# [BIP-XXX] BAL Tokenomics Revamp: ALTERNATIVE PROPOSAL

[sagix]

[BIP-XXX] BAL Tokenomics Reform: Redirect Emissions, Preserve Discovery

Summary

This proposal is an alternative to the companion BAL Tokenomics Revamp.

It agrees with the diagnosis — circular economics on legacy pools are wasteful, the Treasury needs more revenue, and the veBAL fee split is unsustainable.
It disagrees with the prescription of eliminating emissions entirely.

Instead of halting emissions, this proposal redirects them. The emission rate stays the same.
The destination changes. Legacy pools, V2 pools, and the 80/20 BAL/WETH gauge lose eligibility.
Only V3 pools with >50% ERC-4626 yield-bearing composition qualify. veBAL holders retain voting power to direct emissions across eligible pools.
The circular economics die. V3’s discovery mechanism lives.

The core principle: emissions are not an incentive program.
They are V3’s R&D funding layer — the mechanism through which unknown pool architectures get tested by independent builders at no cost to the DAO Treasury.
Removing them doesn’t cut waste. It does NOT reduce the DAO Treasury ongoing expenses.
It cuts the protocol’s ability to discover what V3 can do.

For a protocol with a $10M market cap, a 5.8% “growth budget” with ZERO cost to the DAO Treasury to find a new product-market fit is a standard and arguably necessary investment

---

Motivation

Where We Agree

The Tokenomics Revamp correctly identifies several problems:

• Circular economics. BAL emissions directed to the 80/20 BAL/WETH pool and legacy V2 pools subsidize stagnant liquidity that generates minimal fee revenue. BAL emissions flowing to BAL holders is the most circular economy in the system.
• Treasury revenue gap. The DAO captures only ~$290K/year (17.5% of protocol fees) against a ~$2.87M operating budget. That is not sustainable.
• Governance capture. Meta-governance protocols and large holders have concentrated veBAL voting power in ways that are unrepresentative of the broader community.
• veBAL fee share. veBAL holders receiving 75% of protocol fees while the Treasury runs a $2.6M deficit is backwards.

Where We Disagree

The Revamp proposes eliminating emissions entirely. This removes the only permissionless, scalable mechanism through which external builders can bootstrap new infrastructure on V3.

The causality problem: The Revamp assumes volume creates routing and routing creates success. The reality is reversed. Routing depth doesn’t create itself. It emerges from seeded liquidity structures. Emissions seed the liquidity. Liquidity enables routing. Routing generates volume. Volume generates fees. Without the first step, the chain never starts.

The discovery problem: Balancer hasn’t yet realized the routing advantage V3 enables. V3 supports multi-asset weighted pools, ERC-4626 native yield, hooks, and capital-efficient stable pool designs that no competitor can replicate. But that routing layer is underdeveloped — not because the technology doesn’t work, but because not enough teams have had the tools to build on it. Eliminating emissions freezes the routing layer in its current underdeveloped state.

The competitive problem: Curve maintains CRV emissions and veCRV gauge voting. Aerodrome maintains AERO emissions on Base. Eliminating Balancer’s emissions is unilateral disarmament in a competitive market. A builder evaluating where to deploy new liquidity infrastructure faces a simple choice: build on a protocol with no bootstrapping mechanism, or build on one that has one.

The time-to-viability problem: Without emissions, new pools launch at 0% BAL yield. They may eventually attract organic liquidity — but “eventually” kills builders. A pool displaying 0% rewards while competitors show emission-boosted yields will not attract LPs regardless of architectural superiority. Emissions compress time-to-viability from months to days. That is the difference between a builder choosing Balancer and choosing somewhere else.

The valuation problem: BAL trades at a MC/TVL of 0.067× — 7× below the next cheapest comparable (Cetus at 0.5×). At current prices, 3.78M BAL/year in emissions costs ~$580K. At Cetus multiples, the same emissions would be worth ~$4.3M/year. The emissions aren’t expensive. They’re cheap because BAL is mispriced. What BAL needs is not fewer emissions — it’s a mechanism to discover V3’s routing potential and generate the volume that drives re-rating.

