In practice, I support the ideas behind liquidity baking. I am concerned, however, in the way this protocol is being presented.
As far as I understand, the intent here is to produce one proposal for G which tightly couples an asset (TzBTC), asset issuer (Bitcoin Suisse), and exchange (Dexter) to a number of common sense improvements (faster consensus, lower gas). This effectively means that if the community wishes to uptake common sense improvements we must also decide to crown TzBTC, Bitcoin Suisse, and Dexter as “first class” assets, teams, and products in the protocol. This is bad.
By accepting a single choice for Protocol G, the bakers and users of the network effectively cede a broad range of powers to the Core Devs (Marigold, Nomadic, DaiLambda) to pick and choose winning and losers at the asset (TzBTC vs wBTC), team (Bitcoin Suisse vs Bender Labs), and product (Dexter vs Quipuswap) levels. This should not be the job of the core protocol teams and it creates a bad precedent and slippery slope for future proposals.
Tezos clearly defines bakers (validators who have been given voting power by users of the network) as the stewards of network’s well being. By coupling Liquidity Baking to common sense improvements, the Core Development teams erode the purpose of bakers and give the development teams undue influence. Instead, if core development teams think that Liquidity baking is in fact a useful feature, they should present a variety of protocols [1] and let the bakers choose.
The precedent being set here is extremely important to how future protocol and product development on Tezos happens . As with Baking Accounts, I’d expect/hope that a number of proposals are injected and Bakers can decide on the right asset. I’d suggest we inject the following:
- TzBTC, backed by Bitcoin Suisse
- wBTC, backed by Bender Labs
- EthTZ, backed by StableTech
- Granada with no liquidity baking
The bakers, as stewards of the network, should be able to choose if they want first class assets, and if so, what that asset should be. Perhaps TzBTC is, in fact, the obvious choice. If so, it should be no problem to let the baker community make that decision. I am happy to lend my time to work on creating / injecting these other protocol upgrades if there is broad support from bakers.
To be clear, I have no moral oppositions to liquidity baking (it’s a neat feature) but I have grave concerns with how the asset is chosen. I sincerely hope that the teams working on this will make the right (but harder) choice of presenting a slate of options.
[1] To their credit, Florence contained a few options for Baking Accounts and equally controversial feature. I commend the core development teams for their efforts here.
