Obviously I would rather keep BALN for tax loss harvesting. Remember BALN market cap was 40 million at one time. ICON was able to raise and sell a lot of BALN at a very large price to loyal investors and now they are buying it back for under 4 million. Great deal for ICON to acquire the best technology that ICON put together over “3” years, but a pitiful deal for a long term investor.
I know it is not ICON’s intention for a “bait and switch,” but it can be perceived this way. Believe me when I say I know ICON is one of the respected teams in Crypto and I am not saying they are baiting and switching here, or they used the BALN token as a great fundraiser from the ICX investor for a lot of the core Balanced team that is very similar to the core ICON team.
If we have to switch to SICX, a very bare minimum the buyout should be .6 of an SICX. An SICX is worth more than an ICX for readers that may not understand what SICX is. Also since the switch will be paid out in SICX that seems to be the very very least ICON should offer.
If ICON truly wanted to look out for their greatest long term supporters that hold BALN the payout, in my opinion, the buyout should be closer to 1 to 1. But that would have to be BALN that was owned by wallets between BALN inception to 1/10/24 as we are just rewarding new BALN holders taking advantage of the current premium instead of actually rewarding long term BALN holders.
Long term holders already knew the connection between ICON and Balanced and that is why we bought BALN all the way down, for a future successful project. We don’t want our BALN to be sold at all time lows and switched back to SICX unless we have a fair premium and .5 ICX is not fair given our investment over the years.
Also, only the BALN that was staked by January 10th 2024 should have the option to vote on this procedure. Recent BALN staked should not be allowed to vote as it can sway the outcome from true long term BALN stakers. I will be voting no at the current offer but if the SICX is raised to a fair level I will vote yes as I think it will be good for Balanced.
Thank you for the well-researched and thoughtfully crafted proposal. I believe that the proposal is sensible and recognize it as a logical step towards furthering the development of Balanced. The benefits you’ve outlined are clear. However, I can’t hide my slight sorrow, as I took pride in my BALN tokens and the partial ownership they represented in the DAO. As an ICON user, I can now be proud of Balanced’s addition, but it won’t feel exactly the same. At this moment, I do not have sufficient insight to judge whether the proposed commission is fair, but at first glance, it appears to be a generous compensation. Particularly for new BALN holders, but I understand BALNSupporter’s point that long-term holders might prefer to retain their tokens even with a commission. Given a choice, I would likely opt to keep my tokens, although I acknowledge this could complicate matters and may not be in the best interest of Balanced’s long-term growth. Maintaining the BALN token might only serve to keep investors content without benefiting the DAO, aside from investor satisfaction (which, of course, could be a consideration). More tokens means more maintenance and vulnerabilities.
Thanks for sharing your perspective @Chiel, much appreciated. I understand the emotional aspect of this, but would indeed encourage everybody to fight past it, as this is inherently a more financial decision.
To help with this, I’d encourage everybody to consider the question:
“if I were starting this idea/system from scratch, how would I do it?”
I think you’d be hard pressed to say that the best economic design, best technical design, etc. would be for a two token system, where one token gets 50% of revenue for burning, and the other token gets some amount of fee distributions and governance. I’m not seeing how a 2 token system makes the most sense when I look at it this way.
It seems the argument for a two-token system / keeping BALN is primarily based on emotion from what I’ve seen.
The key negotiation points are mostly around the purchase price and the vesting period.
Yes, I agree that a two-token system is not practical. My previous comment might have been somewhat vague on this matter, but I intended to conclude with the thought that retaining BALN tokens is not an effective approach.
I think the proposal is well crafted as it stands. A commission is fair and necessary for the vote to pass, but anything extraordinary does not make sense and raises the likelihood of rejection from the ICON side.
Actually, we need to remember long term investors that have been with Balanced since the beginning are better off with a $BALN value of “0” and to be able to choose when to sell in the coming years to offset future gains in other investments (tax loss harvesting). That is why your long term investors deserve close to a 1 BALN to 1 ICX exchange rate because this transfer will show one really bad loss for the current tax year and there is no benefit to us. The tax benefit we currently have (being able to trade BALN) is greater than the .5 of an ICX offer.
