BALN token economics enhancement: bBALN

Proposal Discussion WIP: BIP
#42

Ola Guys,

I strongly dislike this proposal right now and would vote “Nay” for several reasons:

  1. It’s too complex. Our current userbase still has trouble wrapping their heads around sICX / finding the unstake button.
  2. Asking people to stake for longer periods of time wil make the barrier to make changes too high for a platform this young.
  3. as demonstrated today, with enough collateral options, staking rewards can be quite sizeable already.

All together i think a plan this complex could be researched at some point in the future, when we have a bigger support system than benny_options answering almost everyone in telegram. And we have had some time to see the effects of BTP and different kinds of collateral.

just my 2 cents…

btw, hats of to the Balanced Team, and especially Scot. Awesome job you guys are doing!

2 Likes
#43

Yes. Nice explanation.

#44

Yep, I get it now! Thank you.

Cool, I think that’s a great approach

1 Like
#45

While I disagree with 1 & 2 those are just my opinion.

However on the point of 3, this doesn’t ‘increase’ the rewards, it shifts the rewards to favour people invested in the long term for the platform.
In fact, if every BALN staker today has the same outlook, long or short, the staking network fees amount doesnt change at all from today.

Under the current system logically people with a short term outlook for BALN should 100% vote no, and I suggest they do, for it is in their best interest. However all the more reason we should have this change as soon as possible, for it is in the platforms best interests.

On complexity and support, its DEFI? Most currently running and massively successful ETH projects are way more complicated, and still successful.
Like you said, people don’t understand sICX, should we remove it?
People don’t understand AMMs nor the real implications of IL, should we do away with the DEX?
People don’t understand leverage, people don’t understand that the smart contract cannot reach into your wallet and take tokens to repay your debt automatically.
Where do we draw the line of ‘oh this is too hard and will harm the platform’?

Finally on that note, IMO it is only a requirement that the revenue drivers of the platform be simple to use. The usability of the governance does not impact the platforms revenue. This is why for many DEFI platforms, governance is hidden away and not part of the main application.

4 Likes
#46

Will we be able to get the rewards daily or are they locked away for the duration? Would be great to still get rewards to pay for daily life things.

#47

Great response Arch.

If an investor doesn’t understand something, they shouldn’t invest in it, whether it be an AMM, staking, vesting etc.

The more tools we have to support long term growth/sustainability of the project the better I reckon.

As investors get more advanced they can use more of the tools available.

1 Like
#48

I appreciate that there is value in cultivating a DAO that doesn’t reward those that are not committed to the DAO. However, when formulating my opinions relating to the DAO I try to make them as inclusive as possible since I would rather see the DAO lean towards a democracy rather than a plutocracy.

With respect to short-term stakers, these weren’t the people I was thinking of when I made my points. I was thinking that a decent amount of mid-long term stakers would likely be more comfortable with locking tokens for shorter intervals, multiple times, as opposed to one long lockup. This is why I think that incentivising shorter (than 4 year) timeframes is sensible. If we’re worried about short term traders/stakers, then we don’t need to increase the lower end of the curve, but making those mid-timeframe lockups (3/6 month) more attractive I think makes sense.

Also, with respect to development complexity, we wouldn’t need to change the proposed model just change some parameters.

@arch @benny_options

1 Like
#49

Can I ask, if the 4 year slot was missing would you still oppose? If someone is not comfortable with a 4year lockup then they can pick a lower one. If the mid-long term stakers are more comfortable with a shorter period… they can pick the shorter period. I disagree with 6months being mid-long though, I would say they need to be 2-3y.

Can I ask what the ‘fallout’ is from the original proposal. Lets say you are right, what happens, what are the negatives that arise from it. To me it doesn’t seem to be an issue, if people:
a. Don’t want to stake 4 years
b. Want to stake for 2 years instead
c. Get upset by their intended plan having less rewards
d. ?? Is there a negative in this spot? The last thing, the very last thing we want is to make decisions based on price action, so the ‘worst’ thing I can think of is people get to buy something that is making the SAME revenue as it would, but for a lower price. They will be replaced by people that DO want to stake at 6months and 1 year, at a lower cost to themselves.

