Summary:
It is proposed that the voluntary 10% cap on the BADGER/rETH 50/50 core pool be removed in light of the truce agreed to by Balancer, Aura and the whale known as Humpy.
References/Useful links:
BIP93 Forum Post
BIP128 Peace Treaty Forum Post
BIP128 Peace Treaty Snapshot
Reasoning
A cap on the gauge was requested by Balancer because of concerns over the emissions voting power held by the whale and the potential for unlimited voting on this gauge. Badger agreed to support Balancer by voluntarily agreeing to the cap limiting the whale’s power over this gauge.
The truce aligns the interests of Balancer, Aura and the whale. It includes the following stipulations:
- Humpy has committed to using his remaining votes on voting incentives where the “bribe $ per veBAL” is greater than the “$ value of emissions per veBAL.” A. Aura has agreed to facilitate the creation of a script for Humpy to help him allocate his votes optimally.
- Humpy has expressed support in voting for pools that are beneficial to the long-term growth of Balancer in line with other major stakeholders.
- All parties have agreed to a gentleman’s agreement to not meddle in each other’s affairs.
In light of these agreements, the cap is redundant and the emissions on the BADGER/rETH gauge should be allowed to float freely as the market and truce allow.
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Happy New Year, brother! To clarify, BIP-128 is a narrowly-targeted, carefully-negotiated settlement regarding one specific gauge. Each clause in the Peace Treaty is only valid when read together w/ the others as a whole. BIP-128’s purpose is not to nullify all prior frameworks and usher in a new era of uncapped anarchy. The Peace Treaty is only applicable to the three parties involved in that discussion, similar to BIP-93, which is only applicable to Badger, not to be interpreted as a generalized framework for 10% gauges.
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Happy New Year, Franklin. Thanks for jumping into the conversation.
I appreciate that the peace treaty needs to be read in it’s entirety and it has a clause that goes beyond the TETU gauge. Specifically, in point #3, it states that the whale will “…avoid putting more than 17.5% on any single gauge in the future.” It was this clause that precipitated my proposal.
Badger is in a unique position because the whale is a large holder of its tokens. When Badger applied for the BADGER/rETH gauge, Balancer had a justified concern that the whale would blackhole the BADGER/rETH gauge. Even though the gauge qualified for an uncapped status, BADGER agreed to a voluntary 10% cap mitigate this valid blackhole concern.
The negotiated settlement negates the blackhole concern that led Badger, in good faith, to agree to a voluntary cap. Badger would now like to remove that cap.
I believe your reading of clause 3 is a formal fallacy known as denying the antecedent.
If X, then Y; not X; therefore, not Y.
If I’m Freddie, I have a job; I’m not Freddie; therefore, I have no job.
If I’m Humpy, no to 17.5+; I’m not Humpy, therefore, yes to 17.5+ on any gauge.
Clause 3 should be read as is within the confines of BIP-128–specifically applicable to one individual. The inverse of the proposition doesn’t hold true. Neither was BIP-128 meant to open up caps between 2 and 17.5 to the open market.
Regarding BIP-93, blackholing was part of the concern, yes, but other statements expressed at that time addressed Badger’s inability to scale with historically high emissions, return of generalized value to Balancer, as well as protocol revenue per emissions spent. I don’t want to open up a whole new can of worms here, but from my understanding, these concerns are still presently valid and suggest that 10 is already too high of a number.
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anecdotally the 10% cap on this gauge seems like it is still in a good middle ground today. further to that the reward APR is the highest of any rETH pool and the TVL hasn’t really moved since the voting weight went to around 10% (mid to early DEC). I’m not sure what, if anything, another 7.5% of voting weight gets the protocol in return.
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TVL went from 2.3m at the beginning of December to 13.3m now. And fees on Jan 3. were 10x fees on Dec 1 and 16x Dec 3. This contradicts the narrative that the vault does not scale.
Badger is an rETH friend and supporter and this is a Core pool benefiting from rETH yields.
I’ve also heard form those within Balancer that while this might not be the most desirable pool, it’s better for the ecosystem than others the whale currently supports.
Fact is for every $1 of emissions spent on this pool it’s earning about 10 cents of total LP revenue (5 cents of protocol revenue).
This is in the lower echelon of pool profitability. Yes you can find pools doing worse, but there’s many doing better. By raising this cap it’s likely emissions would be taken from some pools doing better. More emissions into this pool is not likely to change the reality in terms of total LP revenue generated per emissions spent.
Based on these factors I suggest the community votes against this proposal. A secondary consideration is Badger/DIGG pools now consume 14% of Balancer’s total emissions. These pools do not earn anywhere near 14% of Balancer’s protocol revenue. Simple math, more emissions to these pools is not a good idea for Balancer.
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Support is weak, so consider the proposal/request withdrawn
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