[Proposal] Retroactive airdrop to early Balancer users

Governance General Proposal
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Long time & early Balancer user. Been following the crypto space since the 2016 BTC scaling debate and early iterations of MakerDAO. Always been interested in communtiy-driven protocol governance. Never started a proposal myself since I was in agreement with most proposals of various projects.

However, seeing DEXs like Uniswap & 1inch rewarding their early protocol users and realizing Balancer never did an airdrop to honor those who gave Balancer a chance in the first place, here we are.

I am proposing doing a retroactive airdrop to early protocol users, meaning rewarding anyone who interacted with Balancer up until December 31, 2020.

The to be airdropped amount is open for discussion - A few suggestions:

1.) X % of total BAL supply divided by eligible wallets
2.) Firm BAL amount (10, 20, 50, 100…)

Personally, recognizing Balancer never directly rewarded their early users is quite a shame. It’s long overdue. Every DeFi user before 2021 was key to the success of any still existing DeFi protocol in 2021.

I am aware Balancer had a liquidity mining program since 2020, however liquidity mining mostly favored those who already had a big crypto stack, not those who started from 0 or very little. Examples like Uniswap showed you had to have no money at all, as their airdrop is now worth roughly $16,600 (400 UNI). Those who received that airdrop most likely snowballed that balance already into a 6 or 7 figure mark, to be able to not only providing value to Uniswap, but to the whole DeFi ecosystem at large, supporting new projects with their newfound capital.

Currently it looks like various other protocols like Compound are considering doing a retroactive airdrop to their early adopters as well, indicating this is the way to navigate to, for any future & already existing DeFi project.

Please let me know what you think, I am more than open to any suggestions regarding this topic.

Thanks for reading!

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What. Why??

What value does this provide to the protocol and it’s token holders? Given the large majority of airdrops lead to tokens being dumped, why do I as a token holder want an airdrop to happen so that there’s downward selling pressure on the token itself?

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Thanks for your suggestion @zyx. I fully understand your rationale and find many aspects about this idea interesting (e.g. rewarding early adopters who took the most risk and achieving a wider distribution of $BAL).

I also understand @tongnk’s concerns about extra supply inflation and the sell pressure that this would likely cause.

@markusbkoch will run some numbers and share insights with us here so we can have a better picture about how many users would be getting this and how big of an airdrop this would be depending on how much each of them gets.

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Really appreciate the feedback so far!

@ tongnk I can understand that a retroactive airdrop might add short term selling pressure at a first glance. However, you have to admit rewarding early protocol users is long overdue. It should have happened already last year. Also if you take a closer second look, airdrops don’t directly create token price downward pressure. All it means is that the marketcap goes up while price can stay the same (or even price going up due to “fomo”, and long-term we all have a vision for BAL’s price direction anyway due to DeFi still being in its infancy).

Additionally, this airdrop isn’t directed to new users, it is only directed to early protocol users to honor their passion for Balancer as protocol pioneers. “OGs” are way less likely to just “dump” their airdrop bag, especially as in the past selling any airdrop backfired massively if you think the protocol you are using has a bright future ahead (see Uniswap, 1inch, or even Meme or Cope where everyone regrets selling their airdrop when they received it).

@Fernando Love to hear the proposal for a retroactive airdrop to early users was well received!

@markusbkoch Thank you for running the numbers - I think having a firm number would probably be the best way to go, just to keep things simple. If possible, it would be great if you were able to run the numbers for a September 15, 2020 cut-off date as well, how many users would qualify for that one (September 15 is the day prior to Uniswap announcing their UNI token where all that airdrop craze started). For a firm amount, 400 BAL would be cool if possible, as it would be more valuable than Uniswap’s airdrop as of current prices, while airdropping the same amount like Uniswap did (probably a wise marketing move as well).

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This is an interesting proposal, thanks @zyx.

I’ve put together a quick query on Dune to get us started. Only looking at traders for now, not LPs. Numbers range from 16k to 119k recipients depending on who we filter out and what cut-off date we use.

400 BAL to every recipient might be more dilution than BAL holders would be willing to support in any of those scenarios. I suggest the community keeps iterating on this until we find criteria and numbers that make sense. For example, what happens if we skew the rewards so as to give more to early adopters? Can/Should we filter out arbitrage bots? Everyone is invited to fork the query and play around with alternatives, and feel free to reach out to me if I can help.

