1: When/how can we talk a little more about this 2% vs 5% thing? If I also want that to be voted on, do I need to propose an alternate copy of this snapshot changing that number? I think it should be up to voters to decide this.
2: It is also important for Badger that if this change goes in, especially at 2%, we have some time to request new gauges and move liquidity. I think part of this governance should be a clear deployment schedule, that should give DAOs enough time to adjust gauge weights and have them voted in/enabled at the same time as old gauges are capped.
3: The idea of graviAURA was for DAOs to keep a small amount of it in a pool in order to trigger some self voting. With 10-20% graviAURA in the pool I don’t see how the mcap is relevent. In the end this really limits something Badger has invested quite a bit of time and energy in, until a point where AURA hits 50 million AUM. It’s not the end of the world, but we have put so much time and money into building on, promoting and enabling this ecosystem. It’d be really nice to at least have an exception for graviAURA under 20% (not counted in mcap calcs).
I understand the proposal and what you’re looking to do here, but as proposed this is a complete rug pull for people who have locked significant capital into a system for an extended period of time, only to have it changed without them being able to opt out.
The only way I’d support this is if there’s some unlocking system implemented for people who don’t agree with this to be able to leave.
The fundamental disagreement is the belief that bribes are as valuable as protocol revenue. I believe the long term success of Balancer heavily relies on optimizing for protocol revenue. We cannot rely on the often irrational decisions of 3rd party projects to bribe or not. Having 3rd party bribers is of course a great thing but it is secondary in importance to growing protocol revenue.
Thus, operating from this first principle we know that large cap tokens generate more protocol revenue on balance than small cap tokens. We know that equal weighted pools generate more protocol revenue on balance than unequal weighted pools. We know there are exceptions so we have the phase 2 revenue factor which covers these - small cap tokens or unequal pools which generate meaningful revenue get credit for that under this framework.
Runway of the DAO is a consideration to me. If we value bribes equally or greater than protocol revenue the DAO will suffer. We could lock a significant amount of BAL from the treasury to collect bribes with - hard to imagine veBAL and vlAURA voters voting for such a massive dilution of their voting power and revenue. This seems strictly worse to me than simply optimizing for protocol revenue as this framework proposes.
This really goes back to the same old point of how you view bribes and protocol revenue. Badger/wbtc is among the worse pools in terms of protocol revenue generated per emissions spent.
Today we must carefully consider the impact on protocol revenue if a small cap gauge gets directed a large amount of emissions, whether from bribes or just voters voting for it. This framework applies clear rules which remove the need to consider this possibility. Any use case that brings value to the ecosystem should generate protocol revenue in my mind. Pool2 tokens below $50M mcap that see healthy trading activity get credit for that with the phase 2 revenue factor and can be promoted to uncapped status within a month of being approved for a gauge. I’m not aware of any other DEX that will allow the opportunity for a small cap token to get 2% of emissions, much less the opportunity for uncapped emissions if they pass a fairly low bar of revenue generation. I strongly disagree with the assertion this framework will hurt the adoption of pool2 tokens on Balancer.
so you’d rather existing voters get massively diluted by the DAO locking veBAL? Perhaps it is worth discussing that option I suppose - to me as a veBAL and vlAURA holder, voting to heavily dilute myself feels pretty bad.
The beauty of Balancer’s technology is with these new pool factories where we can apply the protocol fee on yield bearing tokens we actually do not rely on the volume part of that relationship. It is a simple calculation of higher TVL = higher protocol revenue. wstETH pool is a perfect example of this in practice if you doubt this mechanism. We will see many more yield bearing core pools rolled out in the near future as Balancer becomes the main trading destination for this like wstETH and stMATIC, etc. With any luck we will stimulate additional volume in these tokens so we can benefit not only on the yield side but also on the volume side.
There is no rush. We have ample time to discuss this framework before implementing it.
This further highlights the risk of relying on 3rd party bribe revenue as the primary source of income. Often irrational decisions made by these 3rd parties can have serious impacts on our bottom line.
Today we must consider the impact of adding small cap gauges and the potential impact on protocol revenue if a large amount of emissions are directed towards them. This framework removes this risk. It will allow creative uses of Balancer to have a chance to prove themselves with a fair starting cap on their emissions. If this creative use proves valuable and generates protocol revenue the gauge is eligible to become uncapped based on Phase 2 revenue factor.
I strong disagree. This framework lays the foundation for the bribe ecosystem to grow significantly in a symbiotic relationship with Balancer’s protocol revenue. As more yield bearing core pools are added, wstETH launches on L2’s, Optimism comes online (projects waiting to bribe us with OP) - I estimate the bribe market will grow massively over the next few months if this framework is approved.
This bigger risk to the bribe ecosystem is allowing a large amount of emissions to be directed to pools that generate very little protocol revenue and we rely on 3rd parties to decide how much of their profits they will return to the ecosystem via bribes, or not.
