BALN allocation: Test spending BALN on "cheaper" liquidity

I plan on introducing a new proposal later today or tomorrow to adjust some liquidity incentives. The goal is to see if we can increase TVL of the Balanced DEX by spending BALN on “cheaper” liquidity.

Example:

BALN/bnUSD total liquidity = ~10M
BALN/bnUSD daily rewards = ~10k BALN
Liquidity per BALN = ~1,000 USD of TVL per 1 BALN of daily inflation

IUSDC/bnUSD total liquidity = ~1.5M
IUSDC/bnUSD daily rewards = 288 BALN
Liquidity per BALN = ~5,200 USD of TVL per 1 BALN of daily inflation

As you can see from the above example, we get way more for our money by incentivizing this stablecoin pool. This doesn’t mean we need to go to extremes and incentivize only “cheap liquidity”, but it’s a strategy I’d like to explore. It’s good to be nimble with these things.

Side note: as mentioned in the latest blog post we’re working on a way to make this a constant vote, where people can stake their BALN and vote how they think allocations should be, then the network will take an average of everybody’s opinion.

Here is the proposed change (also 0.5% to USDS/bnUSD which is not shown here because it’s not added to the UI yet)

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Nice, imo a step in the right direction

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Inspired by the perspective you shared in Discord @arch. Thank you for your contribution to the project

I would say just to be careful when you reduce BALN rewards from liquidity pools where BALN is required (BALN/bnUSD for example), and give it to a non BALN LP, cause we are going to increase sell pressure on BALN token…

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Good point in general but we actually increased it overall in this situation

What do you mean? Can you please explain more on that ?

My question is why not allocated the same % to both the IUSDC/bnUSD & USDS/bnUSD pairs rather than the 0.5%:2% proposed allocations? Do we not need more liquidity in the USDS:bnUSD pool?

Haha I unfortunately am not sure what you’re referring to here. Can you quote me on where you’re confused and I’ll clarify?

The reason is because USDS isn’t as helpful for getting new users to enter our ecosystem. It’s more of a stablecoin specifically for ICON users since it’s not big elsewhere. Doesn’t really help with arbitrage or stability of bnUSD.

I was just discussing adding a USDT/bnUSD pool which would be best for arbitrage traders. I may wait for that pool to be deployed and adjust this proposal to have USDT/bnUSD to have the most incentives, with less incentive on IUSDC

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nice move, fully support

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YES!!! USDT on balanced should be the next move

With rebalancing occurring more often than anticipated I’m adjusting the proposal to the following in order to provide better execution of arbitrage between centralized exchanges and the Balanced DEX. Right now it’s just too many trades and too difficult for people to do. With IUSDT, you can go directly from your wallet to Binance through the Orbit Bridge, making it much faster to take advantage of miss pricing.

I plan on adding a USDT pool as mentioned above and I’d like it to be the most incentivized of all stablecoin pools because it’s the most direct connection to ICX arbitrage opportunities, further helping to strengthen the peg.

See the below screenshot, and I’ll be proposing 3% to USDT/bnUSD and 0.5% to USDS/bnUSD they just are not in the UI yet because they have not been added as a rewards option. I cut more from the reserve fund because this is used in obscure situations, received heavy funding during our early days of heavy inflation, and can be manually funded with the DAO Fund in the future if necessary.

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Like by increasing it more? Because I see 17.5% → 15%.

Maybe I’m missing something

@Elo try using the “quote” feature so I can get a better idea of what you’re replying to and/or referencing haha. You highlight the section of my text you want to reply to then the “quote” option should appear. I’m still not quite sure what you’re asking unfortunately

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I believe the idea is to increase the pools that are easy/quicker to arbitrage. So the iUSDC and iUSDT pools will increase.

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Why not lower the % to the dao fund? More than 10% of baln market cap is already in the dao fund, is there a reason so much capital needs to be in the dao fund for any on going project ? I understand the dao fund needs to grow for future needs but does it need to be at 20%

The DAO fund is for more than current projects. I talk about in this post. The situation for other pools has changed since then, but the need to build the DAO fund now hasn’t.

How much will it cost to get people to bring their capital to Balanced from other chains? In incentives? In advertisements/promotion? BTP will bring some great opportunities, but it’ll cost something to bring capital over from established native chain competitors.

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These particular adjustments, including iUSDT incentives, look good to me. :+1:

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