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I’d like to see the data on this tbh. Out of airdrop participants how many actually just dumped tokens.

On another note would be curious if we have any retention data @markusbkoch ? Given that churn is expected it again makes no sense to me to airdrop to early traders who have already churned.

This still feels like a grab for free tokens to me masquerading as rewarding existing users. A method that would make more sense to me would be something like the UMA KPI options airdropped to early users with a high KPI hurdle metric.

Basically I’m strongly against just giving away something for free at this point in time. Rewards are limited and should be utilised for the best effect. I’d personally rather see these rewards redirected to a community tooling ecosystem fund so that the long term value of my BAL bags increases rather than receiving a small airdrop.

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@markus Thanks a lot for putting in that work!

I agree 400 BAL might seem a bit high at first. However, considering BAL was way lower in price in 2020 and there had been no airdrop that year, early supporters should not be at a disadvantage just because BAL’s price went up and the retroactive airdrops would happen in 2021 instead of 2020.

400 BAL would been a great choice since:

a.) Same number as the UNI airdrop (400)
b.) Higher total USD value than the UNI airdrop
c.) 400 BAL would have been a “fair amount” in 2020

The exact amount can be debated freely, however I would suggest discussing an amount between 100 to 400, else there might be a.) lack of voting incentive (meaning there might be no airdrop at all) and b.) to not punish early users for not having a retroactive airdrop already in 2020. To further validate airdropping 400 BAL, you would need to claim your airdrop until May 31, 2021 to only reward active users who still follow the project.

Regarding cut-off date, I would suggest either December 31, 2020 (end of year 2020) or September 15, 2020 (last day prior to the UNI token announcement). Choosing September 15, 2020 would exclude any airdrop bots or hunters, since before September 16, 2020 airdrops weren’t really a tangible idea yet, Uniswap basically embraced this way of token distribution by their very gracious airdrop on September 16, 2020.

We should definitely not exclude any wallets before the chosen cut-off date, since trying to filter out bots would most likely not be 100% accurate and we could exclude long-time users who just tried out Balancer once. We also should not exclude anyone by their trading size. I personally know a few traders who started out with 0 who now trade in the 7 figure mark because they did a < $50 swap once on Uniswap to just try it out, and they are more than glad Uniswap gave them a chance to become big.

In general the exclusion of anyone within the eligible timeframe might lead to bad blood in the community, which I am sure is the last thing we would want, as the sole purpose of doing a retroactive airdrop is to rightfully honor protocol pioneers.

@tongnk I think we can all agree on the fact that Uniswap did the best airdrop possible. I have talked to many individuals in DeFi, and literally everyone agreed it realistically couldn’t have been designed better. It’s not a “grab for free tokens”, it is to rightfully reward those users who are the reason Balancer still exists today. There would be no Balancer project if there were no users, hell the entire thesis of DeFi is to empower decentralization and “the little guy” to create a level playing field to compete with whales, which crypto failed to accomplish prior to 2020. Be aware crypto was mostly controlled by CEXs instead of DEXs prior to 2020. DEXs and DAOs were a running gag in crypto communities because the infrastrctures and mindsets weren’t built out yet. Personally I find it quite disrespectful to trash those who are the reason why Balancer still exists today, therefore they should be honored in the most gracious way possible, which is a known consensus among top DeFi projects.

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How can you objectively say that Uniswap did the best airdrop possible without knowing the intentions and reasons behind it. There’s a whole legal angle given they’re a US entity that you haven’t explored here at all. Compound had the same problem and had to basically launch as a DAO from the get go. Anything otherwise is pure speculation.

I agree that without users there is no Balancer, but that doesn’t mean every successful company or project goes and airdrops 20k usd to users. As a token holder that would benefit from this proposal passing I am still firmly against it.

I still see no well formed reason for why this will benefit BAL Token holders. If we are to help “the little guy” and their BAL holdings - why is short term sell pressure helpful to them? What does airdropping tokens achieve to them? We need to differentiate the difference between token holders and non-token holders - Balancer is here to optimise for token holders, not non token holders.