We are telling any DAO under 50M mcap that they should be contributing to the growth of Balancer’s protocol revenue if they want to have access to an uncapped gauge. Aura’s pool 2 generates meaningful revenue so the fact that they are under 50M mcap is no problem. If your pool cannot generate protocol revenue it only makes sense to limit the maximum amount of emissions that pool can receive.
We cannot grow the ecosystem by solely relying on 3rd party bribers and hoping more decide to join. The only way to sustainably grow is by optimizing for protocol revenue - this is the north star metric we all have to shoot for. Allowing 3rd party bribers to direct a large amount of emissions towards pools that cannot generate meaningful protocol revenue represents an existential threat to Balancer’s future.
Hello there. I believe 2% strikes an acceptable middle ground between allowing the opportunity for small cap or uneven weighted gauges to prove that they can generate protocol revenue and allowing gauges that don’t generate protocol revenue from syphoning off so much emissions it makes growing protocol revenue very difficult. 1% does not allow enough opportunity to show the revenue generating potential of a gauge (with aura emissions a 2% cap is more like 4% really). 5% allows too much of our emissions to be directed to gauges that cannot generate protocol revenue.
I prefer to err on the side of starting the cap too low than too high. A future v2 version of this framework could introduce another tier that has a 5% cap - this feels like the correct next step if this is desired by the community.
There is nothing in the framework about capping people from buying more BAL.
If a protocol is birbing for a pool that cannot generate protocol revenue then they would be affected by the proposed 2% cap. I would argue such a birb is not hugely valuable to Balancer in the first place and those emissions instead going to an uncapped gauge per the framework would add more value to the ecosystem over the long run.
this goes back to how you view bribe revenue versus protocol revenue. I won’t rehash what I’ve already written, other than to say I strongly believe our ecosystem must optimize for protocol revenue. Allowing bribe revenue to become a strong enough force that protocol revenue suffers is not a good thing. We’re already on this path now and it will get worse if we don’t act.
The volatility of token market caps and revenue generation make it unfeasible to have a static set of criteria for a gauge being promoted or demoted. Such actions must be infrequent for technical reasons and also simple governance overhead. This is why I kicked the decision to governance - the community must assess the merits of any proposal to promote or demote a gauge. Are the circumstances truly reflective of the likely reality or are they probably temporary?
It is fair to say this aspect of the framework could be improved upon in a v2.
If the community is going to bless bribe revenue as our north star metric over protocol revenue then I agree the DAO probably has no choice but lock a large amount of veBAL into the system. As someone who spent my own money buying voting power, the prospect of voting to approve myself being hugely diluted feels totally wrong. Ultimately the community is in charge here but I’m firmly against this.
There’s nothing wrong with the Badger pool to me. They are playing the game very well and they deserve credit for that.
The goal here is not to hurt the Badger pool. I want Badger to continue to contribute to Balancer’s ecosystem and thrive right alongside us. I think a 5% or 10% cap will not accomplish what the framework is trying to do. If we believe this framework is the correct path forward then we should fully embrace it which means a 2% cap. 5% or 10% would represent a middle ground approach which I believe will not yield any positive result.
It is being discussed now during the feedback period for this proposal. If this proposal is put forth with a 2% cap you are more than welcome to present an alternative proposal to implement a 5% cap.
Specification, including timeline of migrations and everything, will be provided in advance of the vote beginning. It’s safe to say you’ll have plenty of time to propose new gauges or anything you’d like.
I sympathize with the sunk costs you have into graviAURA but I question why the world needs uncapped graviAURA gauges. I’m against any special exceptions for a particular token in any case.
This is not a rug in any form. Everyone who has locked capital into the system will have their fair say, just as with any other proposal. A community as diverse as Balancer’s will inevitably have disagreements but our system of governance is absolute. Voters will decide, as they always have and always will.
I was going to write a longish post looking at the past performance of the USDC/ETH pool when it garnered more votes and what came of that was that while the total overall $$$ being distributed was slightly less than Badger’s. However, I was left wondering what lasts longer, a 3rd party’s ability/desire to bribe at the same rate or volume on a main swapping pair. It didn’t even factor in the fee on yield baring pools.
I would very much support balancer locking some influence and using it to extract revenue from the vote market. I also think it gives the DAO an interesting lever to adjust in order to increase or decrease DAO revenue. BAL could also be locked in AURAbal and used to farm AURA which could also be used to earn.
Maybe we should take some time to explore this in more detail, and see how the community feels about it. @Mr_Po do you have any interest in putting a model/proposal together about how this would work?
