With the recent change to vebal many of us have noticed an uptrend in projects trying to utilize a treasury swap to acquire BAL in order to participate in veBAL under advantageous conditions. Treasury swaps have been useful in lining up incentives with most of our core partners but they no longer should be considered a viable means for any further projects to acquire BAL.
Action
For the sake of the longterm viability of the DAO I propose we freeze any treasury swaps using the BAL in treasury for any tokens other than ETH or a reputable USD stablecoin for 3 months until the veBAL system has had time to properly mature. We can then reassess the situation after that point.
For a little context, I am of the opinion we should not have any alternative means of getting veBAL other than buying it on the open market with no special privileges or connections. If projects know they can make a proposal to acquire cheap BAL right from our treasury, a rational actor will try to pursue those means. It can be hard for users to make informed opinions on every snapshot vote and I believe this can result in many proposals passing that people might not necessarily understand the nuances of.
This only applies to active treasury activity such as token swaps where we are receiving anything other than ETH or Stables in return for BAL.
Risks
Pros:
Ensures that projects only have one way of getting veBAL: buying BAL on the open market just like anyone else.
Protects our precious treasury while BAL is near all time lows
Cons:
Might be harder to align incentives with partner projects over the next 3 months
Some discussed proposals might to need special consideration if we deem them high priority to pass prior to this proposal going into effect
I hope regardless of how anyone feels about this particular proposal, we can start to discuss how we can make sure our treasury is protected and that projects are on equal footing when getting involved in veBAL.. This is not meant to be a commentary on any recent treasury swaps.
Balancer has “built it”, now protocols “will come”. Why are we handing out free tickets to a strong token that has better utility than 90% of the tokens out there.
In general, I’m only really in favor of the AAVE treasury swap. The other treasury swaps make no sense. Let them buy it on the market
Fully support this proposal, we should no longer swap BAL from the treasury at such a low price, and the projects can buy in the open market or bribe veBAL holders.
I tend to agree with this proposal. The counter-argument would likely be that Balancer has made some Treasury exchanges in the past with teams aware of the future change in tokenomics defacto giving them an obvious competitive advantage today.
There are long-term “partners” of Balancers who have actually positioned the Protocol in the DeFi ecosystem and attracted TVL but that for bureaucratic reasons or lack of visibility are showing up only now (a good example is AAVE), while others, also long-term partners of Balancer do not yet have a native token (Element).
Therefore, I would prefer to let the token holders decide what they consider best for the protocol on a case by case basis without outside intervention.
Freezing for 3 months seems like we are afraid veBAL voters will vote incorrectly on future treasury swaps? I don’t see the harm in letting treasury swap proposals go to a vote and be voted down. And I think it is questionable to say we only want swaps for ETH and stables - we’re still giving BAL from the treasury to dilute veBAL if we do such swaps. I don’t see much difference honestly.
The purpose of this proposal is to make sure projects have no alternative means of getting involved in veBAL. Right now, a rationally acting project will try their best to force through a treasury swap before simply market buying BAL. I believe the 3 month period is sufficient enough to let the mechanisms mature without skewed incentives. If we do end up wanting to do a treasury swap, we can TWAP up until this proposal expires and execute on it after. I don’t see us missing any opportunities by implementing this temporary freeze.
Why do we need to constantly dig into the treasury for swaps dude, let them buy on the market or for example set a bonding curve like AAVE is looking to do? veBAL has just launched, give it time to mature before we start handing out free tickets?
While I sympathize with the spirit of this proposal, I don’t see how it can accomplish its goal when our governance system doesn’t have a notion of hierarchy - any future treasure swap proposal would have the power to override this one, wouldn’t it?
While I understand the sentiment I disagree with the course of action charted. I’d prefer if we were to simply put more stipulations around treasury swaps as opposed to completely pausing them, that could hamper the early stage growth for veBAL.
A great example of a good treasury swap would be TOKE. There’s substantial benefits that could come from it and I think could be properly outlined, this is a great foil against the proposed Aave swap which while extremely beneficial for Aave would be less than desirable for Balancer.
Reasonable desire to protect BAL, but I would ask @Mike_B if you could please offer an alternative way to fund/incentivize partnerships and align incentives with partners? It’s good to protect the nest-egg, although diversifying the treasury could also be argued as a positive, but as I understand it one of the core ethos of Balancer is to work with other protocol DAOs. So need to have a solution there
The point of this proposal is not to prevent us from ever doing any sort of treasury swap in the future, its to give a chance to let veBAL mature without people trying to capitalize on our treasury. And more importantly it gives time for us to perfect our governance process regarding such big decisions. I think more important than this proposal is us beginning to think how we can protect our treasury.
The main thing I want to prevent is us giving away BAL, which earns bb-a-usd, BAL, and emissions voting power, in exchange for [gov token x], which lets us… govern I guess (for which we have no metagovernance framework in place). I would like some sort of framework to ensure that Treasury swaps do not result in an asymmetric transfer for value. Any BAL we give away is assumed to be deposited into veBAL, which directs future BAL emissions forever, so that should be taken into account.
I also think there are other ways to align incentives beyond just doing a simple token_a for token_b treasury swap. Rev share agreements can be particularly powerful when it comes to aligning incentives for example.
Appreciate everyones comments. Regardless of if this proposal makes it to snapshot or not it is a good time to start thinking about these topics.
I think I stand by my original position of pausing treasury swaps hampers early stage growth for veBAL. Completely freezing them makes the assumption that the DAO is incapable of evaluating a beneficial swap proposal from a detrimental one.
I think we’ve already shown that we can properly identify a good swap proposal. Why not just put proper expectations, or set the expectation when the next one comes in as far as what we’re looking for?
I do not have any desire to push this to vote in its current form.
edit:
Are you saying you would be voting no as a member of the gov council? (and not as a vebal voter) If yes, can you explain the grounds for voting against this proposal (had I insisted this go to vote)?
