We voted to add a bunch of the DAO funds into the sICX/bnUSD pool not long ago, and while I don’t have the hard numbers, my impression is that it has increased the fees quite a bit in recent times.
Now none of this is that surprising, we - Balanced earn fees on trade volume, and the deeper our liquidity pools, the more we earn. Unsurprising the top ‘DEFI metric’ is TVL. But seeing in person, live, really hammers it home - TVL or more importantly ‘efficient’ TVL is king.
At the moment, from the fees 60% goes to bBALN holders and the other 40% goes to the DAO.
The thing I want to discuss here is changing that to shift more into the DAO. I am personally in favour of a 30/70 split, 30 to stakers, 70 to the DAO, but we can decide the fine tuning in this thread.
Benefits
POL is good
Don’t want to bore everyone, this is something discussed everywhere
Value held by the DAO, is directly value for BALN
If we would recall a very popular project awhile back Olympus DAO, people at large were extremely willing to throw a lot of capital into what is essentially liquidity pools. This is something we can have, but for our own liquidity pools, with the benefits of no middle man and a vertical integration.
Baln value will partially be supported by a direct interest in all the POL owned by Balanced. (Except it will be more than that)
This will also come into focus when we talk about trading BALN for POL but to stay on topic we just need to think about it in terms of what we want to do with fees.
Balanced is just getting started
It is a well known investing trend that small entities, with good growth prospects, tend to keep all earned profits to reinvest in the business, to grow even faster, compound, exponential growth, etc. etc.
By taking our profits out, we clip the faster curve of compounding growth before it can really get started.
Now I hope its fair to say, Balanced is still small, and Balanced has lots of growth left. Not only that, that growth is not say - Risking a new expensive factory, or trying out some new unfounded tech. No, that growth is literally holding hard currency. More POL > more earnings, more earnings > more POL.
By taking lots of profits out, we are basically saying we don’t think Balanced can do anything profitable with this money.
ETH and BTC pools
To really hammer home how much POL can help, our ETH/bnUSD and BTC/bnUSD pools are downright tiny. Even at current earnings we can meaningfully expose ourselves to the volatility of ETH and BTC.
Yes we have plans for BALN > POL via karma, but we can do it all, we should do it all. More earnings more growth.
Downsides
Fees will go down (not really)
This one is pretty obvious, you will get less fee payouts, but not really.
They are just being held in the DAO for you, while earning some, AND making your BALN better.
The one scenario it is objectively worse - is if you are a genious investor, that always makes a lot, and think Balanced can’t grow fast enough. This is true, if this is you, Balanced may not be the investment for you.
bBALN is worse
This is the one aspect with real impact. This makes staking BALN objective worse than before. However, it also makes normal BALN objectively better than before.
As someone with a moderate amount staked for 4 years, this is not a real problem.
All I want is for Balanced to do well.
bBALN still would retain
- 30% fee payouts
- voting rights
- LP weighting votes
- LP/Loan boosting
To me thats plenty of reason. Will that make people stake less, for sure. Is that bad for Balanced, I don’t think so.
Conclusion
Recent choppy markets and our tiny ETH and BTC pools suggest to me, we are leaving a TON of profit on the table. Lets divert more fees to POL and allow us to collect on that profit.
This post is inspired by the discussion among community on Discord here:
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