This isn’t something only rich people can do, anyone can lock it up for the 4 years, and those people have the most conviction in the platform. And, if it plays out that this causes the exact same revenue to be purchasable for a lower cost by people that DO want to stake it for 1/2/3/4 years, then all the better.
Again, not talking down anyone that wants to stake less duration at all, everyone has their own investment philosophy, and as long as the rules are laid out in the clear, they can choose the best investment for themselves.

Also lets pretend a flatter curve is optimal, here we have a very successful system, in the wild, functioning right now. How can you know your or anyone elses invented reward curve doesn’t have game theory flaws. Its all well and good to want to be ‘innovative’ but throwing out a proven system has some tall muster to pass.

Like for origination fees, I feel if you want to propose a different formula, it needs to be backed by more than feeling. Some sort of data or some sort of extrapolation with some assumptions.

1 Like
#50

The rewards are still daily

1 Like
#51

Good morning (well, late morning) from the Pacific Northwest,

At first glance, this seems really complicated, but also very beneficial to users who are excited about Balanced.

To clear some things up in my quickly becoming caffeinated mind:

  1. Would voting ability now only be for vBALN holders, at the weight of their vBALN?
  2. Would vBALN stake effect both network fee rewards and BALN token rewards?

The following example is to understand how the changes would impact users (feedback welcome):

Joe is using Balanced and loving it. His situation (BALN rewards locked/simplified and numbers rounded/approximated for ease):

5000 ICX collateral
500 BnUSD borrowed
250 BALN : 500 BnUSD in LP

He receives:
250 BALN voting weight
.5 BALN daily reward for loan
1 BALN daily reward for LP
100% of daily network fees allocated to him

If proposal passes he receives:
0 vBALN voting weight
.5 BALN daily reward for loan (or .2 BALN?)
1 BALN daily reward for LP (or .4 BALN?)
40% of daily network fees allocated to him

The next day he stakes 100 BALN for 4 years which “boosts” his rewards to 2.5x:
100 vBALN voting weight
.5 BALN daily reward for loan
1 BALN daily reward for LP
100% of daily network fees allocated to him

The day after, much more BALN gets staked, and his boost drops to 2x:
99.93 vBALN voting weight
.5 BALN daily reward for loan (or .4?)
1 BALN daily reward for LP (or .8?)
80% of daily network fees allocated to him

Two years later, no more BALN gets staked, and his boost decays to 1.5x:
50 vBALN voting weight
.5 BALN daily reward for loan (or .3?)
1 BALN daily reward for LP (or .6?)
60% of daily network fees allocated to him

Is that what it would look like?

1 Like
#52

Thanks for chiming in and happy to answer

1.) Yes
2.) Yes, but differently. Network fees would be quite simple, more vBALN = more fees.

Your example is mostly accurate, great job dissecting the proposal - shows a firm understanding of what’s happening here. Let me try to correct a few things

It is indeed 0.2 BALN
It is indeed 0.4 BALN
It would be 0% network fees because network fees would be based on vBALN

This part is not accurate because if no more BALN gets staked, everybody’s vBALN is decaying, so his boost would remain the same.

Fwiw I didn’t spend the time to verify all your numbers but if I didn’t mention it, it looked right to me.

