Rewarding BPRO holders

As it stands BPRO is a token without cashflow and can only be used for governance of the protocol. I believe that holders of the tokens need to be rewarded for their role in the governance.

This will incentivize users to hold their token leading to less velocity and thus a more stable userbase which is in the interest of the protocol.

Bprotocol currently get its cashflow from liquidations, the proceeds of which get shared 75/25 between the liquidator and the jar (which in turn gets shared pro rata by score holders),

I propose that we divert some of this cashflow to BPRO holders by having a new contract buy BPRO on the open market and subsequently burn it, creating upwards pressure.

The community has come to a consensus and before making this into an official proposal I want to gauge interest. We need to decide on the following;

  1. Do we actually want to implement a buy/burn strategy to reward BPRO holders?
  2. How should the cashflow be divided (e.g. 75/20/5 for the liquidators/jar/BPRO holders)
  3. To buy on the open market we need a good source of liquidity. A proven way of doing this is by allowing liquidity tokens to be staked. What do we reward the liquidity stakers? (e.g. 1 BPRO per block)
  4. Where do we source the liquidity? At the moment there is a sizeable pool on Uniswap v2 but why not see if we can do a deal with Sushiswap? They get guaranteed trading fees and LP’s get SUSHI on top of their BPRO rewards. (any better ideas?)

Any input is appreciated but keep in mind to balance the interest of all stakeholders (liquidators, debt suppliers, and BPRO holders). The system cannot function without any of them so we need to make sure that we don’t drive one group away.

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I don’t feel like I’m really able to speak detailed about how I feel the reward should be, but I do know that I feel like holding BPRO should be rewarded. I hope this can spur a discussion that will lead to a proposal which I can support!

  1. I think we should do a buy and burn using liquidation proceeds.

  2. I agree that BPRO token holders should get a cut of the revenue. I’m not sure what the right split should be, but 75/20/5 seems like a good starting point.

  3. I think LP staking is also a good starting point, but we want to avoid the farm and dump problem that can occur with new protocol tokens. We could explore some ideas such as vesting, LP token lockups in order to get the BPRO rewards, etc. I also think the inflation for LP’s should be relatively low.

  4. I think Sushiswap is the best place to migrate liquidity because we can use their Onsen program to further incentivize the pool. I am a SUSHI whale, and I am willing to commit to locking a significant portion of my SUSHI into the recently announced oSUSHI when it goes live to boost the rewards of the BPRO-ETH Onsen pool. I hope there are other large SUSHI holders in the BPRO community that are willing to do the same.

I think this is a great idea and thanks for the proposal:

  1. I like buy and burn. Many don’t like this and point to MKR, I would argue at the end of the day staking is much less gas efficient, tax efficient (for certain jurisdictions) and results in the same thing. Buy and burn is an elegant way of returning value to tokenholders

  2. Agree here that 75/20/5 makes sense, start out small and we can always reassess later on

  3. Not sure if in the long run we would need this there are plenty of projects with deep liquidity and no incentives, ofc these are mature and high MC projects so that helps. BUT in the shorter term I would think LP mining specifically in the context of creating liquidity to buy back and burn makes a ton of sense so no objections here. I know we are discussing this more broadly in general so perhaps there is a way to combine this with the other proposal but not sure if that makes things overly complicated

  4. Sushiswap onsen 100% the way to go

Thank you all for the input.

Regarding the emissions for staking (or in general actually) I would like to see a delayed emission. Get half now and the other half in 6 months or so, like Sushi.

In the meantime, more feedback and discussion is appreciated!

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Thanks for your good proposal. The main problem is that there is no benefit to having BPRO. It would be natural for whales to bring BPRO to the market.

I think it would be beneficial for both parties if the Compound would accept BPRO, but given their conservative nature, it may be difficult.

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Love the sushi model with vesting, think vesting is a great model for any token to align incentives to be more long term

  1. I disagree with the buy/burn model and would instead recommend BPRO Governance to vote for a “smart treasury” as described in an article by Placeholder VC link , which facilitates a buyback and make model.

  2. Cashflow should be directed to a smart treasury and its applications decided (voted) later (as it grows) by the DAO Governance.

  3. Stay away from farm/dump. Utility via integration with other DeFi Money legos MUST happen before… otherwise there will be no other utility for BPRO but just to dump them in the market.

  4. LP rewards on Sushiswap, 100%

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Are there any projects that use the smart treasury design by Placeholder? It sounds good- but never having seen it live I’d be hesitant to go with an experimental model, vs buy/burn. Buy/burn is so simple and effective, it’s elegant. But serious consideration should also be given to burning bpro in the community reservoir, in addition to buy/burn from the open market. Maybe match buy/burn. Sushi is a great idea, onsen would be phenomenal. Additionally to the idea of getting bpro listed on compound- I think that’s a long shot. More realistically, a listing on cream would be advantageous. Cream is part of the yearn ecosystem, as is sushi. Is the bpro that was awarded to the liquidators at genesis meant to be sold to fund operations? Or is there a requirement to lock a certain amount of bpro to be a liquidator? It would very much make sense to require locking of bpro to participate as a liquidator.