Because one wants to bribe 25k a week on a 10 or 20% graviAURA pool, on their token that has over 50 million in mcap. Why does this present a problem? I’m not as absolutist as some of my colleagues above about this, but there was kind of a “deal” that everyone signed up to. While I support taking moves to make the ecosystem healthy, I think it’s important to be conscious of how much and how fast you are changing the deal. How does 10-20% gravi in an otherwise large-enough-mcap-pool make the world any worse? At 5% the exception wouldn’t be as big of a deal…
It doesn’t present any problem if such a pool can generate enough protocol revenue to achieve a revenue factor high enough to justify removing the cap. If it can’t, why is it a good thing for it to be uncapped? Healthy ecosystem means pools receiving a large amount of emissions must contribute to protocol revenue.
Yeah, but a healthy veBAL ecosystem also means that there are lots of new entrants coming in, innovating and growing on top. 30% is one thing, 5% is another. Maybe i’ll spend some time putting a sheet together to try to model some of this. I’m kinda busy and going on vacation next weekend for a shortish week tho.
<50 mcap DAOs could also just make wrappers/versions of their tokens that rebase up at 2-4% a year. Is that in the end what you are looking for? It’s just a very roundabout way to pay revenue into the DAO. Would be so much easier if you earned some bribs and/or could sell some BAL when the innovation it allows for creates value. Or even just stake some auraBAL and farm and sell a little AURA. If smaller cap DAOs do have to do this to pay their due(fair enough), are the resources in place to get it done within a month or two? It’d also be much easier to pay a tax to balancer to bring revenue into line for bribing and/or voting over the limit.
I’m not sure what resources you’re asking me about? This would be upon the DAO(s) interested in this approach to develop and implement it, not on Balancer.
If a solidity dev of decent skill and experience took a few weeks to figure out boosted pools, do whatever coding is necessary and launch them. Would one need support from balancer to add them to the UI and/or create pools on top of wrapped boosted assets, or is that something one could do independently?
Any chance you like the tax idea? Can a DAO just pay in the revenue required? Can a whale?
The UI team is working on generalized boosted pool support but there’s no ETA for when this will be completed. Creating a pool with yield bearing tokens (with the new factories) can be done by anyone, all that’s needed is a rate provider for each yield bearing token.
The tax idea feels like a gimmick to me and not a long term recipe for growth. Do you think DAO’s having to pay taxes to us is more appealing than operating under the proposed framework? Why would humpy pay taxes to us exactly and why would we want that?
Not really. I also agree it’s a shortcut that gets around the building, which is I think why most of us are here. The point is really that my plan is to go work with a bunch of DAOs to figure out how to engage in the balancer ecosystem, grow their liquidty, grow their token, and grow balancer and graviAURA.
In order to do that, there needs to be some way to scale in a sensible way. At 2%, that looks really tricky to me. This whole framework is kinda built on the premise that most of the money comes from rebasing tokens at rest, and for a lowcap token to scale in a way that really works to get over that 50 million hump, they are likely to need to pay in some revenue other than swap fees, or charge 1% which doesn’t tend to result in a robust, liquid token in the long run for the most part (BAL is kind of an exception, but also has a ton of lower fee liquidty and didn’t get to where it was at on 1% swap fees).
The issue is, that if this governance were to go into place tomorrow, we were to create a new wib(tokenX) product that rebased up based on treasury emissions(maybe only when in the balancer vault), and then offered that along with boosted pools as a way to work well within the system. It seems like it is unclear if we would be able to use it.
Again at 5% that hump isn’t so bad, but the way this proposal is structured at 2%, the thing for a builder to do is -reluctantly build around it, and Balancer isn’t actually ready to support that.
In the meantime, maybe a tax is a good work-around?
Aura proves that revenue other than swap fees is not necessary for a small cap token to justify an uncapped gauge. All the DAO’s you’re working with, if their liquidity generates protocol revenue they’ll have no trouble getting an uncapped gauge. If their liquidity does not do that, why do we need it?
To allow for innovation to flourish in a ve ecosystem, and builders to interact with it, pay into it, and create momentum.
I actually thing the 1% swap fee is quite bad for AURA at the moment, and it’s it’ll do a lot better/have a lot more volume once there are cheaper sources of decent liquidty, but at this point I don’t think there is anyway to prove that one way or another. I know @Mr_Po has done a lot of research into this.
Maybe the point here is to leave a bit of space for other ideas and points of view. Maybe you don’t need to see why everything is needed for it to be worth trying/having a shot.
What we do need to do is stop things from being way out of balance.
Yeah but if you build something based on that, you’re going to hit some hump at like 30-50 million I think that will be hard to surpass. This is more of a gut feeling than a well modeled thing. Again, I’ll try to model it out a bit more next week.
It would also be nice to get the point of view of some other, respected, lower mcap tokens building on top of the balancer ecosystem like Redacted and Aura.
