[Discussion] Proposal to create a structured and logical Balancer+MTA rewards program

Proposal to create a structured and logical Balancer+MTA rewards program.

Reference

EP = EarnPool

RP = Rewards Pool

LP = Liquidity Provider

IL = Impermanent Loss

APY = Annual Percentage Yield

XYZ APY (ie BAL apy) yield on a pool for that token’s individual rewards (ie fee apy, bal apy, mta apy, total apy, etc…)


This proposal offers a solution for the current “5:95 lopsided pool allotment” while attracting new money into the mStable Liquidity Provider (LP) pools by offering the following:

⦁ Unrewarded “Staker Pool” for Staker EarnPool holdings.
⦁ Moderate yield investment pool with mitigated risk, and moderate rewards
⦁ High yield “LP Pool” for MTA LPs with maximum MTA rewards.

Here is the setup:

A) Remove the 15k/wk MTA rewards from the current 5% MTA / 95% mUSD pool. ( https://pools.balancer.exchange/#/pool/0xa5da8cc7167070b62fdcb332ef097a55a68d8824 ) [5% BAL APY].
Leave the EarnPool balance in that pool. This pool is for the EarnPool funds and providing backup $mUSD liquidity against $MTA liquidities. Since stakers earn xxx% APY via 49 week staking and those funds are the EP funds, no individual LP should be using this pool as the $4m+ EP holdings will eat up any MTA rewards that would be on it.

It would be misleading and counterproductive to the adoption of the mStable staking & LP programs to have a Reward Pool (RP) with the EarnPool (EP) in it. (Current setup and MTA price fail factor) This pool has minimal Impermanent Loss on mUSD holdings and is MTA “bear” friendly as a “safe pool”. BALapy on this pool will not be extrordinary on this pool, as the ratioFactor of 5:95 is low IL.

B) I setup a NEW 25/25/25/25 MTA:mUSD/BAL/wETH Balancer pool ( https://pools.balancer.exchange/#/pool/0x902d58a84af3ac8d9d384393be6c21449a6fd40b ) [38% BAL APY] with 0.09% swap fee. Use 5k/wk of the Pool A retired MTA rewards on this pool. (0.01%-0.02% lower than the other 2 program pools) This will give preference to this pool for swaps on the exchange and help offset the high impermanent loss on the 50:50 ratio between 6 internal pairs. This pool will be used for swaps and creates 4 currently non-existent Balancer swap pairs for the mStable ecosystem:
⦁ MTA:wETH
⦁ MTA:BAL
⦁ MTA:mUSD
⦁ mUSD:wETH
⦁ mUSD:BAL
It also captures the BALFACTOR and ETHFACTORs from balancer and with an equal ratioFactor on all pairs, giving it the highest BALapy of the 3 pools, 0 slippage, MTA rewards, and moderate/mitigated risk.

C) I Setup a NEW 95:5 MTA:mUSD pool with 0.10% swap fee ( https://pools.balancer.exchange/#/pool/0x8b7333eb8c072523441f5eba8bf7680c0d931ddd/ ) [5% BAL APY] Use the remaining 10k/wk MTA rewards from the retired Pool A rewards HERE. This pool exposes LPs to the highest risk of price fluctiation on the MTA token, but also bears the highest MTA/wk rewards. No EarnPool funds in this pool, otherwise they will hog the MTAapy from the program, de-incentivizing the pool. With low IL on MTA/mUSD, this pool is “bull” friendly and its intent is to bring new money to the mStable LP ecosystem. However, with high price exposure risk, the rewards on this pool WITHOUT the EP funds in it will create tremendous price pressure until this pool liquidity nears the liquidity of pool A).

In an effort to provide better governance, the rewards program on pools B & C should not be changed for 91 days and then review. (13 week program, vote to continue, modify, or terminate) to give confidence to LPs.