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The 400 BAL airdrop will not bode well with the annual supply of 145k BAL for Liquidity Providers. If we use the minimum number of 16k eligible accounts as per @markus’ analysis, the Balancer team will have to airdrop a total of 6.4M BAL (about 419M USD with today’s price).

In comparison to the annual 145k BAL for liquidity providers, 6.4M BAL is more than 44 years worth of token supply.

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I disagree with proposal to airdrop more BAL tokens. I think the existing BAL reserves would be better spent incentivizing future growth of the protocol rather than inflating the wallets of a few. We’re already bending over to maintain the massive APY for BAL LPs in V2 when arguably it would be better to direct LM incentives to a broader range of pools.

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Why is there so much disgust and hate of doing what’s right and overdue already for a year? Let’s be real here, there is a reason why Uniswap is around Top 10 marketcap and Balancer isn’t even in the Top 100. Uniswap did a lot of things really well, including rewarding early protocol users. You should realize that an airdrop also acts as an advertisement for new users to join a protocol, creating more LPs (new LPs from outside and LPs who can become LPs due to the airdrop), resulting in more liquidity, more users, everything. You should think big, not small. I agree 400 BAL might be a bit too high - That’s why I suggest we discuss any number from 100 to 400. However keep in mind 400 BAL would have been a fair amount last year, so I don’t see why early users should be punished receiving any less.

If early protocol users get treated like that, they will simply leave the project, withdraw their liquidity and the protocol dies. Very simple. Early users are the reason in the first place why Balancer even exists. So please be a bit more respectful. Instead of constantly repeating the lazy argument of “but an airdrop would mean a lower token price” which isn’t even true since only the marketcap goes up while the price wouldn’t be directly affected, we should come to a fair solution. Please discuss 100, 200, 300, 400 BAL, with which amount you would agree with. Thanks a lot.

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Since someone on Discord asked me who would be eligible, it would be anyone who interacted with the Balancer contracts up until the chosen cut-off date.

Current airdrop details:

Who - Anyone who interacted with Balancer
Amount - [No consensus yet]
Cut-off date - September 15, 2020 [The day before the UNI token announcement]

For now to keep things smooth, who would be eligible and the cut-off date would be final for now, unless someone wants to have those 2 factors adapted with a good reasoning behind it.

The most important factor to debate would be how much BAL the airdrop would actually be - 10, 20, 50, 100, 200, 400 seem like good numbers - Let me know what you think which would be most fitting one, and why.

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I’m also generally against this proposal, I don’t really see any answer to tongnk’s original question of, “why?”.

That said, if we were to do something like this a cutoff date of June 1st 2020 would make much more sense to me since Balancer did reward early users post that date, via liquidity mining. This results in a much more manageable 162 - 1016 recipients depending on filtering.

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@justwanttoknowathing That question has been answered a couple times already, to reward early users so they also have the ability to provide liquidity to the protocol, and since without those early users, Balancer wouldn’t exist today. September 15, 2020 would be the earliest cut-off date I would agree with, right before UNI token airdrop announcement when the airdrop craze started. Also, the airdrop should be as decentralized, but also as valuable as possible at the same time, so finding a middle ground is usually the best option. Instead of asking the same questions which have been answered multiple times already, I would be interested to hear which BAL amounts would be the most suitable for a September 15, 2020 cut-off.

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Well in case i am repeating some of the concerns already mentioned or discussed, please excuse me.
I also do not want to be disrespectful to the OP of the proposal by any means.

But the reasons for having this airdrop are just absurd.
And from what i am reading they are:

  • Uniswap did it;
  • Compound did it;
  • Uniswap are in top 10 because of airdrops;
  • early users are the reasons Balancer exists today
  • Personally I find it quite disrespectful to trash those who are the reason why Balancer still exists today
  • You should realize that an airdrop also acts as an advertisement for new users to join a protocol "
  • doing whats right and overdue already for a year
  • here is a reason why Uniswap is around Top 10 marketcap and Balancer isn’t even in the Top 100. Uniswap did a lot of things really well, including rewarding early protocol users .

I do not know how to comment most of the points that are given behind this proposal.

