BALN Reward Allocation Adjustments - DAO Fund increase

I’d like to first say that, overall, these numbers should be fluid depending on the needs of Balanced at any given time, APYs of different pools, etc. This is by no means a final allocation decision, but just a proposed next step.

I was originally thinking of something a bit more extreme, but I am hoping this initial proposal will be well received and we can act quickly on the vote. This proposal is about accumulating more BALN in the DAO Fund. It’s hard to see right now because of the lack of direct control by the community, but accumulating more BALN/value to the DAO fund means that BALN genuinely has more value. BALN is essentially backed by the money held in the DAO fund.

Right now we don’t have the tools in place to disburse money from the DAO Fund, but know that of course this functionality will come and that all BALN holders will be able to direct DAO funding toward initiatives such as:

  • Payouts to BALN holders
  • Hackathons
  • Larger bug bounty
  • Smart contract audits
  • Temporary incentive programs with future partners (i.e. deposit token XYZ as collateral and earn your share of x BALN per day for 1 month!)
  • Receiving investment from / investing in other platforms (i.e. doing an OMM/BALN token swap with our DAO Funds to align incentives amongst the community)
  • Things that we can’t think of today that become valuable/strategic in the future (can’t always prepare for everything, but DAO Fund gives us flexibility)

I want to specifically highlight what the DAO Fund really gives you is optionality & flexibility. Once BALN is given out as a reward, there’s no getting it back, but if we put it into the DAO fund we can literally do anything we want with it when necessary. Feel that BALN holders deserve a payout? We can vote on that. Feel that APY is too low on a certain pair but don’t want to pull from others? We can vote on a temporary booster from the DAO Fund.

Optionality is important, something I overlooked in the start unfortunately, but let’s try to recoup some BALN for the DAO fund and future endeavors while inflation is still high during these early days. Here is my proposed change:

New Current Change
DAO Fund 20.0% 5% 15.0%
Teams that contribute to Balanced 20.0% 20% 0.0%
sICX/bnUSD pool 17.5% 17.50% 0.0%
BALN/bnUSD pool 17.5% 17.50% 0.0%
Borrowers 10.0% 20% -10.0%
ICX-only pool 7.5% 10% -2.5%
BALN/sICX pool 5.0% 5% 0.0%
Emergency Reserve 2.5% 5% -2.5%
BALN Stakers 0.0% 0% 0.0%

This takes aware from the ICX only pool, borrowers and the emergency reserve fund to put into the DAO Fund.

Borrowers - I believe this pool is over-incentivized currently. There is already a strong incentive to mint bnUSD given that it has 0% interest to borrow, can be used to generate yield in other pools and can be used as leverage for other assets. You can use bnUSD to convert to sICX, then convert to ICX, then convert to any other yield-generating asset on a centralized exchange for net interest income (i.e. buy UST and deposit onto anchor to earn 20% while paying 0% on balanced. Borrow at 0% → lend at ~20%).

ICX-Only pool - I believe this pool is over-incentivized currently. We have never been close to running out of depth here. If we find that ICX is leaving the pool and there’s often not enough to fill demand of selling sICX then we can re-evaluate.

Emergency Reserve Fund - Currently has ~743k sICX and and ~558k BALN (link). This is used in a very rare (hopefully never) situation and I feel that it’s not necessary to allocate so much inflation there just yet. If it became necessary, we could always allocate money from the DAO Fund to the Emergency Reserve in the future.

5 Likes

Yep, I agree with the reasoning and proposal overall. I think a lot of people have and do confuse the “DAO fund” with the “Balanced Teams”, which is NOT the case.

While I will be a bit sad to see the borrowing rate lowered as a borrower, I also feel it is over incentivized.

This is a thumbs up for me.

4 Likes

Hi Benny,

I don’t have the full visibility on the numbers, but with the current prices of sICX and BALN the DAO fund should be at around ~2,5M USD as the current 5% allocation is the same as you mention for the Emergency Reserve fund which “currently has ~743k sICX and and ~558k BALN” according to you post.

Taking those numbers into account the Teams that contribute to Balanced have received 4x as much as they are at 20% allocation which means ~10M USD which is extreme in my view and is the place which needs to be cut. BALANCED is a great product, but you can hire a lot of tech resources for that amount of money.