---

Specification

1. Redirect Emissions to V3 ERC-4626 Pools Only

Halt emissions to:

• The 80/20 BAL/WETH pool (veBAL gauge)
• All V2 pools
• All V3 pools with <50% ERC-4626 yield-bearing token composition
• All pools below $10K TVL for more than 90 consecutive days

Continue emissions to:

• V3 pools with =50% ERC-4626 yield-bearing composition
• V3 pools get a 120 day grace period from the approval of this proposal or their creation, whatever the later is.
• After that the V3 pools need to be above $10K TVL to be eligible for emissions.

Rationale: This ensures emissions flow exclusively to architecturally sound pools that generate yield fee revenue for the protocol (Balancer earns 10% on all ERC-4626 yield accrual regardless of swap volume). Legacy V2 pools, governance staking, and single-pair commodity pools are excluded. The circular economics die. The discovery mechanism for V3-native infrastructure survives.

Emission rate: Unchanged from current schedule. The cost of emissions at current BAL prices (~$580K/year) is modest and treasury-neutral (inflationary, not extractive). The 5.8% annual dilution is within normal DeFi parameters.

2. Route 100% of Protocol Fees to DAO Treasury

Identical to the Revamp proposal. All protocol fees — V2 swap and yield fees, V3 swap fees, V3 yield fees, LBP fees — route to a single Treasury destination. The current split where veBAL holders receive 75% of fees is eliminated.

Fee Type	Current	Proposed
Protocol fee distribution	Split: veBAL 75% / DAO 17.5% / other	100% to DAO Treasury
V3 swap fee protocol share	50%	25% (LPs keep 60%, 15% to voters, Aura, Tetu, StakeDao vebal etc)
V2 swap fees	50%	50% (unchanged, V2 sunsetting)
Yield fees (ERC-4626)	10%	10% (unchanged)

Estimated DAO revenue: ~$1.22M/year (same as Revamp estimate).

3. Reform Gauge Eligibility with Performance Criteria

Gauge-eligible pools must meet the following criteria, evaluated quarterly:

Criterion	Requirement
Protocol version	V3 only
ERC-4626 composition	=>50% yield-bearing tokens by weight
Minimum TVL	$10K (grace period: 90 days for new pools)
Organic activity	Minimum 10 unique swap transactions per quarter OR measurable TVL growth

Pools that fail to meet these criteria for two consecutive quarters lose gauge eligibility. Emissions redirect to remaining eligible pools automatically.

Rationale: This is self-correcting. Unproductive pools lose their gauge naturally. Productive pools retain the bootstrapping tool. The system filters for quality without requiring subjective BD decisions.

4. Sunset veBAL Fee Share / Retain veBAL Voting

End veBAL fee distributions upon vote passage. veBAL holders no longer receive protocol fee share or direct economic benefit from holding veBAL.

Retain veBAL gauge voting for directing emissions across eligible V3 pools. veBAL remains the governance mechanism for emission allocation. Lock mechanics unchanged.

Rationale: The fee share is the unsustainable component due to 75% of fees flowing to veBAL while the Treasury runs a deficit. The voting mechanism is the valuable component: it enables permissionless emission direction by external builders. This proposal separates the two: kills the fee share, keeps the voting.

5. Reform Aura/StakeDao/Tetu Compatibility

The governance capture problem is real. The solution is better rules, not elimination of the industry accepted mechanism.

• voting restricted to V3 ERC-4626 eligible pools only
• Individual voter influence capped at 20% of total emissions per pool (prevents single-entity gauge monopoly)
• tetuBAL, sdBAL, auraBAL, veBAL positions continues to participate in gauge voting under the reformed criteria

Rationale: Aura/StakeDao/Tetu were actively supported by Balancer as ecosystem partners, invested capital, made concessions.
It serves as a governance amplifier that makes Balancer accessible to builders below whale scale. Destroying its economic function concentrates governance in the hands of the largest BAL holders.
The capture problem is solved by constraining where votes can be directed, not by removing participation.

6. Discontinue Balancer Alliance Programme

Identical to the Revamp proposal. The Alliance programme is discontinued. Fee-sharing agreements are terminated. Partner alignment is achieved through competitive LP fee economics.

7. BAL Buyback — Modified

The Revamp proposes a $3.6M buyback at NAV (~$0.16), capped at 35% of Treasury.