There’s quite a bit to unpack in this thread, but one thing I wanted to hone in on is that the focus on market cap is a bit counterintuitive. Balancer has found clear product market fit with its 80/20 pools - if you assume these continue to be prioritized pairs for projects, it seems circular to gate-keep liquidity as a function of market cap. The two concepts are inextricably linked. It becomes further complicated if you consider that bribes could come to represent a more sophisticated version of buyback and burn value accrual models - in such a scenario, the Balancer DAO (i.e. veBAL stakers) stands to benefit from non-trading fee income. Of course, it’s more likely than not that a < 50M asset wouldn’t have any meaningful protocol revenues, but it’s still taking other sources of bribes like treasuries or partner projects off the table.
TLDR: Taking a backward-looking approach when Balancer PMF to date has largely been on liquidity for venture-grade assets is an overcorrection. This becomes even more apparent when ignoring the wstETH-ETH (to be unwound post-merge) and veBAL pools. I think a universal cap for all gauges would be more constructive, or at the very least, less susceptible to the shortcomings of central planning.
And as I mentioned in a previous thread, introducing these types of restrictions prior to it being straightforward for a project to launch a boosted pool of their own is rather frustrating, especially if you assume that trading fee tiers will continue to compress over time.
There have already been extensive discussions around this proposal which I think is awesome. Our community cares and we all want to build a great DEX ecosystem.
For me it boils down to one main question: how can we create a system where we utilize emissions in the most efficient manner, while attracting useful liquidity and most importantly fund our expensive SPs? - I think this proposal is a step in the right direction. I understand the Badger guys don’t really like it but we need to focus on a healthy ecosystem. There will never be a ace of all spades solution - we need to make compromises and one of them is to make sure we never end up in a situation again as we are right now: being taken hostage by useless gauges / liquidity. We brought it to ourselves as the gauges were voted in. Lessons learned!
I don’t love it and think some of the points above are quite valid, but I think we need to move on and do something and I don’t dislike it either. I just think it needs to change a little bit. Isn’t a 5% cap for low mcap coins a compromise? If the issue is to prevent hostage taking, 5% hardly seems a serious hostage scenario. Where did 2% come from and why is it so much better? Everything else with this BIP comes with quite a bit of good analysis.
As a SMOL individual user my primary concern is that the veBAL system is being modified materially from when I bought and max locked BAL believing I understood how the system was going to work.
I have 263 days until my unlock, I bought BAL at prices quite a bit higher from where it sits now and we are talking about shifting the system to something different than what it was.
I understand the points the balancer maxi group are making but I’m concerned that the tweaking of the system which was only recently implemented will further lead to unintended consequences that will not lead to ecosystem growth or increased revenues. Which will lead to further discussions of tweaking the system and soon we are to the point where investment thesis’ made 100 days ago are invalidated.
If mechanical changes to how veBAL is going to operate continue to pass governance I’d appreciate the DAO consider giving everyone who locked long term an opportunity to get out if they want. After all, we are talking about changing the ecosystem operating parameters for which the investments were made upon.
I’m not sure yet I’d leave but the “compromise” I see in a scenario where the very basic functions of how the veBAL system operates continues to change would be to let the people who made year long commitments to the system they signed up for to walk away when changes to how it works are passed.
The fundamental disagreement is the belief that bribes are as valuable as protocol revenue.
This is spot on.
My idea of what’s good for Balancer is based on what’s good for veBAL and vlAURA holders.
And getting a higher yield for the amount of emissions spent is on the top of that list.
The Curve ecosystem with a more mature bribe market is a clear example of that, and there has been no indication of it lacking longevity.
We cannot rely on the often irrational decisions of 3rd party projects to bribe or not.
Can you give an example of an irrational decision by bribers? The only one that comes to my mind is when Convex bribers were bribing more than $1 for $1 worth of emissions, but in no way was that a bad thing for Convex & Curve.
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From the governance standpoint, the elephant in the room is that the proposal effectively disenfranchises veBAL and vlAURA holders from voting freely, and gauge rewards are the main thing they vote on.
Imagine you are a political party with 30% voting power in the Parliament, and there is a vote that limits your voting power to 2% on a range of matters.
Practically, the same thing could be achieved by proposing to ban the x, y, z addresses from gauge weight voting because most voters don’t like how they vote.
But that would probably leave a different taste in people’s mouths because it would be more apparent as compromising the governance.
Still, people don’t like how one voter votes and the proposal would result in this voter not being able to vote how they want within the previously established governance system.
Except in this case it wouldn’t be just one voter.
It would be all current and future veBAL and vlAURA holders that would have their voting power censored.
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The runway considerations could be solved in a number of other ways without modifying the gauge votes:
The easiest thing to do is to pay contributors in BAL
The core pool bribes could be posted in BAL 1:1, and the Stablecoins could feed the runway
The call options could be settled differently, i.e. sold at the strike price above the current price for Stablecoins