In my view I would do 2 changes:

  1. The emergency fund of ~2,5M USD (and growing unless its being capped t at that amount now) is very excessive. This is basically non revenue generating money which could be better utilized to one or more of the following: Increase marketing, new coins listing on BALANCED and CEX listings for the BALN token, higher yield for longer lock up periods, airdrops, increase pool rewards and/or staking rewards or buy back BALN or ICX to burn. There should of-course be an emergency fund, but 2,5M and growing as massive compared to the size of the company/business compared to the balance sheet of any similar start up/SME.

  2. A full overhaul of how payouts to developers are being structured. At the current rate the developers are taking in close to $50K daily which is unreal. Developers should have a big stake in the game and have a hefty payout if the product/project succeed, but now it seems structured like they have their payday right away without any or little skin in the game. The community doesn’t have any visibility on how many people/what type of roles this money is divided amongst which increases the dissatisfaction.

Why I would make those changes:
To make a successful product we need users. I’ve used Balanced since launch and UX/UI it’s clearly one of the best products in the market. The fact that it’s not nr 1 is because traders/investors make more money elsewhere. If I can get better yield elsewhere, trade more coins, get better staking options etc I don’t really care about the usability that much.
The more users and TVL locked, the more fees are generated, and more money the BALN token holders are making.

You mention “accumulating more BALN/value to the DAO fund means that BALN genuinely has more value” which I see as a short term solution as this will lead BALN value down to the ground. Accumulating BALN is not the same as accumulating more value as giving less BALN/financial rewards to the users will decrease the demand of using BALANCED so the fees will drop as well as the DAO fund value as a result.

Both Devs and DAO has a lot of BALN tokens already and the goal should be to increase the value of the tokens first, and getting more tokens second
Your proposal is taking Balanced the opposite direction for the DAO fund and it’s just binding up non revenue generating capital when at this stage of the business should spend “every single dollar” for growth, customer acquisition and product feature production.

With a declining BALN token price over time I would not provide liquidity to the pools and with a very limited Borrow reward I would rather look into other projects as I use Balanced to keep a solid ICX stack locked while taking up loan when I feel the market is bullish. With both features gone I don’t see the same upside using Balanced or holding ICX which I hold because of this great platform.

I will therefor vote a clear no and I hope this proposal doesn’t go through.

11 Likes

Agreed to the proposal. The DAO allocation is so low for Baln compared to OMM 40% . Please vote yes all.

Thank you

2 Likes

Bot likes the idea of reallocation, but decreasing borrowers 5% which goes to the DAO, and decreasing the 20% the teams get by 2.5% which go to BALN stakers. Staking rewards are weak and this will add the incentive to hold and stake VS sell.

5 Likes

Agree on increase value of the token first , i strongly propose incentive baln staker to prevent the baln selling.

I concur with this 100%. Staking rewards are quite weak given the BALN asset performance.

3 Likes

For those that are asking for rewards to BALN stakers I have to say I’m a bit confused. Have you guys taken a look at BIP4 @Verocknode @Balnmax @Bot123456789?

We all just voted on that proposal which gives a clear incentive to stake + lock BALN for long periods of time. It has recently passed and will be a major focus of smart contract development. If choose to change the structure of BIP4, I would at least prefer to wait to see the effects of the proposal that was just passed a few hours ago. Here is the link.

@Moen82 thanks for the detailed response. I’ll share my thoughts with you later tonight as it requires more time than quickly pointing these folks to the recent BALN staking vote.

I like the booster concept and voted yes on it, but still feel a small bump in normal staking rewards would be beneficial.

Hi Benny,

Thank for your reply . The BIP 4 doesnt mentioned on the BALN reward allocation, that why i highlight here since the reward for Baln staker really insignificant at the moment. We just want more clarify how much % of Baln reward will incentive to Baln Staker to prevent Baln selling.

@Bot123456789 @Balnmax I can see how you would be confused and apologize for that, but BIP4 was indeed about the reward structure of staking BALN. I shared a quote below from the original proposal, and it would have been helpful to share your opinion on the BIP4 proposal to be included in the previous vote.