Modification: Cap the buyback at $1.8M (instead of $3.6M). Allocate the remaining $1.8M to a V3 Discovery Fund:

Allocation	Amount	Purpose
BAL buyback at NAV	$1.8M	Voluntary exit liquidity for holders
V3 Discovery Fund	$1.8M	Seed capital for 5-10 V3 ERC-4626 pools at $100-200K each

V3 Discovery Fund mechanics:

• Treasury seeds eligible V3 pools with stablecoin liquidity
• 6-month evaluation period
• Pools that generate measurable routing volume and fees retain the capital
• Pools that don’t, have capital withdrawn and returned to Treasury
• Principal is recoverable — this is not a grant, it is a controlled experiment

Rationale: The original Revamp allocates $500K to compensate departing veBAL holders and $3.6M to buyback.
That’s $4.1M producing exits. This modification splits the allocation: $1.8M for exits (still generous), $1.8M for discovery (recoverable).
The proposed approach produces only exits. The other produces exits AND data.

8. Compensation

ELIMINATE veBAL holder compensation: $500K extra cost that is not necessary with this proposal.

---

Expected Impact

What Dies (Same as Revamp)

• BAL emissions to the 80/20 pool
• BAL emissions to V2 pools
• BAL emissions to non-ERC-4626 pools
• veBAL fee share (75% of protocol fees)
• Balancer Alliance programme
• Circular bribe economics on legacy gauges

What Survives (Different from Revamp)

• BAL emissions to V3 ERC-4626 pools (discovery mechanism)
• veBAL gauge voting (permissionless emission direction)
• Aura compatibility (reformed, constrained to V3)
• External builder pathway (time-to-viability compression)

Financial Comparison

Metric	Current	Revamp	This Proposal
DAO fee revenue	~$290K/yr	~$1.22M/yr	~$1.22M/yr
Operating budget	~$2.87M/yr	$1.9M/yr	$1.9M/yr
Annual deficit	~$2.6M	~$700K	~$700K
BAL emissions	~3.78M BAL/yr to all pools	Zero	~3.78M BAL/yr to V3 ERC-4626 only
Emission cost (at $0.15)	~$580K (dilutive)	$0	~$580K (dilutive, treasury-neutral)
Buyback allocation	N/A	$3.6M	$1.8M
Discovery fund	N/A	$0	$1.8M (recoverable, upside if markets improve)
Integrator compensation	N/A	$0	$0
Post-allocation Treasury	N/A	~$6.2M	~$8.5M (upside on $1.8 in pools)
Runway (neutral)	<4 years	~9 years	~9 years

The runway is identical because emissions are inflationary (dilutive), not extractive (they don’t draw from the Treasury).
The $1.8M reallocation from buyback to discovery fund. No need to spend one whole year of emissions in integrator compensation.

---

Why This Is Not the Status Quo

This proposal eliminates:

• Circular emissions to BAL holders
• Legacy V2 pool subsidies
• veBAL fee share that starves the Treasury
• Alliance program
• Unconstrained gauge voting to any pool

This proposal preserves:

• Permissionless emission direction to V3-native pools
• External builder pathway with time-to-viability compression
• Aura/StakeDAO/Tetu compatibility (reformed)
• Discovery mechanism for V3 routing potential

The old system was undirected subsidy. This is constrained exploration.

---

The Question for Voters

The Revamp maximizes survival time while minimizing the probability of discovering a new growth regime. This proposal offers the same financial sustainability — identical Treasury runway, identical fee capture, identical operating budget — while preserving the mechanism through which V3’s unrealized routing advantage can be discovered.

The cost of maintaining a constrained discovery mechanism is measurable and bounded (~$580K/year in dilution at current prices). The cost of removing it is not — because it is the set of pool designs, routing structures, and integrations that never get built.

“Balancer’s long term success depends entirely on the success of the protocols and products built on top of it.”
— Fernando Martinelli, 2021

This proposal ensures that external teams still have a reason — and a mechanism — to build.

---

Submitted by Sagix — sagix.io
Builder on Balancer V3

[sagix]

The original proposal assumes that a smaller team can manually bridge the growth gap through “strategic partnerships,” but as you noted, if manual BD were a scalable solution, we would have 18-20 Tier-1 partners by now, not three.

Here are the core points to reinforce the “Focus” model:

• The Partnership Fallacy: Relying on a “Core 12.5” team to manually source growth is wishful thinking. Human-led BD doesn’t scale; permissionless discovery does. Turning off emissions kills the only automated onboarding tool the protocol has.

• The “Zero-Cost” Reality: BAL emissions cost the DAO Treasury $0 in stables or ETH. Cutting them doesn’t extend the runway by a single day; it only shrinks the protocol’s footprint.

