Thank you for sharing your feedback - all perspectives are appreciated.
This project is meant to be nimble which is important to highlight. If Balanced indeed loses income/users from this decision then it can be easily reversed. It’s important to be flexible and willing to test different strategies. We can’t know for certain how something would effect our income/user base without first giving it a try. Even with the cut to rewards for borrowing, borrowers still earn over 20% simply for borrowing money and holding onto it, which is higher than Anchor Protocol on LUNA. There are still many borrowers on Anchor with a 12.3% reward for borrowing.
Agreed to reduce the allocation of the borrower, we should see the market rate. Since anchor only offer merely 13%. Balanced have the advancetage even reduce the reward rate for borrower.
All of the increase goes to stakers technically, either directly (hopefully not) or spending on improving the value of their holdings.
Also while it doesn’t reduce ‘inflation’ it reduces dilution temporarily since they stay in the DAO until used, and hopefully used for good purposes, like improving Balanced.
This is sort of a 2 parter:
Increasing the DAO Fund
Reducing borrow rewards, which was a topic that occured in the past 3(?) proposal discussions.
That’s one of the issues, everyday the rewards drop. I’ll come back to this point later.
Hyperbole or not, I agree with this statement. I believe and hope that a major portion of the extra funds going into the DAO fund will be used to attract those users. I also believe that the best time for making a big push to bring new users to Balanced will be in the future.
Further, I do not believe these changes will significantly impact user base or activity.
First, the borrowing reward pool. From 20% of rewards to 10%.
Currently, you get about .6 BALN per 1,000 bnUSD borrowed.
Joe deposits 5000 ICX, borrows/mints 1,000 bnUSD (+11 in fees), and earns .6 BALN in rewards per day. In 9 days, the fees are paid off.
After this change, you get about .3 BALN per 1,000 bnUSD borrowed.
Joe deposits 5000 ICX, borrows/mints 1,000 bnUSD (+11 in fees), and earns .3 BALN in rewards per day. In 17 days, the fees are paid off.
I don’t think this change will have a huge effect on the user base or loan activity. I could be wrong, and we might need to change it back or even boost it. To me, this function is over incentivized.
Second, the sICX/ICX pool — there is a huge amount of ICX in that pool, and it is barely making more in rewards than just staking ICX. Clearly this pool is popular with some big time holders of ICX (I’m looking at you ICON foundation). This pool is essential to the functionality of Balanced, but it’s a ridiculously deep pool — I want to see this change mostly just to see if anything happens.
The DAO fund is most likely the war chest Balanced will use to attract capital from other chains to Balanced and ICON. Eventually, we are going to be asking “How are we going to get Polkadot users to dwposit dot onto Balanced as collateral to mint/borrow BnUSD?” Or similar questions. And the answer will be incentives.
Maybe that’s in 6 months, maybe it’s two years from now, regardless, ten percent of the rewards today is a lot more BALN than it will be anytime in the future.
This brings me back to the first point. Making a 10% change now, even for a short time, will create a bigger reserve to utilize for incentives, than making a 10% change in the future.
Example:
In 10 days the the extra 10% will gain the DAO fund the equivalent of 560 days of 10% rewards once we hit 2% inflation.
I want good rewards and incentives. As the amount of total BALN available for rewards shrinks, the DAO fund is a way we can ensure growth long after we hit 2% inflation.
The DAO fund is not a blackhole. Some of the potential uses for the fund:
I hope I don’t come off as a jerk, I just wanted to share my thoughts on your post.
So serious. Then we should quickly vote this to increase dao fund allocation. i think we sound like discussing the borrower reduction quite some time already. Let do it .
The change of vbaln will not boost your rewards, its the same amount distributed to stakers, it is only if you stake for 4 years and other people dont that you will get more.
How do we cast a vote for the above proposal with the adjustment that 2.5% gets taken from workers and giving to balanaced stakers? This will boost the tokenomics and workers are still paid plenty and had plenty of time to stack tokens already.
Well said @AwaxJago thanks again for the detailed response.
In an effort to move more efficiently, I’d also like to propose one more change to the original document since we are adding the IUSDC/bnUSD pool. It would be nice to get a small allocation going there straight away. We discussed a fair amount on Discord so wanted to bring the proposal here:
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
7.0%
10%
-3.0%
BALN/sICX pool
5.0%
5%
0.0%
Emergency Reserve
2.5%
5%
-2.5%
IUSDC/bnUSD pool
0.5%
0%
0.5%
As for making adjustments to this proposal, I’ve considered the feedback and based on community sentiment I’d like to move forward with a vote on the above allocation that would start this Friday (ideally).