[End proposal, begin commentary]

Here is the logic behind the plan, beyond what is mentioned above:

  1. EarnPool funds inside of an RewardPool causes the LiquidityProviders to earn negligible MTA rewards from the RP program. Therefore, no RP should ever have EP funds in it, as the pools are intended to hodl the EP funds while earning.
  2. The middle fund, 4x25 is designed to be a place for LPs to dump BAL and MTA rewards while reducing the sell pressure from such by using the 4x25 format. Capturing maximum BALapy and FEEapy is crucial to this pool. 5k/wk MTA rewards with 0 EP funds will create a great combined APY with mitigated risk. There is currently only MTA/mUSD pairs on Balancer, and the 4 NEW liquidity pairs on a rewarded pool will help with adoption.
  3. Pool C) - This is for the true MTA LPs and those who are bullish on MTA due to its 95% MTA weight and minimal impermanent loss on the TOKEN. With 10k/wk mta rewards and no EP funds in it, this pool offers potentially astronomical MTAapy until it gets diluted.
  4. By leaving the EP in Pool A) with 0 weekly MTA rewards, and having higher MTA/mUSD ratios in the other 2 pools WITH rewards, this causes BUY pressure on the coin and its underlying math from defi protocols.
  5. Increased price = increased MTAapy = more LP buying in = more buy pressure = higher price… (cycle)
  6. This could be the mStable+Balancer rewards program and close/remove any other rewards from balancer pools
  7. It solves the current 5:95 imbalance pinning the price down, while giving a program solution to handling RP on Balancer.

I would like to see a vote on this proposal before CEX full listing… In otherwords, asap.

Since no EP funds go to the 2 new pools I created tonight for this proposal, there is no capturing a huge pool entry fee from the $4m EP in the 5:95.

hi :grinning:

I think almost everyone agrees on the wind down 5/95.
What would this proposal look like as an actual voting option?

For example)

  1. Wind down 5/95 pool (yes/no)
  2. Create 25% Balpool with 5K (yes/no)
  3. Create 95/5 Balpool with 10K (yes/no) (prefer 5K?)

if you think “moving 5/95” voting, I’m sorry disagree.
Because if Proposal of moving fails, the 5/95 Pool will be left.

If we are going to vote in the form of 123, I’m agree.
The results of 2 and 3 will be decided by governance.

  1. Wind down 15k MTA/wk 5:95 pool AND leave earnpool funds there.

0xa5da8cc7167070b62fdcb332ef097a55a68d8824

y || n


  1. Add 5k MTA/wk rewards to pool (“B”)

0x902d58a84af3ac8d9d384393be6c21449a6fd40b

y || n


  1. Add 10k MTA/wk rewards to pool (“C”)

0x8b7333eb8c072523441f5eba8bf7680c0d931ddd

y || n


  1. Commit to no rewards changes on the 3 affected pools for 91 days (make it a 13 week program with review after 13 weeks)

y || n


As for the comment about the 5:95, nobody benefits from the 15k/mta/week … The $4m earnpool fund eats the mta rewards and so just take rewards off the pool… Need the mUSD liquidity kept in 5:95.

Pools B and C (vote 2 & 3) will have huge rewards apy until it gets diluted.

Mathematically buying these pools (higher mta ratio) will raise the MTA price (good for stakers, LP, and investors) and as result, raise apys across the board, enticing more new money, and maintaining price stability, wherever the market decides that should be.

Right now we have an ineffective (and actually damaging) set up.

The 5:95 is 99% earn pool funds, and the underlying staking pays out like 2.5m MTA… The 15k/wk is not a part of how that works… It belongs on real LP pools. The 5:95 is mUSD safe pool for staker EP funds while offering huge mUSD liquidities.

So I would vote yyyy. But I don’t vote, I am an independent LP and investor. I would hope stakers want better price and price stability too.

10/23/2020

Balancer matters…

4 will mean that governance will vote to narrow the powers of governance.
I don’t think many people would agree with that.
(If you really want to do this, I’m not opposed to the poll itself. :sweat_smile: )

“Wind down 15k MTA/wk 5:95 pool” is the most important Proposal.
We need to discard any points of disagreement and reach consensus for everyone quickly…

I look forward to opinion from other participants.

Stakers who vote NO on 4 are not governing in the best interest of the community.

They voted this bad setup (stakers vote, have to stake to vote)… This is the fix and #4 is about investor and LP confidence.

Too many quick changes deincentivizes any progeam that cost to join… I am not wasting eth fees to jump pools due to fickle/indecisive/misinformed governors… Most outside money will stay out too under unpredictable govs.

The #4 is the govs way of committing to, and a vote for, STABILITY for mSTABLE ecosys.

Also, this is a package deal. If #1 passes and 234 fail, there is still no rewards program for MTA+Balancer(typically the most active mta exchange) and is not an effective fix.

The same math that hurts the ecosystem by having the only balancer MTA incentived pool be the pool with the EP Fund, is the same math I used to fix it AND use the effect to the ecosystem’s advantage, including price, in the FULL proposal.

