BALN token economics enhancement: bBALN

Hey folks - revisiting this proposal as it gets closer to launch. One of the major aspects of veCRV economics that was left out of the original discussion was the concept of directing inflation using veCRV. veCRV vote on which pools earn more CRV inflation rewards. The more votes a pool has, the more CRV inflation it receives. This resulted in a “bribing” market for new projects

I’d like to include this in the launch of bBALN, as it makes it far more attractive for outside parties. For example, if Omm community wanted to get some BALN rewards for the OMM/USDS pool, they could lock BALN, receive bBALN, then use that bBALN to direct rewards to their liquidity pool.

Only inflation allocated toward liquidity pools would be eligible for this. For example, if 20% of inflation is going to borrowers, 20% to Reserve Fund, 20% to the DAO Fund, and 40% to liquidity pools, then only that 40% can be directed by bBALN voting.

If anybody has any strong opinions, I’m open to feedback, but generally speaking this is inline with the proposal to model bBALN off of veCRV.

3 Likes

Agreed, more utility for bBALN. Furthermore it puts an important governance decision in the hands of the people who have a long term vested interest in the Balanced protocol.

2 Likes

Could this lead to vote stagnancy over time?

The good thing about bBALN is the linear decay of the token holdings. So if somebody doesn’t lock their BALN again, the amount of bBALN they have goes down over time. Since the amount of bBALN goes down, their impact on governance goes down as well.

1 Like

You are right, that massively prevents voting stagnancy.

I agree with this feature.

1 Like

I was wondering the same thing, completely forgetting the decay mechanism of bBALN. The decay of bBALN compliments this feature so well.

Similarly, the decay would also compliment a feature directing sICX staking votes (I believe @PARROT9 mentioned is something that could be added at some point)

1 Like

Would other platforms, OMM for example, need to adjust their staking liquidity token contracts to distribute rewards?

If for example, there’s a 1% of inflation directed at OMM/sICX pool. Would the BALN rewards got to the contract where the LP tokens are staked (on OMM), and then need to be distributed?

I was just discussing this today with contract devs. This is how it would work:

1.) Balanced rewards contract directs x% of BALN inflation to the Balanced LP Token Staking contract

2.) Balanced LP Token Staking contract handles bBALN voting preferences to direct that x% appropriately.

So to answer your question, Omm would need to start using our LP Token staking contract I’d say. There’s still some nuances to work out in terms of implementation, I already thought of an issue as I was writing this.

1 Like

I like this idea a lot. I kept up with the “CRV wars” saga involving Convex and all those related protocols. I think the impact of this model will be small in the beginning, but I can see it being a big positive for BALN holders once Balanced implements some cross-chain strategies and we list assets from other chains.

1 Like

I actually think it might be better to put more work into the rewards contract instead. So instead of rewards delegating a % to StakedLP. We instead have a % of “bBaln voteable” inflation that can be directed to any dataSource in rewards (proabaly with some restrictions).
Then for OMM to add one of their pools they:

  1. implement the dataSource Interface to their staking contract.

  2. Add it to the rewards contract.

  3. Get people to direct inflation to it.

This would give a lot more flexibility.
Should also be a great solution if we want to incentivise cross chain pools.

1 Like