• Investing vs. Spending: A ~5.8% annual dilution is a standard R&D “growth budget.” Using it to force-multiply V3’s yield-bearing architecture (ERC-4626) is a high-leverage investment, not “wasteful spending.”

• Giving Partners a Job: Instead of a “slow death” for Aura and Tetu, this proposal gives them a specific, productive target: driving TVL into V3-native hubs. It transforms them from extractors into specialized growth agents.

• The “Museum” Risk: Without a mechanism for external builders to bootstrap, V3 risks becoming a technically perfect “Yield Museum”—impressive to look at, but economically stagnant.

Bottom line: The original BIP is a defensive liquidation. This alternative is an offensive pivot that preserves the “Small-world network” resilience of the protocol without touching the Treasury’s cash.

[Xeonus]

Hi @sagix really appreciate the effort you are putting into this counter-prop.

@sagix

tatuBAL, sdBAL, auraBAL, veBAL positions continues to participate in gauge voting under the reformed criteria

There is no “tatuBAL”. It’s tetuBAL, see one of their still active vaults here

@sagix

The cost of emissions at current BAL prices (~$580K/year) is modest and treasury-neutral (inflationary, not extractive)

I fully disagree with this. Main reason we are where we are. Our proposal outlines well why this is the case.

@sagix

Emissions seed the liquidity

We tried this for many years and it simply doesn’t work. We spent a lot of time revamping our fee model, introduce the core pool framework (which is the same as your ERC-4626 idea btw), add layers on top to end up with the same problem: emissions cause sell pressure. We need a sustainable product without emissions that attracts TVL. Simple as that.

Additional points:

• comparing us to Curve or Aerodrome is noble but not realistic. Curve has established several core revenue streams and never had the ve-capture dominance problem like we had. Aerodrome is the dominant DEX on Base but will face a similar fate in the future with their agressive emission schedule IMO. In other words, it is just a younger protocol but will run into the same liquidity and emission issues as any other older protocol relying on them. There are many examples ou there showcasing this.
• Comparing us to Cetus doesn’t make any sense to me. Could compare to any random project.
• Seeding v3 pools with “discovery funds”: same problem, different framing. Will not change the fact that we currently don’t have strong PMF and lost trust after the hacks and Immunefi report of reCLAMMs. Only upside I see is with re-introducing reCLAMMs but that needs a lot of work in terms of trust building with LPs.
• the whole framing of ERC-4626 is the same thing as we had with boosted / core pools but it didn’t really work. Incentives subsidized for high protocol fees. This counter-prop will not change the underlying fundamental problems the protocol faced with its current status quo.

Based on above statements, I don’t see any value-add from this counter-proposal. Thanks again for the effort though.

[sagix]

@Xeonus — we’re on the same side. I want BAL at $1B TVL. $10B. $100B.

On the Cetus comparison: it’s not about protocol similarity. It’s about what the market is telling us.

The FDV of any financial project, DeFi or TradFi, is a multiple of its productive base.

For AMMs, that’s TVL. FDV = multiple × TVL.

And FDV means fully diluted, all tokens, locked or not. It’s naive to think locked or unminted tokens don’t count. So emissions are a moot point here. Apple doesn’t list “free float market cap” on CNBC. A token is a token. A share is a share, even in diamond hands like Buffett’s or Tim Cook’s.

Have you noticed BAL token price didn’t move when the emission elimination was announced? The market already told us emissions aren’t the problem.

BAL’s multiple is 0.067×. That is a loud and clear market statement.

Cetus, a vanilla AMM fork with no hooks, no ERC-4626, no boosted pools, on a fading L1, trades at 0.5×. That’s 8× higher for objectively inferior technology. YES it makes no sense to compare the protocols tech. Yet, Cetus was exploited for $223M, still runs liquidity mining emissions. Cetus allocates 40% of total supply to community rewards and liquidity mining. They use a dual-token model (CETUS + xCETUS) with active emission programm, and trades at 8× BAL’s multiple.

The emissions and the exploit are not what’s suppressing BAL. The absence of a credible growth path is.

The market isn’t comparing architectures. It’s pricing growth expectations.

A multiple of 0.067× is the market saying: this project is not expected to grow.

I’ve seen this before. Ridiculously low multiples. Altavista. Netscape. Yahoo. Pets.com. They’re either value traps or terminal values.