1 Like

previous 95 MTA/5 mUSD was wound down once staking was implemented. With staking v1 available having this EP reinstated doesn’t make any sense at all.
5 MTA/95 mUSD should be wound down and rewards given to staking, or EP, or creation of new EP
Also the proposed 25/25/25/25 pool might benefit from having the 25% mUSD lowered to 20% and adding 5% USDC or DAI to create even more potential trades wile providing access to more liquid stable coin (mUSD is not as liquid as either of those)

1 Like

I firmly disagree with you based on mathematics, largely because of a lack of overall liquidity still.

NOT reinstating rewards on the 95:5 makes it entirely risk, 5% apy rewards. Without matching liquidity for the $4m in the 5:95, the w1t1=w2t2 pricing model exchanges (namely uniswap) will pin the price to a 5% of $1 averaged against other liquidity pairs with much less weight.

Giving more rewards to staking instead is a big middle finger to LPs and will ensure more MTA price price fail, and a great short down to $0.01. Your staking apy will fill your bags with worthless tokens with no solid LP plan. We just go elsewhere.

“Adding 5% DAI” introduces slippage and ruins the ratio factors that make it the current highest MTA pool for BAL apy and is totally counterproductive to the proposal.

But u are right… No rewards on 5:95 or 95:5 does fix imbalance… But what a waste of opportunity to not use math to the ecosystem advantage…

Stakers win: higher $usd value per MTA / better price stability

LP win: high yield pools that make sense with incentive to lock (SAVE) BPT (pool shares) for MTA.

Investor win: stability, pool options that make perfect sense for bull, neutral, bear positions on MTA

Example APYs if proposal passes as written:

Assume $1.20 MTA price and $1m liquidity in the pool

4x25% Pool:
BAL_APY = 36%
Rewards: (5000MTA/wk rewards = $6000/wk… /$1m liquidity == 0.6%/wk === 31.2% APY)
Total APY: 67.2% + feeAPY

95:5% Pool:
BAL_APY = 5%
Rewards: (10000MTA/wk rewards = $12000/wk… /$1m liquidity == 1.20%/wk === 62.4% APY)
Total APY: 67.4% + feeAPY

Now…

Assume $2.00 MTA price and $1m liquidity in the pool…

4x25% Pool:
BAL_APY = 36%
Rewards: (5000MTA/wk rewards = $10000/wk… /$1m liquidity == 1.00%/wk === 52% APY)
Total APY: 88% + feeAPY

95:5% Pool:
BAL_APY = 5%
Rewards: (10000MTA/wk rewards = $20000/wk… /$1m liquidity == 2.00%/wk === 104% APY)
Total APY: 109% + feeAPY

Now…

Assume $5.00 MTA price and $1m liquidity in the pool…

4x25% Pool:
BAL_APY = 36%
Rewards: (5000MTA/wk rewards = $25000/wk… /$1m liquidity == 2.50%/wk === 130% APY)
Total APY: 166% + feeAPY

95:5% Pool:
BAL_APY = 5%
Rewards: (10000MTA/wk rewards = $50000/wk… /$1m liquidity == 5.00%/wk === 260% APY)
Total APY: 266% + feeAPY

Higher price = higher APYs = more new LP monies = higher price = higher APYs = more new LP monies = higher price = higher APYs = more new LP monies = higher price = higher APYs = more new LP monies

… Get it?

Lower liquidity in the pools only means higher (like… waaay higher mtaAPYs and will bring in dat new money and new LPs!)

Since markets are headed lower at this moment, lets look at at $0.60 mta price…

Assume $0.60 MTA price and $1m liquidity in the pool…

4x25% Pool:
BAL_APY = 36%
Rewards: (5000MTA/wk rewards = $3000/wk… /$1m liquidity == 0.30%/wk === 15.6% APY)
Total APY: 52.6% + feeAPY

95:5% Pool:
BAL_APY = 5%
Rewards: (10000MTA/wk rewards = $6000/wk… /$1m liquidity == 0.60%/wk === 31.2% APY)
Total APY: 36.2% + feeAPY

It is a comprehensive solution but we have to get the vote going and turn it around.

If I stake at 100% apy and price cuts in half each year, no good. I would rather LP in a way that makes sense in this environment.

And yeah I know LP loses on price cut in half too, but we can control losses better.

This whole thing is kind of a check and balance system for LP vs Staker on balancer.

LP has to trust stakers (voters) to make good pool options with logically predictable effects.

Staker has to trust LP to utilize the pools to maintain and grow $$$ VALUE of their stakings.

