Incentivize BTCB/bnUSD pool with BALN

I’m thinking of making a proposal to incentivize a BTCB/bnUSD pool to kickstart LP. I want to stress that this would be an experiment more than anything else. Up until now, the only pair that could be arbitraged between was sICX/bnUSD on Balanced and ICX/USDT on a CEX. I’ve personally made thousands of trades on Balanced because of this opportunity. I want to see if adding a BTCB/bnUSD pool will cause trading activity on Balanced to pick up again. With this pool, users can arbitrage with BTCB/bnUSD on Balanced and BTC/USDT on a CEX.

Since BTCB on ICON via ICON Bridge is still quite new, I think the BALN allocation needs to be fairly high to account for the risk. Thus, I would like to propose to redirect incentives on stablecoin pairs (IUSDC/bnUSD, IUSDT/bnUSD, USDS/bnUSD) to a BTCB/bnUSD pool.

I think this is a reasonable proposal for the following reasons:

  • USDS and IUSDC have very low volume (~$2,000/day combined), and incentivizing pools with little trading interest doesn’t seem like a good use for BALN inflation. Furthermore, USDS and IUSDC can both be swapped to/from bnUSD via the Stability Fund, which already has a low fee (perhaps we can discuss lowering this further to make it even better for traders).
  • IUSDT typically has less than $500/day in volume. My opinion on this pool is that it’s no longer needed. Since it was created, it hasn’t gained much traction.
  • Over time, I think it would be best for Balanced to remove reliance on Orbit Bridge and rely on ICON-native bridging solutions like ICON Bridge and BTP. As part of this, I think the strategy should eventually be to consolidate stablecoin trading into BUSD/bnUSD or USDC/bnUSD (bridged from BNB Smart Chain). Removing or lowering BALN incentives is a good way to start this process.

I’d be happy with one of the following allocations:

NOW

  • IUSDC/bnUSD - 2.5%
  • IUSDT/bnUSD - 0.5%
  • USDS/bnUSD - 2%
  • BTCB/bnUSD - 0%

AFTER

  • IUSDC/bnUSD - 0%
  • IUSDT/bnUSD - 0%
  • USDS/bnUSD - 0%
  • BTCB/bnUSD - 5%

OR

  • IUSDC/bnUSD - 0.5%
  • IUSDT/bnUSD - 0%
  • USDS/bnUSD - 0.5%
  • BTCB/bnUSD - 4%

I think if we can bootstrap the BTCB/bnUSD pool to decent liquidity, it could be a great marketing point for Balanced. Traders go where profits can be made, so I think this idea is definitely worth pursuing.

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I like this simply because I think we should be data driven, we have a reasonable amount of data so far about the stable pair pools.
A part of this is also probably due to the friction in bridging the stables.

Additionally I think its possible to leverage the stability fund style setup instead for stablecoin ‘trades’ going forward.

This doesn’t address the main discussion but I also wanted to bring up longer term plans like reducing some BALN/X incentives to the DAO fund to prepare to use for POL/Karma.

If we wait til we actually want to use it, we won’t have it. Since the market is cool atm, having slightly worse liquidity and worse trading in preparation for the future might be a better idea.

With that, I think we should also open to taking a bit off the BALN pairs for this BTC pair, or other future pairs, like ETH/BNB. We can only take allocations off stable pairs once afterall.

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The BALN/sICX pool strikes me as over-incentivized at 15%. Since bnUSD option is probably the most important KPI for Balanced, I think it would make sense if only bnUSD pairs were incentivized. @arch what do you think about the idea of cutting rewards for BALN/sICX, increasing BALN/bnUSD to 15%, and then sending the difference to the DAO Fund (maybe until we onboard ETHB/bnUSD at which point some of it can be diverted to that pool.

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I actually prefer the BALN/sICX pool. In general at least in my experience, the DEX token gets paired with the ‘chain token’. Additionally, BALN/sICX is suitable for people bullish on both, which seems more likely than partially bearish in BALN/bnUSD.

Now I understand bnUSD is special for Balanced so wouldn’t push the point super hard but personally I think having BALN/sICX is better than BALN/bnUSD.

Which leads me to my next point, I think we only need one of those pools. Cutting one, either one, does mean a worser trading experience on BALN itself, but we arent here to drive trading volume on BALN/X. But I would be in favour of cutting one entirely, and letting trade routing handle the other pair.

EDIT: Full disclosure I’m in BALN/sICX but not BALN/bnUSD, but still would support closing one down, its not efficient to have both IMO. If people prefer BALN/bnUSD so be it.
EDIT2: I will say there is an elegence to all the main incentivised pairs being X/bnUSD… hmm…

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I’m sure part of it is my OCD kicking in, but I love the idea of all incentivized pools trading against bnUSD. To me, there’s nothing special about the BALN token that warrants a dedicated and incentivized sICX pair. Regarding BALN/sICX being a good option for people who are bullish on both tokens, I wonder if bnUSD already bakes in that bullishness because it’s basically leverage on sICX.

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The logic for BALN/sICX is, we need to support platform token liquidity ‘somehow’.
BALN/sICX is more likely(my assumption) to have more people less afraid of impermanent loss, as they should move somewhat correlated. This means, it should get more TVL for the same rewards. Now this was mostly true historically I believe, but it looks like, as bearish sentiment grows, the bearish LP BALN/bnUSD has got a better TVL to reward?

Assuming we only get to pick 1 (and thats what i believe is better, concentrated liquidity), whichever one gets the better TVL per reward is best.

Now I guess in a bear, people prefer bearish X/stable LPs? I personally don’t really like them as if you are so bearish, you are pretty much in the LP for pure 100% yield. On the other hand, people that are double long would accept poorer yields on things they plan to hold anyway. Thats my take on it at least. Do not believe either option is bad.

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Categories Current APY BALN/Fees Liquidity 24hr Vol Liq. Per 1%
sICX / ICX 3% 1.30%/3.01% $1,381,325 $11,691 $460,442
sICX / bnUSD 12% 5.37%/3.02% $1,337,533 $41,633 $111,461
BALN / bnUSD 12% 10.71%/0.50% $670,919 $2,418 $55,910
BALN / sICX 15% 12.50%/0.51% $718,509 $3,486 $47,901
IUSDC / bnUSD 2.50% 1.87%/0.33% $798,897 $1,019 $319,559
USDS / bnUSD 2% 3.24%/0.28% $369,440 $704 $184,720
IUSDT / bnUSD 0.50% 10.29%/0.39% $29,104 $36 $58,208

The column titles are hard to read, from left to right:
LP,
Current BALN%,
APY BALN/Fees,
Liquidity,
24hr Vol,
Liquidity per 1% of BALN distribution

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This is a great idea. Also, having more pairs with direct CEX arbitrage opportunities sounds like solid reasoning.

I believe a “live” version of voting for incentive weight for LPs is in the plans, but I am unsure how long after bBALN that will be. The BALN rewards for LPs could definitely use a refresh in the mean time.

I posted a chart to show the current distribution. I used liquidity per 1% of BALN inflation as a metric for how effective the rewards are at securing liquidity.

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Just want to hop in here before you folks get too far haha. I do think we’re better off waiting for “live” voting, as that’s currently under development. Hoping to have that deployed within 4-6 weeks if you guys are open to waiting for that. Of course, no need to take my advice here, just a suggestion.

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