[BIP-93] Enable BADGER/rETH 50/50 Gauge [Ethereum] w/10% emissions cap

BAL Gauges
1

Gauge Proposal Template:

Summary:
This proposal is to add a gauge with a 10% emissions cap for the BADGER/rETH 50/50 Core Pool. This would enter as a core pool under BIP-19, meaning Balancer’s protocol fees earned on this pool would be returned as voting incentives on it.

References/Useful links:

Protocol Description:

BadgerDAO is a well established DAO building the infrastructure for Bitcoin in DeFi. Badger Vaults currently have over $80m in TVL as well with more TVL spread across DeFi in Badger created liquidity. Badger also has ibBTC, the number 5 Bitcoin synthetic in defi. BADGER is the governance token of BadgerDAO which allows for users to vote on protocol changes and initiatives of the DAO. Holding BADGER allows users to receive boosted emissions on deposits within the Badger Vaults ecosystem.

Price History: $BADGER, Price History for BADGER can be found on coingecko

Motivation:

Badger would like to create liquidity with a BADGER / ETH pairing. This gauge will provide a yielding opportunity for BADGER holders who want to pair with ETH. It will also provide more efficient liquidity that will increase Balancer trading volumes and fees because of arbitrage opportunities between this gauge and the BADGER/wBTC gauge. Also, Balancer and BADGER LPs will earn the rETH staking rewards from the pool.

Badger is a supporter of, and believer in, censorship resistance. We believe that the Rocketpool model of decentralized, permissionless node operations and staking are the future of privacy and security. It is for this reason that we selected rETH for pairing in this LP.

Incentivization of the BADGER/rETH 50/50 Pool will attract meaningful amounts of liquidity to the Balancer ecosystem. We’re interested in having a diverse set of exchanges which support the BADGER token liquidity and giving Badger supporters many opportunities to earn fees and yield on their tokens. Balancer is our preferred DEX partner for this pair.

Specifications:

  1. Governance:
  • Proposal: Any member of the community can propose improvements to governance or tokenomics in our Discord
  • Council: Badger has a community elected governance council who helps community members refine their proposals. This includes seeking broad community feedback through a Discord RFF process
  • Forum Signaling and Snapshot: The proposal is posted on the Badger Forum when it is well formed, technical viability has been assessed and suitable alternatives or variations have been identified. After the community has provided feedback on the forum the proposal is updated, if needed, and a decision is made to take the proposal to a snapshot vote.
  • BadgerDAO has a hierarchy of different multisig accounts that handle operations within the DAO. These have specific use cases and are outlined in detail in the repo linked here: Badger Multisigs. The highest risk operations are controlled by a timelock address which needs to be triggered and has a 2 day time delay to perform any actions.

  1. Oracles: 2. Badger does not rely on any external oracles

  2. Audits:
    Audits have been performed by multiple top tier audit agencies. Web2 has been fully audited and reviewed by Halborn and we have an ongoing relationship with Quantstamp and code4rena. Badger Audits can be found on badger.com here: Security & Audits

  3. Centralization vectors:

  • Badger does use upgradeable contracts for many of the products we offer, though these are protected by a 2 day time lock for prevention of issues.
  • Our API and frontend are hosted by centralized entities and we are releasing an IPFS hosted access point titled “Chadger” that is fully permissionless.
  • BadgerDAO has a hierarchy of different multisig accounts handling operations within the DAO. These have specific use cases and are outlined in detail here: Badger Multisigs
  • Our DeFi pools do not liquidate users and so there are no liquidation risk vectors.
  1. Market History:
  • The BADGER token has been actively trading since December 2020. Price movements are largely correlated to the price of BTC and to the overall crypto market cycles.
  • BADGER currently trades on Balancer and Curve in a BADGER+BTC pair as well as large positions in Univ V2, V3
  • The Balancer pair has a TVL $7m and Curve has a TVL of $2.7m.
  • Volume regularly approaches 1% / day.
  • Comparable pairs have had >$1m daily average volume during this time across Uni v2/3 and Sushi. We believe this gauge will bring consistent volume and fees to Balancer.
  • Badger has been actively trading since December 2020. Badger valuation has moved in step with the markets, bear and bull.
  • Pool: Balancer Pool
  • Gauge w/10% emissions cap: 0xb32Ae42524d38be7E7eD9E02b5F9330fCEf07f3F
  1. Value:
    This pool will be the primary source of liquidity for BADGER paired with ETH. It will also provide arbitrage trading with the BADGER/wBTC pool. Historically, BADGER pools generate reliable volume and consistent fees.
10 Likes
2

Updated with the gauge rather than pool address

3

Thank you for the proposal and I’m happy to see Badger’s continued activity in the ecosystem!

If approved this would be the third Badger gauge which is excessive in my view. I also think an uncapped gauge for BADGER is too risky - if it leads to another emissions blackhole we are moving backward as an ecosystem, not forward.