Speculators gonna speculate

Completely agree - 5/95 should be removed pronto. The 25-25-25-25 BAL pool also seems like a good idea to me. To prevent clogging though, let’s move with the one that has almost unanimous consensus - removing the 5/95 pool. We should move at least that to vote stat. I will vote for it.

1 Like

I still stand by this proposal as a 1 Poll proposal, 1 vote:


  1. End 15k rewards on current 5:95 and leave the ~$3.8m EarnPool liquidity in the pool (where it currently already is)

If so…

2a. Add 5k/wk rewards to the new 25:25:25:25 pool (address in proposal)
2b. Add 10k/wk rewards to the new 95:5 pool (address in proposal)
2c. Commit to this as a temporary 13 week program with the intent of review after 13 weeks


  • Obviously, if #1 fails, the other 3 are off the table.
  • The other 3 are the "13 Week Structured & Logical Balancer+MTA Rewards Program"
  • All 3 (a,b,c) of #2 must pass in order to confirm the Proposal

As a result, we need an option for if ANY of 2a, 2b, or 2c fail, and that should be to move the 15k/wk to the Staker rewards until the governors decide to implement a different LP Balancer plan or whatever.

If #1 passes and the rest fails, this will have ZERO positive impact on the MTA situation as there will still be no effective LP Rewards program for Balancer at all (which is the same as now)

The $3.8m in the 5:95 is what is hurting the price via weighting formulas. Removing the rewards does not change that, but at least the rewards are not being “wasted” on what the community thinks is a LP Rewards program. It forces acknowledgement for need to change.

As a result, it is somewhat illogical to vote anything except for YES to all or NO to all…

  • NO to #1 keeps the MTA rewards being paid back to MTA stakers via MTA rewards on their own EarnPool. Those rewards were named as LP rewards… not staker double dip. If NO to #1 there is no funding for #2.
  • YES to #1 means you want to change the rewards and help LP incentives in order to bring price stability
  • NO in the #2 section breaks the proposal math, and invalidates the idea
  • YES in the #2 section commits to a temporary 13 week LP program and then re-evaluate prior to the end to either renew, change, or terminate.

This is the only plan that I will submit.

All or none.

If it fails, yall can modify it and re propose or propose something else or let the MTA token die.

But, I am 100% liquidating to the 25:25:25:25 pool if this fails for loss mitigation.

That would be undeniable proof that the govs would rather cater to stakers than math, logic, fairness, stability, equity, price growth, innovation, and being industry leaders. (imo)

I understand many govs do not have the math knowledge or in depth understanding of how and why this all works. But I think anyone can see by the MTA price action that something is wrong.

This was my audit result and educated recommendation as an independent LP, investor, and LAMP stack developer who has been with bitcoin since 2014.

Take that for what it is worth.

I look at this issue from the perspective of improving the liquidity and utility of mAsset.

I think the 25 pool is suggestive because there is a utility improvement to mUSD.
The 5/95 pool is not positive because it does not contribute to mAsset.

You may be thinking, “that is ridiculous”, But this is diversity.
I respect you that made some thought-provoking suggestions. Why don’t we respect each other and find a compromise?

All or none is the furthest suggestion to reach agreement with someone who disagrees with you.

As I’ve written before, I’m in favor of treating 123 as an independent proposal for a vote.
If we can’t reach consensus because of the priority of all or none, I would prefer to separate Proposal, and put 1 on the poll first.
Because almost everyone agree about this.

2 Likes

Thanks! Quite diplomatic of you.

How about a counter-compromise :smiley:

Vote issue #1 must pass for #2 & #3 to be voted on

ie, if 15k stays on 5:95 then the entire proposal fails for lack of funding for issues #2 & #3

2&3 are bundled vote

ie YES or NO 5k->25:25:25:25 AND 10k->95:5

If the 2+3 bundle passes, allow a 3rd issue on it to commit to the following phrasing:

YES or NO:
Duration and exit strategy:
“The rewards pool is intended to be a 13 week program. However, governance retains the right to modify or terminate the program through normal voting processes at any time, and for any or no reason.”

It shows that govs acknowledge the need for consistency on the rewards programs the govs make, but they also retain (in legal speak even) rights to edit/end.

One more math point I forgot:

The 3 Balancer pools with rewards (if 123 pass) will have an overall ratio:

(95+25+5)=125/300 mUSD weight
(95+25+5)=125/300 MTA weight
25 BAL weight
25 wETH weight

Much better than the current
95:5 mUSD:MTA Balancer rewards pools.