Aligning Incentives between ICON and Balanced through enshrinement

Proposal Discussion
#21

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.

#22

nailed it, but also considering more efficient options.

#23

Ok folks - after much discussion with @Fezbox and others at ICON, weā€™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 couldnā€™t make much progress on, so the below proposal feels like the best path forward and Iā€™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. Itā€™s a great path forward with less friction. Thereā€™s pros and cons to 1 token vs 2 token model, but given that itā€™s already a 2 token model, this path has less friction and still achieves excellent synergies.

6 Likes
BIP 51: Implementing the Economic Enshrinement agreement
#24

This is an incredible proposal to align us together. Thank You, Benny!

4 Likes
#25

Great proposal, thanks a lot!
Will the fees that ICON will get from locking their BALN be also supplied as additional liquidity?

#26

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?

#27

Good question - that will be up to them though.

Another good question - Iā€™d say the security concern can still be mitigated using ICONā€™s security. We could give ownership of certain contracts to the ICON governance SCORE to gain some network security. Itā€™s something worth considering after this is all sorted.

2 Likes