BALN Allocation Adjustment Discussion (cont.)

With BIP14 being a close vote and some one-off pushback through social media commentary, I wanted to open up a discussion before making another proposal. Overall I agreed with the direction of BIP14, more heavily incentivizing BALN/sICX. So I’ll start with a less aggressive version of BIP14 and see where we go from there.

One thing to note is that sICX/bnUSD also has, in a way, deeper liquidity from the pool of borrowers through the rebalancing process. Once we add BALN as a collateral type, the same will be true for BALN/bnUSD. Additionally, borrowers have a strong incentive to provide liquidity in the liquidity pool that matches their collateral type in order to hedge against rebalancing. Because of these facts, it’s less important to have BALN incentives in these pools.

The strategy for rebalancing hedging and relevant tests can be found in the November Roadmap Update

Source Before After
DAO Fund 20% 20%
Reserve 1% 1%
Workers 20% 20%
Borrowers 10% 10%
sICX/ICX 5% 5%
sICX/bnUSD 14.5% 12%
BALN/bnUSD 14.5% 12%
BALN/sICX 10% 15%
IUSDC/bnUSD 2.5% 2.5%
IUSDT/bnUSD 0.5% 0.5%
USDS/bnUSD 2% 2%

I still think this is the right direction for the platform and I agree that taking smaller steps is probably a good move.

It might be better to hold off on another vote until continuous rewards are live and BALN in pools loses its voting power.

I don’t imagine many BALN/bnUSD providers are eager to vote yes on receiving less rewards, even if it is the best thing for the platform.

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I imagine once the ICY airdrop happens there will be a huge swap of those holding sICX to BALN so the BALN/sICX pool should be incentivised more as soon as possible to prepare for this.


I voted no on the proposal.

In the Luna ecosystem the main pairs are paired with UST.

This incentivised borrowing of UST and locking up of LUNA.

With a higher APY on BALN/bnUSD, this helps hedge against IL & incentivises borrowing bnUSD.

More borrowing = more fees.

Better for the platform.

Same applies for sICX/bnUSD.

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APY is not determined by the reward amount, but by the amount of value people choose to commit to that pool. The market tells balanced the cost(the APY) of the pair, Balanced decides how much to buy (the reward amount). The proposal is seeking to change the amount spent on on that pair. In time(and we have seen normalisation quite fast) the APYs always drift to the markets willingness to supply to that pair.

Additionally, BALN/bnUSD has higher IL due to uncorrelated assets while BALN tracks ICX relatively closely, resulting in as little IL as possible.

Nobody cared when BALN dumping hard before ICY snapshot, but now people want more liquidity in sICX/BALN pool to switch right after snapshot. How fair is that?

Why we cut bnUSD pairs? The goal is make bnUSD main currency and we are cutting…


You are correct.

Except for that the APY is determined by the amount of rewards and other factors.

You’ve hit the nail on the head here.

We should be adding extra rewards to the pools with bnUSD.

This will incentivise borrowing of bnUSD.

One of the main features of Balanced is minting bnUSD.

We should be supporting this as much as possible.

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Hit the nail on the head Benny!!!

I am all for incentivizing BALN/sICX. This high utility pool will be fuel to the platform.

With many biases out there, i think incremental movements will help people plan better as to what to expect in the future moving forward. Lets get this on the board!!

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I’m sure the volume would show that those receiving BALN have been dumping it for sICX thus utilizing the sICX/BALN pool the most. This is a slow burn rather than what could possibly be a HUGE swap come the time after the snapshot so it’s more important now than ever.

Those in this pool have been hit less by IL so they might not be so vocal or defensive as those in the bnUSD pools are.

I personally would want a smaller change than originally proposed - a more even ratio between the 2 bnUSD pools and slightly more for the sICX/BALN pool which Scott has outlined above. Once BTP is live and more volume comes into the ecosystem this could look to change again.

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Just want to be 100% clear that APY (i.e. 45% APY) is economically independent from the amount of BALN offered to the pool, for the most part. If, for example, the current APY is 50%, then we cut the allocation in half, it will temporarily drop to 25% APY.

Assuming that people in the pool are only interested in the 50% APY prior to the cut, users will withdraw liquidity until the APY again reaches 50%. APY is essentially a fixed number while liquidity provided is what ends up changing. Pretty much, the APY of these pools will always hover around the same rate, it’s the $$ value of liquidity that tends to change with BALN Allocation Adjustments.