What I don’t see here is why we are removing a not-inconsequential sum from a ton of pools, all of which:
- Contain a Balanced product in one if not both sides of the pool
- Need deep liquidity for large trades
- Play a part in stabilising bnUSD peg
Realistically trading volume on that pair(CFT/sICX) is not as much driven/affected by the depth of liquidity, and trading volumes are unlikely to be encouraged by deeper liquidity.
Go and try and trade bnUSD/USDC/USDT/USDS and look at the slippage, if anything we need MORE on stable pools not less. There is a ton of potential volume, and the stablecoins still don’t line up precisely because of high slippage due to shallow liquidity.
The proposal allocations
Lets more closely examine the pools being proposed get cut:
USDC/bnUSD 2% (-0.5%)
Excuse me, are we removing 20% of the incentive for bnUSD/USDC, an important cornerstone of Balanced products with the most popular DEFI stablecoin. This alone makes me seriously question the good faith of the proposer.
USDS/bnUSD 1.5% (-0.5%)
This is less harmful than the above, but only slightly less harmful, are you saying we should cut bnUSD pair with the only direct USD fiat onramp/offramp by 25%. Now that I write this out, this is even worse than I thought.
BALN/sICX 13% (-1%)
Compared to pretty much every DEFI in existence, including extremely successful ones, the Balanced incentive for its platform token(BALN) with the chain token (ICX) is pretty much the lowest in terms of allocation ratio, again this pretty much harms Balanced, this category should be increased, not lowered. Also I assume its a typo as the current allocation is 15%.
iUSDT/bnUSD 0% (-0.5%)
I am assuming this is a typo but its asking to remove 100% of the incentives of this pair. Can’t tell if serious honestly. The pair is not performing well volume-wise but if its to be removed it should certianly go to other stables. Also lets just not conveniently forget, that bad press aside its still the largest and most CEX supported stablecoin.
BALN/bnUSD 10.5% (-2.5%)
This pool is not an ideally allocated pool, but cutting it by 20% is flat out preposterous without being able to show the benefit to the platform. Lets see some volume projections. Additionally the listed proposal numbers are wrong, the current allocation is 12%, so this seeks to lower it to 9.5% not 10.5%.
CFT/sICX 5% (+5%)
Lets do a fun thought experiment, the LP currently holds about 9% of the supply of CFT. Across both BALN pools, both LPs hold ~23% of the BALN supply and receives 27% of the allocations across both pools.
After the proposal this BALN supply will supported by 23.5% of the allocations. This means, on a percentage of supply basis, Balanced will be supporting CFT half as much as BALN, and even less if you count Balanced should absolutely support bnUSD as well.
Even not scaling it to supply ratio, thats over 1/5th the support for a arbitrary token versus the platforms very own token. And gets worse if you include the need to support bnUSD again.
Personally there can be only one conclusion about this proposal, that is not made in good faith, seeking to do 1 of 2 things, worst case outright siphoning BALN holders holdings, or engaging in some sort of price anchoring, suggesting something outragous to then scale it back ‘a lot’ and still end up with way more than logical.
This critism is not suggesting Balanced should not ever support other fellow ecosystem tokens, but the scale of the proposal to me tells me it cannot have been made in good faith at all.
Suggested benefits as per proposal
Proposal point 1
The proposal suggests it is a very profitable pool for balanced, however collectively all OMM pools have both higher TVL and higher trading volume.
Also as proposed, trade volume will need to increase an extreme amount.
Lets all be realistic, CFT/sICX is much more volatile that 2 stablecoins. The increase in TVL for CFT/sICX will be magnitudes lower than increases in TVL for stablecoin pairs, as people are more willing to provide liquidity at a lower return. Remember Balanced voters, high APR for pools is Balanced paying more for a particular amount of liquidity.
This looks to be an appeal to some sort quid pro quo, or a suggestion that bnUSD may not be used if Balanced does not comply? I am not sure.
From this point we can see, if Craft is incentivising the LP, we can easily see how much the current return on the pool is, and by how much we can expect the LP TVL to increase by allocating an additional 5% of BALN emmissions to it. However I was unable to find the current CFT rate for LPs to model the likely increase in TVL for that pair.
That said, ‘we incentivise the pair’ is not really an argument for a benefit to Balanced. That platform should do what is best for itself, like support liquidity in its token. Framing it as some sort of benefit to Balanced seems very strange to me. I am not discounting the trading fees Balanced collects, but those are fees for services rendered, if the platform(Craft) is not feeling it is receiving the proper services for the fees rendered that is a different matter. It should be a mutually beneficial relationship, not a sacrifice from either side.
EDIT Bonus fun stats
Proposal seeks to lower support for stable/stable pairs containing Balanced own product by 30%. Pairs that help greatly with bnUSD pegging.
Proposal seeks to lower support for Balanced own token by 13%, and additionally some amount I can’t easily parse in bnUSD support.
5% is crazy yo. this is not in good faith.