bBALN Penalty Improvement

The current penalty for unlocking bBALN early is a draconian 50% penalty regardless of amount of time remaining. This was meant to be a “better than nothing” option to bBALN holders, but after more thought I believe we can improve the logic of this penalty structure.

After discussing with a few smart contract developers, I’d like to propose another simple but more logical solution would be the following calculation:

BALN returned to user = max (BALN locked - bBALN, BALN locked * 50%)

The benefit to this adjustment is that it’s generally more fair to those locking tokens, as the current system had no thought put into it. It also allows lockers to have more flexibility to adjust their current lock amounts.


Ola mate,

I suspect you made a slight error here, or i just dont understand…

The current formula caps the maximum returned in case of an early release at a max of 50% of the initialliy locked tokens, While going even lower if there is a longer time remaining on the lock than 2 years.

I believe you meant to suggest the following:

BALN returned to user = max (BALN locked - bBALN, BALN locked * 50%)

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Yep, nice catch! Will fix the original post

My advice is to take it a step further and lower barriers for Baln stakers to want to lock for 4 years. We need to give people a reason to invest in the Baln token.

Do we really expect new BALN buyers to be willing to take the risk of losing 50 percent of their tokens on a 4 million dollar market cap, zero exchange token?

Once they buy Baln and try to stake Baln they will realize they can’t keep up with the inflationary pressure of Baln and it can’t keep up with ICX so they will sell. We need to make BALN wanted.

Also only 2.5 million BBALN is going to direct this new inflation. Notice how some pools will receive crazy apy and others, the most important ones, like sicx/BNUSD will start getting minimal directed Baln. These effects will happen.

I propose

  1. Prepare a plan where a major exchange would want to list BALN. People act like it’s crazy I bring up this point. But we actually have a working product on a growing chain that people actually use. 90 percent of tokens on exchanges can’t say that.

  2. Be as welcoming as possible, we are the only part of the icon ecosystem that actually has a penalty system. And it’s a stringent one, like we’re a billion dollar market cap coin.

  3. Heavily support ICX sub tokens. I love the balanced/craft partnership.

The product itself is amazing, we are in an amazing and growing icx ecosystem, i love the current approach of the workers:)

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To quickly touch on this topic, the inflation for BALN is quite low compared to most cryptocurrencies. But more importantly, the main purpose of the bBALN system is to align incentives between Liquidity Providers / Borrowers (“Users”) and those governing the platform with bBALN. bBALN is most beneficial to Users because it boosts their rewards.

It’s rare for bBALN holders to not also be active users of the platform because one of the primary benefits is boosting rewards. The ideal result is that most people who govern the protocol (bBALN holders) are direct beneficiaries of the inflation generated for users. See this quote from the original bBALN (BIP4) proposal, as this was one of the key reasons for migrating to this model.

Also just want to highlight the purpose of the penalty is not about encouraging or discouraging people to lock. The locking period options range all the way down to 1 week, so users have lots of flexibility in terms of their commitment. The penalty is to prevent governance attacks. I’ll walk through a brief example if we had no penalty at all.

  • Bob buys a lot of BALN
  • Bob locks for 4 years, getting maximum governance power
  • Bob submits a proposal to distribute all DAO Funds to himself
  • Bob votes with his massive amount of bBALN
  • Bob unlocks his bBALN with no penalty
  • Bob sells all his BALN at no loss
  • Bob steals all the money from the DAO and has no loss, because he was able to immediately unlock his bBALN

Hope this helps clarify.

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Understood and thanks for the clarification.

Off topic but it seemed like the bbaln bribes moved the votes to heavily support craft. I think the 10 to 35 percent apy previously looked healthy for that pool. An APY of 130 is not conducive like I mentioned in the post above.

Is it possible for balanced to offer bbaln bribes in SICX/BNUSD, since that pool needs to continue to have deep liquidity.

Staked Baln holders on a normal month will only get about 6% apy for locking for 4 years. We should consider a 15,000 icx monthly incentive like craft has done.

It’s an idea to make bbaln wanted.

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Yeah been considering “self-bribes” for a few key pools at least. It’s a way to reward active bBALN holders that provide value through voting how the DAO wants

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Yes, I like the once a week idea craft did, to reward attention. Also, I hope craft knows bbaln voters are huge fans of their protocol and balanced self bribing to rewards pools that need incentives should not stop craft from continuing their bribe if they wish to do so.

Again, it is evident the bribes work and more and more bbaln voters will vote and become more involved:)

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Wow, the last update for the quarterly report was impressive. Again, the workers on Balanced continue to impress. I’m happy about the audit development as well. Very proud of the hard work being done.

Maybe two things to consider:

How can we get 80% of BBALN to vote on proposals. Maybe we should try to align the votes in the middle and end of the months. Also, I’m not sure it is possible but a small bribe for the voters may draw more BBALN to vote. It would be worthwhile if we can get twice the participation.

Secondly, we should self bribe for our main token pair, “Staked Icon/Balanced USD. Bribing works, again it brings positive attention to Balanced.

Can’t say enough positive about Balanced and if bribing brings more positive attention to our platform we should consider more ways of using it:)