[Proposal] BAL for Gas on Balancer V2

On behalf of the Balancer community, I’d like to propose we include V2 trades in the BAL for Gas program.

Proposal

The mechanics to determine eligible transactions and BAL amounts would be the same as in V1, except:

  1. In addition to the Exchange Proxy, transactions sent to the Vault would qualify for the program (the Exchange Proxy only connects trades to V1 pools)
  2. The gas amount to be reimbursed for trades through the V2 Vault would be defined as:
    • 90,000 gas for transactions containing one swap
    • 140,000 gas for transactions containing two or more swaps.

As V2 goes live and we start collecting more data, we would possibly review those amounts and create specific tiers for transactions containing three or four swaps.

Motivation

The BAL for Gas program has become an important mechanism for distributing Balancer protocol governance power to one of its widest user bases: traders. With the launch of Balancer V2, it is only fair that users who have their trades routed through V2 pools get the same treatment as those who go through V1.

6 Likes

Thank you for this proposal @rabmarut, I support it 100%, for several reasons:

  1. The major concern with Balancer today is that the protocol is not widely used because the general public has trouble navigating through its interface.With V2 and the new UI, many new users will discover Balancer. We need to keep them by charming them with the gas refund program.

  2. This distribution is fair: it rewards real users of the protocol, while making no difference between whales and small wallets.

  3. This redistribution, now unique, differentiates us positively from all other DEX, and largely compensates for the higher slippage on many pairs for small traders.

In my opinion, mainstream adoption of the protocol through this system will be much more profitable in the long run than giving out a few more BALs (which those who reject this proposal see as more selling pressure). Looking at the long term, this mechanism is great and should be adopted.

VOTE “FOR”!

4 Likes

Came across Balancer in the last couple weeks seeing sponsorships on the Bankless podcast. With Ethereum transaction fees as high as they are now, hearing that Balancer helps cover the cost of gas stood out in my mind as a unique and thoughtful gesture that compelled me to give the platform a try. A couple weeks later, I’m providing liquidity, reviewing the V2 repo for the bug bounty, and referring a couple friends to take a closer look at Balancer.

TBH, there’s a good chance I’d have joined Balancer in any case for its strong fundamentals. However, the high up-front costs associated creating the first proxy contract and making the series of approvals necessary for contributing liquidity cost around $300. It was hard to know how many steps were involved at the outset, and approximately how much each step would cost. In the end, it was probably $200+ out of pocket to start providing liquidity (even after factoring in BAL for gas), but the BAL to help learn the ropes and subsidize initial setup costs helped grease the wheels of completing the onboarding process at its most costly point.

Thought experiment: if Balancer could conduct paid advertising but instead of paying CPC (Cost-Per-Click) or CPM (Cost-Per-Impressions), we could pay CPA (Cost-Per-Acquisition) for real results at the moment of acquisition, with those funds going to new users supporting Balancer (as opposed to big tech ad networks) – how much would we be willing to pay per acquisition?

To answer this, consider:

  • TVL (Total Value Locked) is an essential indicator of AMM growth

  • Balancer’s largest pools have under 1k LPs (706 on BAL/ETH, 684 on WBTC/WETH, etc.; source: https://pools.vision)

  • Only 6.94% of BAL supply are in active circulation

It’s hard to imagine more impactful & cost effective way of distributing BAL than distributing it as partial cost coverage onboarding new users (increasing network effects; Metcalfe’s Law). It would likely be strategic to pay upwards of $250-350 CPA to onboard quality LPs to the ecosystem. Actual BAL given as gas is a fraction of that. From the acquisition perspective, BAL for Gas is acquisition-insurance to ensure new LPs successfully complete the onboarding process.

Overall, completely agree with TIM_Betting’s rationale and can vouch for it having a recognizable impact in my recent onboarding experience.

5 Likes

It’s awesome you discovered Balancer via the Bankless podcast @FluffyCat. I’ve noticed Balancer sponsors The Defiant podcast as well. Even though these are ads, when I hear about projects via trusted podcasts I find myself eventually looking into the projects after repeated exposure.

I voted “FOR” because this helps incentivize me to test at smaller amounts and makes it easier to pitch friends to try out Balancer.

6 Likes

IMO the BAL back for gas fees is one of the more unique programs in DeFi that I’ve seen - would def be in favor of supporting this for V2 (esp as gas fees climb higher!).

3 Likes

Agreed! BAL for Gas is essential with the high gas fees as they are. I would have migrated to v2 50/50 ETH/BAL if it wouldn’t cost me almost $600.

1 Like

Perhaps there could be a way to subsidize 85% to 95% of the fees associated with adding the liquidity with BAL. Could we make it such that the new LP gets the BAL to cover most of their fees only after one month (or something) and if they take out their liquidity prior to that they don’t get reimbursed?

1 Like

I think we could also provide some BAL to LPs migrating to V2. The new pools are pretty empty and that does not look good for new people coming in.

I think the reason why most liquidity have not moved to V2 is because LM is not yet fully moved in V2. As per the V2 LM proposal, it should be a rolling eight weeks for that. Then we should see most of the liquidity naturally migrating to V2.

Still, the BAL for LP migration to V2 will provide a great help for our new and small LP’s.

Fairly new small LP here, and I agree 100% about a BAL for LP Migration incentive. I just migrated from the v1 50/50 BAL/wETH to v2. I had been in the v1 pool for about a week and a half prior. I saw that gas was lower than it has been lately so I took the plunge and migrated. You are correct there are not many people at all in the pools right now. It ok though - I understand it was just rolled out.

I do think LPs should receive a small, flat/capped reward of (1 or 2 BAL?) to migrate. Essentially it would be a partial gas reimbursement. Perhaps it would be wise to make it so the reward can only be claimed 2 weeks after migrating provided that they didn’t remove their stake from the vault within those two weeks. A limited incentive of this size would cover part of the gas for the transaction and encourage those for whom gas is a major sticking point to take the plunge.

I also just wanted to say I’ve really taken a liking to Balancer and to this community, the discussions, and governance. nice work!!

P.S. - is there a dark-mode for v2 UI in the works???

1 Like