Can you share the math of why selling at a 100% loss is better than a 40% premium to market. I’m struggling to understand your logic. Would be helpful if you can provide a full walkthrough example comparing both scenarios.
Let’s say you have 1,000,000 BALN tokens purchased at an average price of 1 ICX per BALN for simplicity.
Scenario 1: Selling 1M BALN at 0.5 ICX
Scenario 2: Selling 1M BALN for 0.001 ICX (crashing DEX price as close to 0 as possible)
Because I can choose to sell my BALN over many years when I have gains in other coins? Have you really not tax loss harvested before. This tax year you may have no gains to offset, next year could be a different story where there are gains you can offset.
The benefit I am describing outweighs a forced sell and a humongous loss in one year.
Your longest, loyal, supporters are getting the same benefit as being able to sell for “0” over many years as they are getting from ICONs first offer.
Got it ok, you’ll likely be able to do this regardless. Will confirm with @Andell but I believe the design of the buyout would work in a way that you could always just keep ur tokens and sell them into a nearly empty liquidity pool for 0.
Well before the vote please 100 percent confirm that we can dispose of our BALN at our discretion so we can take advantage of tax loss harvesting over the next 5 years or so.
Yeah the baln token will still exist and the liquidity pool will not be removed.
You will most likley also be able to swap to icx via the deal for a long while
Hard to see a better path forward. With big capital injections Balanced has a shot at competing with much bigger protocols.
Reality now is that revenue is thin and slippage is high, hard to accept but without taking action things won’t change, despite the passion and hard work.
Respect for Balanced core team for the hard and consistent work, and also for the community, which has been always constructive and passionate.
The yield for BnUSD savings to be generated by RWA, makes me think of the RWA HiYIELD platform on Avalanche also management by Lydia Labs.
How would this work? Back the BnUSD with Avalanche based USDC and deposit it in on the HiYIELD market place? Or will the Icon Foundation just use the same custody contacts and not use the HiYIELD platform. I kind of assume Lydia Labs would like it to go via HiYIELD to boost their revenue there.
I know the finer details will need to be decided, but I assume the high level approach is known already.
Ok folks - after much discussion with @Fezbox and others at ICON, we’ve arrived at what I think is a great happy-medium counter-proposal. It takes into consideration that, for the most part, it seemed BALN holders wanted to keep their BALN. Additionally, the price-point was a sticking point that I couldn’t make much progress on, so the below proposal feels like the best path forward and I’m personally quite happy with it.
As opposed to a full buyout, here are the proposed terms:
ICON Network votes to economically enshrine Balanced as originally proposed (see proposal)
Balanced dedicates 50% of its revenue to buying + burning ICX forever in exchange for the economic enshrinement, no governance action by Balanced should ever override this
The other 50% of the revenue is controlled by Balanced governance (e.g. some to bBALN and some to DAO Fund for operations)
ICON to provide additional investment in Balanced and receive 3,112,235 BALN from the DAO Treasury Fund at a price of 0.35 ICX per BALN (No premium to the fair market price on Jan 11th, date of the original announcement) and will lock BALN for 4 years.
With this fresh new investment from ICON and 50% of revenue going forward, Balanced is to financially support its platform development and operations.
ICON will commit at least 10M ICX from its treasury to supply liquidity in Balanced pools to help scale faster
I liked the first proposal, and I also like this proposal. It’s a great path forward with less friction. There’s pros and cons to 1 token vs 2 token model, but given that it’s already a 2 token model, this path has less friction and still achieves excellent synergies.
Are there additional security concerns by keeping BALN as the governance token instead of ICX? Or using ICX like the initial proposal poses the same risks?
Another good question - I’d say the security concern can still be mitigated using ICON’s security. We could give ownership of certain contracts to the ICON governance SCORE to gain some network security. It’s something worth considering after this is all sorted.