I feel like i would support an Airdrop of at least 5000 BAL per wallet, 400 BAL is just not enough for those early supporters who “created” Balancer protocol.

Please don’t take my opinion as sign of hate or disgust.

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@Bmc137 Please stop trolling. We are actually trying to do some good for the entire project.

@markus In your opinion, would 100 BAL feel realistic with a cut-off date of September 15, 2020? Personally I would agree with that amount. It’s 75% less than from the original proposal. If you think 100 BAL would make sense, I would suggest we would take 100 BAL and put it up for the vote.

If anyone else is actually serious about the to be chosen amount, please elaborate your POV. Thank you.

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Please, i am not trolling.

This proposal is just ridiculous the way it is.

How do you match those dates with Uniswap also, protocol that launched november 2019.

The reason for your: Cut-off date - September 15, 2020 [The day before the UNI token announcement]

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@Bmc137 December 31, 2020 or September 15, 2020. September 15, 2020 was picked by me because it would be the day right before the entire airdrop mania started. Before September 16, 2020 it wasn’t a tangible idea for most projects. December 31, 2020 is a decent alternative as well, I would be fine with either.

Also, it’s not ridiculous, it’s what DeFi is. You probably should go back to CeFi if you don’t see the value behind distributing value in a decentralized manner.

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Ok this topic is ridiculous and this will be my last post unless I see some actual well thought through logic for a why. As literally everyone else has posted, there is no good reason why. I’m going to take @Bmc137 's list as it actually summarises your points well:

First off, simply claiming protocol x did it is not a reason. It’s just a campaign they did. For example, uniswap had only a very short period of liquidity mining. By your reasoning we should simply follow what Uniswap did and we’ll be the top 1? It’s just not the case, there’s nuances to it all. Compound has a completely different use case and set of users.

Not to mention for both protocols they are based in the US and were most likely required to be decentralised by nature when launching a token (this is just a guess having been in the space + talked to lawyers and parties who are familiar). So you really can’t take an event and just say “they did it for early users”.

Secondly, early users are the reasons balancer exists today - this is true. However based on previous analysis ran I would actually argue the following:

  1. Balancer captured an enormous amount of liquidity through its LM program which enabled lower slippage
  2. The design of Balancer meant that there were a large majority of pools with similar tokens and a lot of fragmented liquidity
  3. The real reason Balancer exists now is due to arbitrageurs who arb all of this volume. If you dive into the data you can see this

Next point around trashing early users - this is just silly. Early users who provided liquidity were amply rewarded through liquidity mining programs. Early users who traded were not rewarded. But given they were making money doing arbitrage why would we reward them? What benefit to token holders does it have?

On airdrop as an advertisement - sure it’s an advertisement. Just the dumbest one in mind. You will have an infinite cost per acquisition as no new users will join for a retro-active airdrop so all you’re creating is a branding campaign. Which would be great if people didn’t know about Balancer, but people do know about Balancer and it’s considered a blue chip defi. Additionally, if we want to have branding campaigns there are much more cost efficient mechanisms to reach our cost per mille (cost per 1000 impressions) such as sponsoring podcasts, newsletters etc (of which I believe the team are already doing)

I like the thought around what you’re trying to do but the proposal is a bit ridiculous with the numbers thrown around being ridiculous as well. I would vote no for any proposal at this stage as well as publically encourage all members of the community to do so as well.

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To summarize, there are two main reasons for the airdrop:

  1. Reward for early users
  2. Advertisement

@tongnk is right. Both LM and arbitrage are rewards that will keep Balancer relevant and useful in the long run. Also, the next big advertisement will come in the form of V2 launch where the better UI/UX will make it easier for normal users to engage in the platform.

It is highly arguable that not doing an airdrop is disrespectful to early users. If you are an early LP who has accumulated a significant amount of BAL out of LM, you will not want an airdrop that simply dilutes your accumulated BAL stack. Due to a BAL price diluting airdrop, our early LP’s can simply move out to a different platform and thus reducing the total liquidity for the platform. Hence, the risk is significantly greater than the benefit.

I also believe we should focus on long term proposals that benefit ALL Balancer users without discrimination. The Balancer platform should be an awesome place to safely trade and to store liquidity regardless if you discovered it early a year ago or if you have just started to discover it now.

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