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Idle Finance already has a smart treasury (based on Placeholder).

Something that should be discussed, but is often not, for a variety of reasons, is the price of bpro. For example, I recently watched the genesis event of Dfinity- in it, they explicitly stated that they gauge the success of the network based on the price of their native token. The higher the price of their token, the more secure the network, and the more likely it will succeed long term. The same concept applies to BProtocol. At all times, primary consideration should be given to how governance decisions will effect the price of bpro. It seems like there are more examples of a buy/burn model having a positive effect on price action than the smart treasury model.

EDIT: This is a really important topic in the beginning stages of a DAO. I understand that the core team wants to somehow “detach” itself from Governance as much as possible and let the rest of the community lead the conversations. At the same time, imo, its crucial that @yaron and the rest voice their personal visions since they are a part of the Bprotocol ecosystem and we need to come up with solutions that are as inclusive as possible.
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Me thinks that judging the success of a project and the quality of a protocol by it’s price is wrong and it’s not what DeFi should be about. That’s why I disagree with the buy/burn model and will vote for a smart treasury instead.

This might seem silly now but I am willing to revisit this thread during the next bear market.

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The opportunity to compromise and sabotage governance is present when the cost of doing so (via acquisition of gov token) is not high. This is a well established and often discussed principle. Not controversial and that this fact is even being debated is astonishing.

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yes… I know where you are getting and will 1000% agree with you in the sense that they are real.
Price is not how you prevent them (think flashloans or even evil DAO attacks), so the solution must lay somewhere else. There are amazing examples and research using smart treasuries, elasticDAO, dxDAO, D2D syndicates, and some others.
Feel free to dm in case this stuff keeps you up at night :nerd_face:

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My vision is that community and governance should be designed bottom up and not top down. Namely, it should evolve from community discussions, and it is great to see discussions are taking place.

To give a more direct answer, i have a clear vision on my head about how backstop should be designed, and I do not have an answer on how governance should. So I focus on what I am good at…

That said, as some people already know, and some might notice, Eitan, who leading the community and ecosystem in smart future labs (the company that developed B.Protocol) was hospitalized couple of weeks ago, and still in recovery. In a week or so he is expected to return in some capacity, and then maybe we can share some thoughts on the proposals.

A community call might also be in order.

In the mean time, I can answer specific questions, if you have any.

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I think its far too early in the project to be discussing rewarding token holders. If you think if bprotocol as an ‘early stage startup’ or whatever, the marketing budget (token incentives) should be spent on growing the core business (total liquidate-able loans available), not focusing on how to maximize yield or cap gains for the token holders in the short term.

Opposed to buy and burn in general as well.

Agree with Uncornio that this simply isn’t important right now.

IMO, at least until there is a big opportunity for lots of liquidations (basically a big dip in the market or even a bear market), the goal should be to amass as much risky-ish loans as possible. Mechanisms that will reward token holders should really only be considered once we’ve seen a whole cycle of how bprotocol works out, meaning:

  1. attract people to use the product so their loans are here
  2. wait till we see at least one big dip where lots of liquidations happen across the defi ecosystem
  3. see how bprotocol performed with regards to successfully achieving profitable liquidations
  4. see how profitable the protocol is.

Once this cycle has occurred at least once, that’s the time to start thinking about rewarding token holders - because the “business model” will have been proven to be successful and profitable.

Otherwise, we’re just discussing how to distribute phantom revenue.

As an aside, I think potentially a more elegant solution than buy and burn or the regular staking (distribute profits directly in eth, or buy bpro with profits and distribute) is to award bscore in some fashion to bpro holders. There is already a revenue distribution mechanism via bscore, why not use it?

In any case, I reiterate that I believe this discussion to be extremely premature and I’m pretty against any model that seeks to “reward tokenholders” - at least in the short term.

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+1

bprotocol has this amazing good problem that it has potentially 2 units of accounting: BPRO and the bscore.

This must be leveraged not only to create a governance framework/model but also about what other utilities can Bprotocol have…

SPOILER: “CREDIT SCORE, for retail and Institutional liquidity providers”

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i think this should be the last move in order to reduce token velocity.
It is true that the burn mechanism is the easiest and fastest way to raise the value of a token but it does not realistically raise the value of the protocol. I would rather support a “token use-case solution” that would add value to the protocol.

Thanks for the proposal

I personally don’t like the buy/burn method. To be effective/noticeable, there needs to be a lot of buying pressure, I cannot see that with the allocation proposed.

I would rather see a way of either increasing the cashflow to token holders vs no token holders, or even better divert some amount of cashflow and provide grants to community projects that can provide increase cashflow (additional TVL, enable riskier pools, become backstop of other protocols)

The way I see it we need to create cash flow and incentives for token lockups, period. This way we stabilize volatility and give users a reason to hold Bpro. The liquidity miners are introducing new tokens and dumping them. By accruing 5% cash flow to gov tokens and incentivizing token lock there will be no reason for whales or regular users to sell. Maybe a portion of future emissions can be put towards staking rewards for bpro. Not a fan of the buyback/burn method but the smart treasury idea that was proposed in this thread looks promising.

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