BAL is where it is because TVL came down. We know why. The question is: what drives TVL back up?

Only TVL increase turns this around. The multiple expands when the market sees growth. Growth comes from volume. Volume comes from routing. Routing comes from pools with depth. Pools get depth from LPs. LPs come for yield. At current BAL prices, emissions are the cheapest possible yield mechanism, $580K/year at zero Treasury cost.

Core pools didn’t fail because of the architecture. They failed because the exploit destroyed TVL and trust. Conflating a security failure with a mechanism failure is a logical error.

Also, you are conflating the old undirected system with my constrained version. The old system directed emissions everywhere. Mine restricts to V3 ERC-4626 only.

What is the alternative mechanism for TVL growth in the Revamp? That’s not rhetorical.

I genuinely want to know the plan. Because eliminating the cheapest growth tool at the moment of lowest valuation without a solid credible plan is throwing the towel without a fight. The market will smell that as sharks smell blood from a distance.

Note my proposal reduces DAO treasury spending.

Otherwise I have suggested a PMF vision multiple times already. You may not agree with it, but this revamp proposal is killing its chance before its birth.

We need a discovery mechanism specifically because PMF hasn’t been found. For a project without PMF, 4.8% emissions that have no impact on the DAO balance sheet is a must.

I’d rather have the protocol buying back and burning 5% of BAL annually from organic revenue.

That buyback will come but ONLY if PMF is found first.

The current proposal spends $3.6M on buybacks before PMF exists. That’s distributing the war chest before the war is won. Find PMF first. Let revenue fund the buyback. That’s the sustainable model not a treasury-funded exit for holders who’ve already given up

And apologies on “tatuBAL” corrected to tetuBAL. Sloppy on my part.

[sagix]

for the record.

No V3 multi-asset ERC-4626 pool has ever received directed emissions when combining 52% yield bearing tokens and the most traded tokens on eth in a constellation arrangement of 5 pools.

The experiment hasn’t failed.

It hasn’t happened.

[0xDanko]

The fundamental disagreement between the revamp and your alternative here misses the reality-based sustainability the protocol is currently facing, imo.

For a protocol with a $10M market cap, a 5.8% “growth budget” with ZERO cost to the DAO Treasury to find a new product-market fit is a standard and arguably necessary investment

You argue that BAL emissions are a cheap discovery tool ($580k/year). From an operational perspective, emissions are never free. They are a continuous dilution of every holder’s stake.

Balancer has been bootstrapping and in “discovery mode” for years through the veBAL and gauge system, but the reality is a protocol revenue of only ~$290k/year now. We are currently spending millions in diluted value to attract liquidity that doesn’t generate enough organic fees to cover our operating costs. Emissions were tested in various forms and hypothesis, you can’t say “is killing its chance before its birth”; BAL emissions were created for a bootstrapping phase that the hack has pushed us through. We need to move on. The market is signaling to us it now values lean, revenue-generating protocols over those that subsidize TVL with inflationary tokens.

Which brings us to the Aura highlighting the same structural fatigue. Removing even more from them doesn’t make any sense, their model won’t survive, and the goal is already to wind-down and deprecate their veBAL position anyway (22m tokens last time I checked). The circular economics of veBAL is out of gas, no point of keeping those systems on life support with redirected emissions, or creating a new token, etc… will only delay the inevitable.

We are choosing to pivot Balancer into a high-efficiency, programmable liquidity layer that wins on product superiority and real profits, rather than virtually boosted apy.

Your points are noted, but what we are proposing is the protocol’s continuity and the transition to a profitable entity we believe has already plenty of products and means it can find sustainability.

[sagix]

“we are choosing”? who is we? the community? are you assuming this forum and the vote process is a done deal?

I chose to believe that this is a DAO that fosters debate and will be able to find a better proposal.

@0xMaha asked me in the aura forum (in a post that has not been hidden there yet, as the other were) and you asked me to make it easy for you to address. So, here it is

I am talking about 9 specific questions.

1. my alternate proposal that @0xmaha response in the aura forum admits he failed to get familiar with after 4 days. Your response on the emissions and my proposal quick dismissal suggests perhaps my proposal still need further clarifications and debate before any vote

2. the failure to address the risks of unbudgeted regulatory costs on the runway time given the absurd treasury expenses to payout some while others are neglected.

3. the preferential treatment some vebal holders would get against others. Aura, tetu, stakedao, etc are all vebal holders and MUST be treated equally.