I’ll also take this opportunity to share some implications of this proposal off the top of my head:

  • LP’s (and borrowers) are heavily incentivized to lock BALN for an extended period of time to maximize their yield
  • Users with interests in specific pools are heavily incentivized to lock BALN for a long time in order to have more power to direct rewards to the pools they like (i.e. imagine OMM/sICX pool becomes incentivized, OMM holders would want to lock BALN and vote to add more rewards to their pool)
  • It aligns BALN stakers with the long-term success of the platform rather than only short-term price action and short-term fee collection
  • Those most dedicated to long-term success have the loudest voice - mitigates the issues of plutocratic blockchain governance.
  • Lowers incentive to sell BALN rewards → reward-earning activities will want to stake in order to boost
  • Directs more rewards to those that are aligned for the long term (possibly redundant)
  • Provides a good incentive for other protocols to stake BALN (i.e. Optimus.finance will want to boost the yields of their users)
2 Likes
#53

Thank you for clarifying.
:sunglasses: :nerd_face: :face_with_monocle:

1 Like
#54

adamant on polygon has similar and has had great success since making changes

1 Like
#55

If you refer back to my original post you’ll see that I am not actually opposing this proposal, if it came to vote I would support it. I’m also not suggesting this upgrade would cause any “fallout”, I’m also not suggesting my proposed improvement is “free of game theory flaws” or should even be implemented in it’s current form. I was simply presenting my ideas and proposing an improvement. My intent wasn’t to see it implemented, it was simply to participate in governance with the time I have available, get some ideas out there, and attempt to generate discussion.

Thanks

Ed

1 Like
#56

I will support this proposal as is.

Breaking it down as simple as I can imagine it. If this proposal is approved BALN holders are going to decide 1 of 2 main options:

  1. Stake BALN for a long term source of passive income.
  2. Do not stake and have flexibility to sell BALN, taking advantage of price appreciation.

Option 2 people should be happy for option 1 people taking a decent amount of BALN liquidity off the market and boost price appreciation in doing so.

2 Likes
#57

I apologise if my post seemed overly targetted at you. I was just trying to make the general point that any ‘new’ formula anyone comes up with, will be inherently more risky than one we have prior evidence of.

With the improvement, I guess for me personally I am not seeing the improvement?
Lower duration stakers get more network fees > More people stake for shorter durations > ?
I just want to see it from the opposite perspective but I can’t see the angle.

2 Likes
#58

I think this point is important. Mitigating it with some visual representation and sliders (with text input boxes!) should help. I imagine a bar similar to the risk ratio, so that it could represent different points based on stake.

4 Likes
#59

No worries! Critical thinking and sharing perspectives are important when it comes to governance.

1 Like
#60

Yes. I think the complexity being a black box to a lot of users is fine as long as UI/UX compensates and projected earnings are clear.

2 Likes
#61

I’m going to try and clean up my old post, and use the formula to see if it makes sense to me.

I’ll add some parameters:

  • BALN/BnUSD total liquidity = 8.4 m
  • Total BnUSD borrowed (is this value used for total liquidity for borrowing rewards?) = 21 m
  • vBALN total = 4 m

If Joe does not do anything, his rewards look like this:

0 vBALN voting weight
.2 BALN daily reward for loan
.4 BALN daily reward for LP
0% of daily network fees

Joe decides to stake 100 BALN for 4 years:

5000 ICX collateral
500 BnUSD borrowed
250 BALN : 500 BnUSD in LP
100 vBALN

Earning Weight for LP = min((1000 * .4) + (8.4m * 100 / 4m * .6), 1000)

Earning Weight for LP = min((400) + (126), 1000)

Earning Weight for LP = min((526), 1000)

Earning Weight for LP = .526

Earning Weight for borrowing = min((500 * .4) + (21m * 100 / 4m * .6), 500)

Earning Weight for borrowing = min((200) + (21m * 100 / 4m * .6), 500)

Earning Weight for borrowing = min((200) + (315), 500)

Earning Weight for borrowing = min((515), 500)

Earning Weight for borrowing = 1

He receives:
100 BALN voting weight
.5 BALN daily reward for loan (1 weight)
.526 BALN daily reward for LP (.526 weight)
100/4m (or 0.000025) of daily network fees allocated to vBALN

4 Likes