Well, everybody knows i’m very vocal against the use of subsidies, because they are prone to corruption and people looting us through the subsidy and that subsidies must be funded by taxing us.
But i have an idea, to make LB more fair.
Since tzBTC has been proven near impossible to mint / unmint, and that affects the trading volumes of the liquidity baking contract because nobody wants to own an asset like that. Then let’s make LB smart and more fair, let’s make LB in a way, that, we can add more than one asset to LB contract, let’s say tzBTC, usdTz and USDC, and many more, the more, the better, and the LB contracts knows which one is generating more trading volume, then the LB contract assigns more subsidy to the asset that generates more trading volume, in other words, the assignment of resources is proportional to the amount of generated trading volume.
This way, the assets need to “compete” for which asset gets more subsidy. And it makes it much more difficult for bad actors like the TzBTC.io gang to loot the subsidy.
Let me clarify if you guys couldn’t understand me. The LB contract will be more intelligent. The LB contract will measure which assets pairs are being traded more, and based on that, the LB will allocate more resources of the subsidy to those assets that are being traded more. If an asset, like tzBTC is generating 0 trading volume, the LB contract will know it, and will allocate 0% resources to the LP’s of that trading pair. If USDC has 90% of the dominance in trading volume, the LB contract will allocate, 90% of the total resources of the subsidy to XTZ-USDC liquidity providers.
This eliminates or makes it extremely difficult to be corruption, or certain groups of people robbing or looting us through the subsidy, with negligence tactics like not allowing or making it near impossible for anyone to freely mint/unmint, like is happening with tzBTC right now.
With this system, tzBTC would have to get his shit together, to receive the subsidy. And will also allow multiple assets to compete for the subsidy like USDtz and many others, the more, the better.
Wow, maybe folks should have listened to these criticisms like a year ago when originally surfaced. MAYBE TF SHOULD CEASE ITS NEGLIGENT BEHAVIOR AND ENGAGE MARKET MAKERS.
Honestly, this idea, to make LB more fair, is so much harder to implement. The best way is to end the subsidy, which is funded by taxing us, the hodlers.
Imagine using the most revolutionary on-chain governance, not for technological upgrades, scaling, privacy, etc, but for taxation, what a way to misuse on-chain governance. Educate your baker and ask him to vote to end liquidity baking using the escape hatch.
LB didn’t work and we still funding it. We have liquidity standing there, but that is not even being used, the goal of LB was not only to get liquidity, but also USE the liquidity to serve trades. And it failed, and we still are taxed to fund something that does not work.
Imagine taxing your citizens to fund a school, you build the school, you hire teachers, but no students go to the school. Why keep paying the teachers? If there are no students to teach anything? Well, teachers are liquidity providers in LB. And the lack of volume are the missing students. Then you find out, that, the school managers, didn’t want any students to join the school, they were asking lots of requirements, sending emails, opening a bank account, KYC, and having at least 1 BTC to join, that is tzBTC.io gatekeepers.
I have to say, I agree. I wanted to mint some of my BTC to tzBTC, but then realized that it was too complicated and had too many requirements. In general I think the inflation of Tezos is too big at the moment for the amount of interest that the blockchain inspires in the crypto world at the moment. Price precedes hype and if we want people to flock into the Tezos ecosystem, the price needs to stop tanking. For that, reducing inflation would go a loooong way. LB is not helping at all, since there’s no liquidity and nobody is minting tzBTC. We definitely need a better/easier way to mint tzBTC or remove LB completely.
Because I wanted to contribute liquidity with the Bitcoin and XTZ I have, not buy XTZ in an exchange (pay fees) to then buy tzBTC (fee, slippage) and then add liquidity to the pair.
I don’t want to escape hatch LB but I think we need other pairs. tzBTC didn’t work, clearly.
I would love to see how @KevinMehrabi’s idea of changing the pair for USDtz and BTCtz would work.