4. the potential fiduciary and due process negligence risks and concerns for the Treasury Council decision makers, as substantive questions on these impacts remain unaddressed. aggravated by the hiding of my posts in that AURA forum.

5. As for your emissions cutting misstep, as I posted on x reproduced here for your convenience https://x.com/sagixapothecary/status/2036940170151268545:

Supply-side shock: cut emissions, production issues, restricted access.

Demand-side shock: create utility, generate volume.

Misdiagnosis kills.

A supply-side fix for a demand-side problem is chemotherapy for a cold

Scarcity amplifies demand, it doesn’t create it.

Restricting something no one wants isn’t strategy.

It’s self-sabotage.

7. I argue that the emissions were planed a long time ago. You have held @belbix to a higher standard when you had him deploy an immutable smart contract for tetubal. Now, after years of unregulated operation on decentralization claims, a small group of a handful of people that controls the DAO, the multisig wallet, the forum and aura are doing just that. Posting a proposal for changing a smart contract ALONG with that programing already done.

8. where in the DAO Treasure balance sheet do the emissions go? I do NOT see that line

9. what is the plan and budget to address the regulatory scrutiny and MiCA / SEC process that WILL arise with the new arising structure? I laid it out and it remains unanswered other than name calling annoying and hallucination.

10. quantify the cost of losing credibility and potential civil exposure for breaching this explicit and misleading marketing campaing on the bal website front in light of the expedited approach of having the code done at the same time of the proposal and the rushed approach. **Note this ad has the reasonable expectation of smart contract ruling.**

    

happy to discuss specifics on the merits.

[0xDanko]

1. Yes, I agree. I quickly dismissed it because the premises were wrong, but that’s my opinion. Every community member is encouraged to have its own. More clarification is always good.
2. I’ll address it on point (9). The “absurd treasury expenses to payout some while others are neglected” is below (3)
3. “the preferential treatment some vebal holders would get against others” can you clarify what is the pref treatment you’re seeing? Afaik all veBAL can wind-down at the same time, and the buyback is not until 12-mo. The NAV price floor will apply to all and mitigate risks of arbitrage (35% of circulating supply: there’s no BAL liquidity for that without huge price movement). So I’m not sure what you are talking about here.
4. Are you taking Aura moderators and Balancer TC members as same people/protocol? This didn’t make much sense. The risks (or fiduciary duties) of mandates and DAO service providers are bounded by the DAO Standards (BIP-702)
5. There is not a question here.
6. Six was skipped.
7. I can’t speak for Tetu’s motivations to build a permalocked system, but these risks were disclosed in the original proposal. veBAL was not built this way. Check 2022’s Introducing veBAL tokenomics by Fernando.

It’s impossible to be at the same time predictable and upgradeable, so the trade-off chosen was that the system itself cannot be changed, but veBAL governance can choose to direct BAL inflation to a new system with a minimum 1-year delay. This is not expected to happen any time soon, but as things change hyper fast in this space, this system will likely not be the best option in say 5 years from now.

8. This doesn’t make sense either; that’s not how the DAO Treasury works and emissions are sent straight to liquidity providers. However: since the market is pricing BAL at NAV, we can say that every USDC spent, or BAL minted, has a direct effect on the token price. Essentially, the market is pricing BAL itself at $0, what’s valuable is the redemption against the Treasury assets (the buyback portion on the Revamp proposal).
9. Re: MiCA/US, Balancer DAO is not a US/EU company, nor is the Balancer Foundation and its subsidiaries. If your legal opinion is that this new tokenomics triggers higher regulatory concerns (veBAL vs. liquid BAL), you are asking a legitimate question despite heavily amplified budget estimates. The Cayman/BVI structure continues to offer governance and tax alignment. Clarity on TC-level versus DAO-level decision rights is needed and advised by our legal counsel, which was presented on [BIP-XXX] Operational Restructuring for Balancer. Basically: day-to-day operations and product development is mandated to OpCo service providers, and governance remains with BAL holders. I do agree resources are limited, but I gues your suggestion wouldn’t be to increase the laywer burn.
10. I have no idea what you are talking about “misleading marketing campaign” or “expedited approach of having code done at the same time of the proposal”? What?

