I donât fully understand this argument that Tetu keeps making based on 2 things.
1: Tetuâs whitelist was approved around 1 week after Aura back in May. Since that time, a dedicated and focused team of AURA contributors have been working to apply the already proven âconvex patchâ to veBAL. Tetu has had all the time that AURA has had to exist under the same rules, so the arguments about how AURA has an unfair advanatge donât carry so much weight with me.
2: Balancers goal, more than creating a fair breeding ground for wrappers, should be to create a healthy and growing ecosystem for all stakeholders. The AURA tokenomics, based on learnings from Convex, seek to create/add more value in all directions. Aura staking yields are high not so much because there are some yields on stableswap (thatâs to provide liquidity), but because takes fees from âfarmsâ offered to depositors that share the boost of veBAL and offer higher yields than depositing alone. Further, the AURA token is being slowly but consistently emitted, in a way that has added substantial additional yields to all balancer gauges for many months and shall continue to do so for many many more.
At least for now, everyone can make more money on Balancer because AURA exists and most of the value paid out to auraBAL HODLers comes from a 25% fee taken on that extra value being created. Can that be said for Tetu? I donât think it can be yet, but I do see a lot of talented and energised people working to get there and am excited to see what comes out.
Tetu is in a tricky situation (through not fault of itâs own), whereby the cross-chain boost that was supposed to be in place doesnât work, so thereâs not really a good way to do much on polygon or other sidechains with veBAL other than allow for passthrough voting (which should respect the principals of locking more than it does IMO) and some sort of yields obtained from selling votes. We are all waiting for crosschain boosties gauges, it will be a glorious day, and when those exist perhaps Tetu will find new and amazing ways to add economic value to the ecosystem and bring in new DAOS and users from the polygon space.
For now though, I fail to see how Tetu is bringing tons of value to the Balancer ecosystem. In order for the relationship between Tetu and Balancer to be positive and long lasting (and I hope it is), conversations about the interaction between Tokenomics, The AMM, and Balancer need to shift towards builders thinking about how to create new value in the ecosystem, not about how to most efficiently farm rewards while minimising IL (this tends to also mean minimising trading or the potential to trade). I see a ton of potential here, and hope that everyone can remain focused on working together to build cool stuff.
The thing about liquid wrappers is that they also come with governance rights. As a result, depending on how those governance rights are used/bestowed they can be quite a centralizing force. Further, if the main way that a wrapper makes money is by voting for itâ own LP, it creates a blackhole situation where the most efficient way to earn yield on BAL is to deposit into the LP that votes 100% for itself. In this situation, you have perfect allocation of rewards to HODLers, in that deposits in the LP get 100% of the rewards being generated paid back to them (perhaps less some fees). This also means that no BAL is flowing to âthose pesky LPsâ in the AMM seeking to create liquidty for anything else 
Balancer is an AMM, the goal of Balancer is to be a place where people come to trade their tokens, either through swapping or by putting them in liquidty pools that trade on their own. BalancerDAO makes fees based on this trading actively, and now also the management of upward rebasing assets at rest in liquidity pools. If all the rewards are being paid out to support BAL LP of some sort (veBAL, auraBAL, tetuBAL) then the entire system just folds in on itself and becomes nothing but the most basic and pointless of Ponzis. Itâs for this reason that there is a cap on veBAL returns.
The veCRV(veBAL) contract/setups donât solve all problems or work for all entities in all usecases. For this reason there is a lot of room to innovate, and wrapping locked governance and boosties (and finding healthy ways to redirect them) is one of the main ways this can happen. That being said, most of the value of a wrapper should come from the value it creates, not from the fact that itâs voting on itâs own yields.
The goal of gauges for wrappers should be to create sufficient liquidity for people to trade at decent volumes, not to make a given wrapper economically viable. We want DAOs to buy and lock governance so they can vote on their pools, bring their users/community to Balancer, and participate in the entire ecosystem generating revenue barring flows for the DAO.
Agered, but again, the battle is to create liquidity for your new stablecoin or gov token, not to build the best blackhole to suck up all the BAL emissions.
Good choice. Me too! Get some TETU also if you wanna have the complete âveBAL + frens indexâ
Thereâs 3 wrappers now (auraBAL, tetuBAL, sdBAL). If they all got 10% of veBAL each and then veBAL also got 10% of veBAL, 40% of all emissions would just be blackholing back into Balancer without supporting/encouraging any external utilisation of Balancer. veBAL or a single wrapper taking 10% of the vote seems fine, but I think 40% is too much. Because, from a BAL farming perspective, the veBAL blackholes described above are more capitally efficient than other forms of farming, as soon as one DAO starts to max out their veBAL stableswap, it creates strong competitive pressures for others to do the same. I donât think thatâs the arms race we want to define the next phase of Balancer Ecosystem Development.
What do you think the âright numberâ is? What would you suggest? To me more than 20% of emissions going towards veBAL (veBAL itself + wrappers) seems unlikely to result in positive/healthy growth in the Balancer ecosystem, but itâs just a gut feeling based on a lot of experience working with these kinds of systems.
Iâd love to see veBAL also capped at 5% of emissions. Based on the fact that sdBAL is smol and seems to get less than 1% of veBAL voting for its stableswap, maybe it would make sense to set the limits at 7.5% per wrapper with an agreement to consider reducing the per wrapper limit further if/when more than 15%(or whatever number the community thinks is best) starts voting for wrappers + veBAL.
@Bobbay_StableLab as the author of this BIP, may I suggest that you consider running the snapshot with a few options about what the max cap per wrapper should be. Maybe 5%, 7,5% and 10% could be options. There doesnât seem to be a lot of objection to the concept, and minimal concerns so far about the 15% cap across all wrappers, so maybe leave that there and use it as a reason to come back and reassess if too much BAL is getting sucked into veBAL wrapper blackholes.
(Canât speak for others of course, lol)