Hey Matt - the way it works is that I post on the forum (anybody can do this part of it) to start discussion then another Balanced contributor submits a vote on-chain for the community to vote on. In our coming update, anybody that meets certain criteria (has 0.1% of total BALN supply staked + pays a 100 bnUSD fee) will be able to submit a proposal on-chain for the community to vote on.
But as Scott says, it provides more flexibility later to utilise those funds better at a later stage. Let’s not be short sighted and rather look at the long-term impacts. Once they’ve been distributed as rewards, we can’t get them back. I think having a healthy DAO is massively beneficial as it allows us to promote Balanced more and to spend money on attracting new users which will increase the fees generated and and and. Its a virtuous cycle.
Excited to get this voted on. Having a larger DAO fund will add intrinsic value to BALN token since the governance rights around the BALN token will be more valuable because BALN token holders will be able to direct these funds as they please. I think this is a positive adjustment for everyone.
[quote=“benny_options, post:39, topic:227”]
this proposal,
[/quote] I don’t agree with the change to the icx only pool, it is already the lowest APY and is barely competitive with other platforms
Hi, I’d like to reiterate on what @Moen82 stated earlier
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.
Would it be possible to have more transparency around how these dev funds are being allocated? I think 20% is quite a large amount for dev, and some of that could definitely be provided as more incentive instead (as DAO funds could also be used to fund future developments for example). But happy to hear your opinion on it @benny_options, just like to get more visibility on this. Thanks!
Without going into the dollar values of the value of their work, I think we should remember they are also equity holders and essentially angel investors.
Omm worker distribution is 30%.
Non inflationary Uniswap retained 40% total supply for dev + ‘early investors’.
Just as a raw opinion, I don’t have an issue with the founders of a startup retaining 20% ownship, in fact that feels low personally, they don’t even have a natural veto total of voting weight, unlike in OMM.
With regards to compensation, personally the portion that I feel needs to be improved is the inability to direct the voting of the sICX, I do feel that does disproportionally favours the founder P-reps.
If I was part of the group that had this great idea, gathered a bunch of talented people together, and delivered on creating a remarkable product/platform, then you’d be hard pressed to get me and my team to give up such a portion of control.
Originally, the teams got 22.2% of new circulating BALN (DAO and ERF funds don’t really count).
This change brings it to 25.8% of new circulating BALN.
I don’t know what other projects/teams get, but I am happy with the performance of the team so far.
Hey @smok I’m happy to comment on it and I appreciate your respect and professionalism. @arch and @AwaxJago have also made good points that I’d like to second, and I appreciate their unbiased opinions. Here are a few other points:
Comparison to other projects
In comparison to other major projects in the industry, Balanced core contributors maintain a lower or in-line allocation of tokens:
Anchor Protocol (LUNA’s flagship product): 30% (team + investors, but investors buy from team)
Chainlink ($LINK): Owns over 50% of supply with off-chain agreements based on trust (assuming based on circulating vs total supply on CMC)
Terra ($LUNA): Owns over 50% of supply with off-chain agreements based on trust (assuming based on circulating vs total supply on CMC)
Uniswap ($UNI): ~22% to team + ~18% to investors = ~40%
The list goes on, and I wouldn’t say that there is any data to show that lowering allocations to core contributors leads to more successful projects, but I’m of course open to examples if you’ve found a project that has become a greater success as a result of lowering the allocation to the core contributors to below 20%.
Pre-mine vs Worker Token Model
We could have done a pre-mine like many other blockchain projects, where the team gets all tokens up front and just abides by promises in a white paper and off-chain agreements to not sell, which in the end, are entirely trust-based. Instead, we have the worker token model, where tokens are slowly given to contributors over time at the same rate of community participants.
Another way of looking at the current structure is that the team has ~5.8M tokens (20% of the ~29M supply after 10 years) that vest a very small amount every day at the same rate of the community emissions. This would be more relatable to existing projects that have significant pre-mines, but Balanced has a built-in vesting schedule.
The worker-token model is not perfect, but it brings a bit more trustlessness to a project compared to massive pre-mines managed with off-chain agreements and pie charts in white papers.
DAO Structure from the Start
As it stands, there is no one single team working on Balanced that gets 20% of supply, while most other projects we’re comparing to have one entity that holds the “team” portion.
From the start of the project, there were 4 teams involved, each with 5% of total supply, all of which worked for 1.5 years+ without any payment or incentive other than bringing this vision to reality. We have since added two more teams and a few individuals.
The funds are split between 6 teams and individuals that contribute to Balanced regularly. You can see each of the teams here if you scroll down. You can also look at the blockchain to see Balanced Worker Tokens and which wallets hold them. Funding is of course used to incentivize all teams involved to continue working hard on Balanced long into the future as well as various other initiatives to grow Balanced.