I understand I’ve asked you for some clarifications to better address your concerns, and I’ll try to respond to all the pending (3, 4 and 10) to the best of my abilities if they are legit. But like I said, my goal is to push the bill forward with a healthy discussion. If this becomes just bashing nonsense, I will refrain from meaningless participation and let the community address the issues as they best see fit.

[sagix]

@0xDanko

• “the preferential treatment some vebal holders would get against others” can you clarify what is the pref treatment you’re seeing? Afaik all veBAL can wind-down at the same time, and the buyback is not until 12-mo. The NAV price floor will apply to all and mitigate risks of arbitrage (35% of circulating supply: there’s no BAL liquidity for that without huge price movement). So I’m not sure what you are talking about here.

From @0xMaha reply to your own post @0xDanko

@0xMaha

Consider accepting tetuBAL as part of the buyback, maybe at a further discount, given the BAL itself can’t be burned

maybe at a further discount?!?! and stakeDao? MUST address every vebal holder equally at the same rate.

@0xDanko

I can’t speak for Tetu’s motivations to build a permalocked system, but these risks were disclosed in the original proposal. veBAL was not built this way. Check 2022’s Introducing veBAL tokenomics by Fernando.

from tetus @belbix response to YOUR post:

When tetuBAL was approved, we were explicitly required to give up upgradeability and restrict our ability to exit veBAL positions as a condition of integration (see governance discussion: [Proposal] Allow Whitelist tetuBAL in Balancer VotingEscrow - #21 by solarcurve ). We accepted these constraints in good faith to align with the system.

0xDanko:

I have no idea what you are talking about “misleading marketing campaign”

Highly recommend you have a very good idea of what is being talked about.

Long-term veBAL holders locked under the reasonable expectation created by the smart-contract mechanics and years of “Earn passively on Balancer” marketing. The complete sunset of economic rights represents a material change to the original proposition with clear consequences and significant implications to the DAO, for locked capital, governance trust and fiduciary-like duties of decision-makers.

This is a significant and major civil risk for everyone voting for the original proposal.

These are not “bashing nonsense”. Please make an effort to respect fellow community members and adhere to the forum guidelines. Threads 7001 and 7005 are legitimate governance concerns.

Again, I welcome a substantive response rather than procedural deferrals.

The community records here are to be preserved.

[sagix]

@0xDanko

• Re: MiCA/US, Balancer DAO is not a US/EU company, nor is the Balancer Foundation and its subsidiaries. If your legal opinion is that this new tokenomics triggers higher regulatory concerns (veBAL vs. liquid BAL), you are asking a legitimate question despite heavily amplified budget estimates. The Cayman/BVI structure continues to offer governance and tax alignment. Clarity on TC-level versus DAO-level decision rights is needed and advised by our legal counsel, which was presented on [BIP-XXX] Operational Restructuring for Balancer. Basically: day-to-day operations and product development is mandated to OpCo service providers, and governance remains with BAL holders. I do agree resources are limited, but I gues your suggestion wouldn’t be to increase the laywer burn.

If the OpCo has too much “discretionary power” over the protocol’s direction or tokenomics, it weakens the argument that the token is decentralized, making it a “low-hanging fruit” for SEC enforcement or MiCA licensing requirements. The vebal holders only have voting power on what the OpCo decides is relevant, as per your own proposal

The proposal’s explicit grant of discretionary power to the Core Team / OpCo

[BIP-XXX] Operational Restructuring for Balancer

Authors: @danielmk, @0xDanko, @Xeonus, @mendesfabio, @Marcus Summary This proposal restructures Balancer’s operational model for long-term sustainability. It consolidates all operations under Balancer OpCo Limited as an agent of the DAO following the wind-down of Balancer Labs, right-sizes the team to 12.5 FTE, and establishes an annual operating budget of $1.9M, a 34% reduction from the ~$2.87M approved under BIP-873. Combined with the companion [BIP-XXX] BAL Tokenomics Revamp (which proposes…

(fee parameters, vendor selection, sprint priorities, partner negotiations) and the 5/7 Treasury Council multisig represents functional centralization, even if the Cayman/BVI legal wrapper remains.

Regulators increasingly assess “managerial efforts” and points of control rather than legal form alone. This structure, combined with the complete sunset of veBAL economic rights, raises legitimate questions about MiCA’s “fully decentralized” exemption and the Howey Test’s “common enterprise” prong

these questions remain unanswered in the current modeling.

