[RFC] Closing Year 2 Funding Gap

[Yakitori]

Hi @immutbl, nice to meet you too.

@immutbl

Well, the main takeaway of @solarcurve’s proposal IMO is that Balancer would actually put itself in a financially sustainable position at its current rate of spending if the DAO and and veBAL holders were to receive an equal distribution of protocol revenue. As long as the DAO only receives 25%, it spends significantly more than it makes.

You’re advocating to take from VeBal holders to match spending, I propose to adjust spending to match revenue, which is currently lacking by a great proportion.

I’m not convinced that reducing the underlying factor that propels the flywheel won’t slow it down in the medium term and reduce demand for the Bal token. There has been no discussion about it, so here’s a good way to start it.

@immutbl

This is an interesting and very unique take; I couldn’t disagree with you more. You’re suggesting that Balancer’s growth phase is mostly behind it-- while we’ve come a long way, that would be sad if true!

I think it’s safe to say everyone associated with this project, and the majority of people involved in the DeFi space overall, would actually argue the extreme opposite on this one.

Not saying at all that our success is guaranteed; we’re going to have to build and execute at a very high level. The growth opportunity is ahead of us, not behind us.

Balancer has been launched mid 2020, it’s more than two years old. It’s a long time in crypto, it has seen a full bull market which allowed it to grow, experiment and show the relevance of its protocol. Now changes are incremental. So, it’s “mature”. It doesn’t mean innovation can’t happen, just like Google or Apple continue to innovate.

An organization can’t grow forever if it doesn’t address at some points its inefficiencies. This discussion is quite mundane in the tech sector, and the recent wave of layoffs is a result of this. Scaling down is often an opportunity to focus on what matter, move faster and improve communication in the teams.

It doesn’t necessarily prevent innovation. Most new protocols in defi are built by teams with few devs. The latest issue that affected pools show that even larger teams aren’t immune to problems in prod.

@immutbl

Your suggestion indicates that if it were up to you, you’d remove half of Balancer’s operations in order to maintain a high veBAL payout. In other words, your stance seems quite eager to sacrifice the future of this project in order to extract from it in the short term.

It’s not a specifically high veBal payout, it’s the current veBal payout that was voted earlier (and revoted to increase it) and that propels the flywheel, which is at the core of the protocol. VeBal requires locking your capital for a year. Liquid staking protocols, that soak plenty of emissions, lock…forever. I therefore don’t see any “short-term extraction” – I could say the same about you, by the way, so let’s keep it cordial, please.

@immutbl

We’ve trimmed the fat, we even trimmed some muscle. Next is bone. You’re proposing to start cutting off limbs, for a project that has been building momentum and doubled its marketshare thus far during the bear. What the justification behind your suggestion?

Well, it doubled thanks to Balancer’s superior technical proposition, but also because of its veTokenomics, which we are currently planing down.

Anyway, this is an interesting point. From what I see (please tell me if I’m wrong, as I may have missed something), there’s no KPI, no estimated ROI on the core integration work.

What are the most important ongoing projects for Balancer right now, along with their estimated costs? Then maybe there could be an informed discussion regarding which body part removal we’re talking.

@immutbl

Do you see half of the Balancer ecosystem’s costs as unnecessary? Please name the functions of this ecosystem that should cease to exist. What is your vision for Balancer succeeding with half of its personnel gone? Is it time to shut off the engines and coast?

It seems to me that many projects listed on the front page rely on Bal and veBal revenues. Cutting into it would indeed endanger the said ecosystem.

I think btw you missread the proposition: there approximatively 50% of the budget missing, so to cover 50% of the hole with cost reduction would mean a 25% budget reduction. Given that there are currently 5 engineers at Orbs + 7 at the front-end team (I don’t have a clear count of the front end team), I don’t think it’s reasonable to use such “There is No Alternative” tactics.

@immutbl

I’m just wondering if you’ve put serious thought into the implications of this idea or if you were just throwing out a few numbers that sounded nice.

I could say the same about the current proposal: no analysis was done on the impact of the fee reduction for veBal holders and the revenue cost of a reduction in spending. As for my proposition, it was an attempt to meet in the middle between the different ideas brought in the discussion, and the obvious need to address costs.

As a final note, I don’t hold a grudge against anyone here, I’m exposing what, I believe, is right for the organization as a whole. The reductions in cost should, if they need to happen, be decided by the DAO, with an informed decision. Maybe an external audit would help?