One final note on using BALN in the DAO Fund for POL (sorry, but this stuff is important!).
Right now, we print ~7k BALN per day to RENT liquidity. That’s genuine direct dilution of token holders by printing new coins and giving them away to LPs. Using BALN in the DAO Fund for POL lowers this cost, because the DAO Fund earns back the newly minted tokens which lowers REAL dilution / inflation. It also lowers the need to print future coins because the DAO owns its own liquidity and doesn’t need to rent as much in the future.
I would be in favour of a higher sICX/bnUSD POL amount but definitely getting the DAO some POL in the two other pools while saving some bnUSD for the BTC & ETH karma bonds.
If we can all agree then I guess we just need to come up with a good ratio to put to vote ?
Andell pointed out a good example later in the thread, but that leaves the DAO fund dry which temporarily won’t look the best especially if any devs require funding, however it will no doubt grow at a much faster rate than previously due to more protocol fees from arbitrage and BALN rewards.
One thing to potentially look at for our initial POL is, where the current ‘market’ distribution for bBALN voting sits. This doesn’t matter for sICX/bnUSD so much as that always can use ‘more liquidity’ whereas BALN pairs only need ‘enough’ liquidity.
POL for BALN makes sense if the pools are small, or we were still in full control of incentives and reduced them to replace with POL instead. But while people are voting to incentivise a BALN pair heavily like now, I wouldn’t think we need any BALN based POL, for now.
Of course this can change and supporting BALN liquidity with POL should always be on the table, but given limited resources it may be better used in other ways.
Hey @Robi !
This is a important topic and i think it deserves a thread of its own. Perhaps even two threads. One about BALN bonds longterm solution and about a short term solution to buy BTC and ETH for our bnUSD funds.
You can look at it from the other direction if we supply to it and it gets a lot of votes, inflation is either lowered significantly or moved somewhere else. Both are good scenarios. Since supplying to BALN pools is kindof half price since the daofund has alot o BALN tokens it might still be pretty profitable option while also deepening liquidty for our own token.
To second what @Andell was saying, it’s actually totally fine if the DAO has large POL in a heavily incentivized pool. Imagine an extreme scenario, that always helps me visualize. Let’s say 100% of BALN inflation was directed toward the BALN/sICX pool. Let’s also say the pool itself is 90% POL. That would mean 90% of newly minted BALN would be getting claimed as rewards by the DAO Fund, and only 10% is released as circulating supply to the rest of LPs. POL takes back inflation, there’s really no need to “reduce them and replace with POL”. It’s pretty much done automatically based on the percentage of the pool that’s POL.
Having POL opens up new stable and real yield revenue stream for the protocol.
Where this stream is redirected to depends on the protocol, but it can easily be directed on the Baln holders, appreciating token value even further.
All the points with BALN POL make sense, including the ease of execution since we hold a bunch of BALN.
I guess I was more thinking in the short term, on a scale of a few weeks, where these sort of market efficiencies take a bit of time to play out.
In the short term we have a bunch of BALN/X LPs from incentives, and BALN/X POL, and basically the effect of POL was to reduce inflation which while good isnt as potentially impactful as say, bootstrapping an ETH pool
Hey @Andell any thoughts on next steps here? Imo it seems we have broad agreement about the sICX bnUSD pool so I think a good strategy would be to do a first vote to move the sICX from reserve and pair it against bnUSD. That will also get more revenue going straight away, so more budget to work with on future votes.
I’ll revise my suggestion of 1.5M sICX to keep in mind other options. How about 1.25M sICX and the corresponding amount of bnUSD? Open to other suggestions as well, but I think we can get something going for that pool
Yeah I agree, seems everyone is on board with sICX/bnUSD.
A vote which moves ~~1M sICX from the reserve to the daofund then supplies 1.25M sICX with corresponding bnUSD sounds good to me.
I think this would be possible to pass and we can continue discussing next steps.
I’m going to add a large chunk of my BBALN vote to icx bnusd pool since it seems that is what would give us the best liquidity.
It seems like people in the DAO want to buy Eth and Bitcoin and supply that as protocol owned liquidity instead of using our bnusd to supply liquidity to the Balance token positions. Is this the consensus I am following?
Just want to stay updated so I can vote properly! Everyone have a great day!
This proposal just uses funds already earned by the DAO from revenue. Karma is best when we need to sell assets in the DAO Fund for things it doesn’t have, such as BTCB or ETHB