The DAO is registered in Cayman/BVI, but

• the OpCo will have full decision power on what is subject to the vebal holders vote.
• the Opco operates, and solicits services in Europe and the US, as the attendance by the OpCo team in the EthCC in Cannes next week. Under MiCa, such physical presence, networking, promotion can be viewed as solicitation of crypto asset services within the EU, weakening the reverse solicitation exemption and increasing compliance obligations with cost implications not evaluated in current runway projections.

[0xDanko]

OK, for the sake of being practical, what is your suggestion for tetuBAL if Aura decides to sunset? Balancer v3 is not even deployed on Polygon (nor there was any discussion to do so). I read in your proposal we would be sending 15% of the fees to them as bribes? Please explain the value of this change further, because I don’t know if you are aware tetuBAL is actually captured by Humpy and has not generated any meaningful value for Balancer in all these years.

And re: operating budget, would that be a suggestion to edit that proposal to increase legal budget and/or refrain from event attendance in US/EU? I hear your concerns with regulatory, but the proposal doesn’t increase the risk profile and the issues already at hand faced by the entire DeFi industry. By any means “OpCo will have full decision power on what is subject to the vebal holders vote”, that’s simply NOT true. The mandate is given to run core protocol development, which is pretty standard across the entire industry.

[sagix]

@0xDanko thanks for responding.

I have no idea who controls what bal liquid token flavor on what blochain.

I am trying to find a compromise that works for everyone, increases the chance of turning the situation around and does not centralize the protocol while saving unnecessary DAO buyout costs and keeping the protocol decentralized as industry wide standard so activities can continue with no regulation scrutiny risks.

To clarify the 15% mechanism:

The 15% is not a payment from the DAO Treasury. It’s a share of fees that each non-V3/non-ERC-4626 pool generates for itself. 15% of what the pool produces goes to the BPT stakers that provide liquidity. 85% of those fees, on a per pool basis, goes to the DAO Treasury.

If the pool generates zero fees, 15% of zero is zero. The DAO gives up nothing AND saves the buyout costs.

This creates two tiers:

1. V3 pools on supported blockchains (and reCLAMM after the upgrade / rebranding, the 2 flagship products) with >=50% ERC-4626 + active volume: Eligible for BAL emissions. 85% of fees to DAO treasury, 15% of the BPT stakers. These are the growth pools the discovery mechanism bootstraps. I also suggested a grace period on TVL and trading volume metrics for new pools so they can bootstrap after their launch.

2. Everything else, regardless of blockchain: No emissions. ONLY 15% of their own fee generation goes to liquidity providers (staked BPT).

This incentivizes LP migration to V3 on the supported blockchains without abandoning existing infrastructure overnight. It’s self-funding the DAO never subsidizes it.

Also has the potential to increase flagship pool depth which is needed for solvers to route trades to balancer.

The 80/20 BAL/WETH pool and any other pool with wrappers on the vebal token get no emissions. The circular economics are dead regardless. I am aware the 8020 bal/weth gets no emissions already. These pools would get only the 15% of the fees that pool generates on their own. No fees, the DAO gives up no revenue.

This will incentivize voting AND liquidity provision on the flagship / growth pools.

Aura does not have to be sunset, as I believe their voters will be smart to provide liquidity and direct emissions to the flagship pools.

The core team’s own operational BIP lists exactly these two products as their growth path. In time everything will be the flagship pools.

We’re arguing about whether to fund the protocol’s own flagship products.

Bal growth strategy and my emission criteria are the same thing.

[sagix]

note where I am coming from…

https://x.com/DRF_hq/status/2036157213874528398?s=20

the reserve community actively announces yield opportunities. 41likes, 3.2k impressions. not overwhelming, I agree, but active defi users.

The goal is to have flagship V3 balancer pools at the top of that list.

at the top of defi llama yield ranking lists.

Visible to every yield-seeking LP in the ecosystem.

that’s the demand side we must address

by limiting emissions to the flagship pools, the concentrated focus of the emissions will increase the yield on the flagship product, the V3 pools, no emission dilution to old pools so that’s achievable.

Without emissions, Balancer pools show 0% and never appear on any leaderboard.

The communities that are actively looking for yield opportunities never discovers that V3 exists.

That’s the discovery mechanism in practice. Not theory. no DAO balance sheet line.

A leaderboard slot.

[sagix]

Also this is the other part of the demand

Deep Markets for a Safer Frankencoin: svZCHF Liquidity Infrastructure on...