Either way, adding rewards simply for staking BALN would indeed require additional dev effort, not something that’s as easily switched like the current pools. Let’s focus on what can be more easily changed for this proposal, then you can have a separate proposal to add a new reward pool for staking BALN (something small seems fine to me, no strong feelings here). After a new reward pool is approved, then we can decide how much to add to it. That would be a good process.

Thanks for clarifying. Makes sense. Just curious, but what is the % yield for staking BALN currently. I haven’t seen the numbers or missed it.

This proposal i can get behind 100 percent !
Increasing the dao fund and reducing the rewards for borrowers is the way to go !!

Great proposal !

1 Like

Just want to thow an additional thought regarding all the peple that want some allocation to stakers, funds in the DAO fund are directly property of the DAO, which stakers(voters) are.
I know its not 100% the same, but it still is kind of the same thing.

Other than that I think its pretty good idea.
One suggestion on the presentation of the breakdown of the distribution, perhaps it would be clearer if they were segemented into groups, like all the LP incentives together, with a total, and the ‘DAO controlled funds’ which is the DAO fund + Emergency Reserve. Or maybe seperate the ones that cause ‘dilution’ of stakers, like various rewards, versus things like the DAO fund, or in the future any allocations to stakers

1 Like

I’d also prefer if stakers get a portion of the daily allocation. So far its still underwhelming compared to their value in bnUSD. Yes, I have read up on the previous BIP but it only incentivise long-term holders vs short term holders and their activity (providing LP) and it does not address the poor returns from just purely staking BALN. Personally, I’ll be voting “no” as it still does little right for the BALN stakers. I’m all for allocating more to DAO fund but it still does not address to the stakers.

People are going to compare it BALN to ICX staking when it comes to returns. At the moment, the variable returns are largely base on minting bnUSD. Without heaving minting of bnUSD, its approximately 3-5% APY of the total value of BALN. With ‘heavy’ minting over the last few days, its around 8-10% APY.

I’d suggest increasing the allocation for BALN stakers from 0% to a small percentage (~5%). I’d suggest allocating DAO fund to 15% and let stakers have 5% of it.

That will complement very well with the previous BIP proposed on bBALN. It’ll be a good floor for BALN to have some allocation and predictable rewards + variable rewards from network fees.

7 Likes

Should BALN stakers be rewarded with daily BALN allocation? (~5%)

  • Yes
  • No

0 voters

2 Likes

I’m going to put a poll. I believe majority of the BALN stakers will feel that there is little that is done for the last few months with the poor incentives of BALN stakers. This will be felt even more when users have their tokens locked for 4 years. Without a fixed daily allocation, and in a bear market (with less trading activity) and where there is less minting, its going to be very bad. We should nail this first (in terms of implementation) before coming up with the bBALN BIP implementation.

EDIT: 1 more point to add on, for bBALN to be successful and for more people to be comfortable with voting for the full 4 years, its hard just to rely on a variable incentives. There should be another incentives thats more stable. I believe that is when the daily allocation of BALN comes in. It does not need to be a huge allocation. If it is too much/too little, I believe we can do another vote to adjust the allocation of it again.

3 Likes

Not sure if you guy notice in white paper OMM also provided 10% OMM reward for staker ? why Balanced can’t ?

My 2 cents.

I like it Scott!

However I think it’s still too much of
change.

I’d prefer to maintain a higher rewards for borrowing, atleast for the short term. Because with the launch of OMM the demand for stable coin is high.

The more borrowing, the more origination fees!

As far as BALN stakers receiving BALN emissions. I’d prefer to see how the bBALN goes first.

This will boost your BALN rewards anyway! And also support the BALN price, with more incentive to HODL rather than sell.

As for reducing the emissions to the sICX/ICX pool, I’m against this. With the current APY around 12%, it’s a great alternative for ICX stakers to participate in Balanced rather than staking on the network. I’d rather see the APY maintained to be similar to ICON network rewards.

1 Like

One more thing. @benny_options where would the emissions for the stable coin rewards come from?

They could easily come from the borrowing rewards?

Maybe we move some of the emissions from borrowing rewards into stablecoin pairs and the DAO.