XP1: Using BAL rewards to buy back XTK

As we’ve been discussing in the Discord the last few weeks, there are BAL rewards accruing in the three staking rewards pools that accept Balancer LP tokens (xSNXa, xAAVEa, xAAVEb). Balancer’s script assigns the rewards to the address holding the LP tokens, not the true owner of the LP tokens. That means that the xToken-controlled staking rewards contracts are the addresses eligible to claim the BAL.

The fairest solution would be to pass through the BAL rewards proportionally to users based on number of LP tokens and amount of time staked. Unfortunately, this is near impossible on chain and quite complicated off-chain. It would require significant developer hours and would be highly error-prone. We’d have to write a block-by-block script recording number of tokens staked at each block for all participating addresses. Additionally, the BAL rewards for many addresses would be smaller than the gas fees required to register them and claim them, making this approach inefficient on both ends.

I’d like to propose an in-between measure that is both highly capital efficient and also benefits LPs proportionately. It would save us time and allow us to focus on upcoming product releases, while increasing the value of XTK liquidity rewards.

Proposal: Claim BAL rewards on behalf of the pools each week; use BAL to buy XTK on the open market; transfer the XTK into the community treasury to be distributed during future community vesting programs.

In just our first full week of BAL mining, the contracts earned nearly $50k in BAL. While that amount is small in the grand scheme of things, $50k or more in weekly buying pressure could provide a floor for the XTK price, benefiting LPs.

We’re opening up this proposal to community discussion with an eye towards resolving it within the week. We’d begin claiming and buying back XTK weekly starting next week.

22 Likes

I support this. Seems to be an easy and relatively fair way to handle this for now.

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I support this as well. Nice work mjc

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Yes - please.

Would love a future where x tokens have to purchased with XTK in conjunction with the appropriate ETH/KNC/AAVE/SNX assets to create additional pressure.

Yes. Excellent solution, let’s do it.

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hey jvk - can you explain a bit more what the mechanism would be for LPers to reclaim the BAL? not quite sure i understand

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I am also for this proposal! I believe the BAL rewards for every single person alone is not even that much, but for the protocol as a whole it’s a nice way to increase the Treasury and provide some buying pressure on the market! While 50k per Week doesn’t sound much, it adds to 2.6 Million $ in one year if the BAL rewards remain at these Levels.

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My proposition is to organise a lottery with BAL rewards. XTK holders can buy a ticket to win the BAL prizepool each week. Tickets are burnt.

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I support this. Not a perfect solution, but seems the most efficient.

This is definitely an interesting idea, perhaps not for this specifically or 100% of BAL. But I like the idea of community rewards and prizes being awarded from ancillary protocol revenues.

I’m in favor of this :orangutan:

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I’m in favor of this proposal :+1: send it :rocket:

Also, I like the idea of a lottery as @Dezbaba suggested, but would prefer if we converted it all to XTK for the buy-pressure, and then can design some kind of lottery to give out some XTK.

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The original proposal sounds good to me. We are providing a nice XTK incentive for staked LP, so the DAO accumulating the BAL seems reasonable.

My first thought was that we should keep the BAL (/Sell for ETH) in order to start diversifying the treasury. However, as the xTokens are generating cash flow, we can use those as a diversifer.

With current daily trade volume ~$300 k, $50 per week should provide a nice boost to the XTK price. .

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Great idea.

Just buyback and put back to Treasury - DO NOT BURN

3 Likes

100% agree with this. The price volatility on XTK would frighten the average DeFi user and this should help stabilize it.

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It’s a pretty innovative use of BAL rewards. I’m absolutely supportive of redirecting these BAL mining flows to support the XTKETH ratio.

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Would be happy with the XTK Buy Pressure and if we were going to do a Lottery system then perhaps we should talk to PoolTogether? Lock XTK/ETH LP tokens for rewards - maybe get some POOL tokens ontop.

I LOVE THIS IDEA! Great Work :clap: :clap: :clap:

Sounds great! :partying_face::partying_face:
Lottery idea has potential but I think the details would have to be thought out a little more.

Yes I’m in favor of that.
Great proposal!