used in C and C++. This could make it easier to develop Dapps, although it is not clear to me the precise manner in which the Linux VM communicates with the Ethereum VM. It is a compelling idea nonetheless, and I am simply going to assume the project has an implementation that addresses possible security risks and other oversights that are deeply smart contract-dependent. Cartesi claims to be blockchain agnostic, which is critical for the type of product it is developing. The value proposition for the project is beyond question.

The CTSI token is a utility token, and is used in a PoS consensus mechanism on its own network side-chain. As a side note, the node runners are apparently randomly selected, which is a potential weakness in the system, but not a big concern for whitelisting the token. CTSI is also paid by network users to write data to the blockchain, and also plays a roll in the Descartes Rollup system - a modified optimistic rollup implementation with an interactive dispute resolution (still in alpha). The Cartesi announcements channel on Telegram is fairly high quality, and the level of transparency there is admirable.

The CTSI token poses no apparent security issues; it is a standard erc20, and the normal locking and staking contracts aside, the token appears fairly well distributed. Audits have been completed by Certik and Slowmist. Exchange liquidity exists for CTSI on Binance and Coinbase, Kraken, Huobi, KuCoin,, as well as some DeFI protocols, including Uniswap v3. The requested BNT funding is reasonable (50K).

The Automaton will vote FOR the whitelisting of CTSI.

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Proposal: Onboard Sheesha with 50K BNT Trading Liquidity Limit

The Sheesha Twitter account has done an excellent job promoting the proposal(see: here, here, here). They even went to the effort of creating instructional tweets on governance participation (see: here, here, here). Absolutely exemplary.

Sheesha is a mutual fund. The SHEESHA token is part of a rewards and staking mechanism. It’s not entirely clear how the performance of the fund is connected with the SHEESHA token; the lite paper discusses diversified portfolios and other things, but never addresses how the SHEESHA token is involved. This is potentially an issue, albeit a small one (relative to crypto norms). The token itself seems harmless, and the requested funding is relatively small.

The Automaton will vote FOR whitelisting SHEESHA; however, the pool should probably remain small. The Automaton is unlikely to support a proposal to increase the available trading liquidity until the role of SHEESHA in the fund is better established.

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Proposal to activate LM rewards on the SFI-BNT pool in exchange for SFI buybacks

This proposal is among a family of similar proposals, such as those affecting $FARM, $eRSDL, $APW, and $MKR (although the proposal for MakerDAO was deprecated before a vote). The strategy has legs - the $FARM pool on Bancor now commands ~90% of the total liquidity on Ethereum.

The Saffron.Finance counterpart to this proposal can be viewed on their own discourse page; the proposal has not yet appeared on their snapshot governance page. The Twitter account publicized the proposal, to a positive reception.

It should be noted that the pool depth, at present, is a little lackluster. However, this is an unconvincing reason to deny an incentives campaign, as the desired outcome is to improve liquidity. Further, the wording of the proposal is critical:

This is an exchange - liquidity incentives for being the target of SFI buy-backs. Therefore this proposal is contingent on governance agreeing to orchestrate the buyback this way. The Automaton will vote FOR this proposal, but will not vote to renew the incentives, consistent with its prior established behavior.

Proposal: Increase INDEX trade fees to 0.5% on Bancor3 only

The effect of fees on the health and sustainability of the system is the focus of an active investigation. However, the present proposal asks only to increase the fee to 0.5% following the release of version 3. The Automaton will vote FOR the fee increase.

Proposal: Increase the trading liquidity limit in the ENS-BNT pool to 200K BNT

Increasing the single-sided capacity at this stage is sensible. The ENS token has had a little time to settle down, following its mass distribution via an airdrop at the end of last year. The proposal seeks to increase the BNT funding from 50k to 200k, or 4×. This is on the extreme side, but the total funding limit is commensurate with the size and popularity of ENS. Moreover, a community member has asked if the ENS treasury would consider establishing an LP position on Bancor:

This is an interesting possibility, but likely unnecessary. If the pool is to increase its capacity again in the near future, establishing a dialogue with the ENS community either on their own governance pages or through any other means, ought to be made a high priority.

The automaton will vote FOR the increase in BNT funding for the ENS pool.

Proposal: Change the fee in the OCEAN pool from 0.2% to 0.5%

The discussion on the OCEAN fee change is interesting.

These types of analyses are helpful for determining the likely effect of trade routing, and the $OCEAN token is a fairly compelling one to examine further. The current status of the fee optimization experiments suggest that trade routing is a secondary priority; however, we have primarily examined tokens for which Bancor has established a commanding lead in relative liquidity share. Something like $OCEAN is slightly better distributed, and could behave differently. In any case, it is worth determining.

The automaton will vote FOR the proposed fee change on $OCEAN.

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