I cannot support this proposal in its current form. As a compromise, I think a proposal for BADGER/rETH with a 10% emissions cap combined with killing the gauges for the two existing Badger pools (BADGER/wBTC and wBTC/DIGG/graviAURA) would be reasonable. This increases the total emissions Badger can vote/bribe for while ensuring Balancer does not support three Badger gauges and we avoid a possible emissions blackhole.

cheers

1 Like
4

The Badger team will take time early next week to evaluate this proposal. While these gauges all include Badger tokens, we want to consider how the proposal above will be perceived by the impacted token holders and the broader community.

For example, we did not bring forth the DIGG gauge, it was done by a community member passionate about both DIGG and graviAURA. Yields come from AURA token holders who are locked in gravi or from independent participants and it stopped being a black-hole (never our goal) when the 2% cap was implemented. This gauge currently received less than 1% of votes.

We would like to understand the logic behind capping BADGER/rETH at 10% since the gauge score is 11+, well above the level set by Balancer for a cap. And also, why should BADGER/wBTC not be allowed to co-exist with an rETH pairing?

Finally, is there a precedent for this proposal, or is it precedent setting for future gauges?

5

Logic is we already proved with BADGER/wBTC that Badger cannot scale when 30%+ of our emissions are directed to it. Why would we open the door for such a thing to happen again? Run the numbers between COMP and that pool and it will become obvious we’re in a far better position now than we were before BIP-57. Give it some time and think about it.

There’s no reason I see Badger needs two/three gauges. If you have some reasons feel free to present them.

There is a precedent for 10% cap since veBAL is capped at 10%. But having a precedent is not really needed. Any cap that voters desire can be easily done. The framework was a guideline. There are positive benefits to BADGER/rETH 50/50 from Balancer’s perspective, thus why I suggested 10% since that seems like a positive benefit from your perspective to me. Just trying to find a way for all involved to move forward amicably.

1 Like
6

Really happy to see this proposal and hope this is the start of DAOs picking rETH as the trading pair by themselves

5 Likes
7

I don’t understand why the DIGG/WBTC/graviAURA pool is considered a third BADGER pool yet auraBAL/ETH/graviAURA isn’t considered a fourth?

DIGG != BADGER just like graviAURA != BADGER

Sure all three of these are tokens created by BADGER DAO, but I don’t understand why this BADGER/rETH gauge would be traded off against the DIGG pool.

I do think it makes sense to consider BADGER/WBTC being traded off against BADGER/rETH as they’re both about BADGER liquidity.

My thoughts (as a Badger & Balancer fan) are that the main appeal of LPing Balancer’s pools vs. Curve or Uniswaps BADGER/WBTC pools is the 80/20 nature of the current Balancer pool and the earnings potential of the other half with an rETH pairing. An 80/20 BADGER rETH pool would potentially be interesting, although that means less income from rETH.

Ultimately, since this would be the main pairing of BADGER with ETH across DeFi that should take precedence over the WBTC gauge if necessary. Of course I would love to see both but understand the desire to limit BAL emissions per token/project.

6 Likes
8

I think those two pools were highlighted because of the low liquidity/volume tokens associated to both, DIGG and BADGER respectively and the gauge proposal was initiated by the Badger DAO community. You say DIGG != BADGER but both are Badger DAO products and the market profiles are similar. To me I generally feel okay to keep the other two pools out there since they are capped, people can vote for them if they want.

We do have some precedence here with with an uncapped BADGER pool that had high emissions and brought little in return to the protocol. Is there a specific reason why you are not OK with a 10% cap or something in that range? Do you think a BADGER/rETH pool will generate sufficient returns to justify 20 to 30% of protocol emissions? It would be great to see some analysis that supports that scenario.

3 Likes
9

I’d like to thank everybody for the feedback so far. Badger understands that caps can be appropriate and healthy, and we’re committed to being an active and supportive member of the Balancer ecosystem.

Blackholing was never our intention with any of the gauges centered on our tokens. Still, they have been a vector for abuse in the past. Caps put on the BADGER/wBTC and wBTC/DIGG/graviAURA gauges had the desired effect. Vote weight is no longer being abused on these pools and they now receive a more reasonable portion of the vote weight.

The BADGER/rETH gauge poses another possible target for vote weight abuse. To avoid this risk, we can accept a 10% voluntary cap.

80/20 pools (BADGER/wBTC) are unique to the Balancer ecosystem. We cannot easily replicate the utility of this pool elsewhere. Also, Badger made investments on top of both of the existing pools. They have been integrated into our technology stack and provide utility for our users. They also incentivize locking of BAL and AURA.

Because of the investments we’ve made, because they provide utility for our users and, since they are not being abused, we feel it is reasonable to ask that they be left in place.

12 Likes
10

I’ve updated the OP to include the gauge with 10% emissions cap. Governance Council will review this for a vote starting on Thursday per usual. Cheers

5 Likes