This is almost impossible to achieve.
In the previous granada vote, there was 68.27% participation. Out of that, 47% of them (of the 68%) voted pass. Escape hatch needs 60% of bakers to vote for it which is a much higher bar than voting a proposal…
I have no idea, but i’d like to vote via configuring my baker to signal to shut down. Need to look up how to do this, so i can do my part from my side. But it would just be easier if a proposal was included without LB, Burning fee won’t work unless there is a strong asset, tzBTC seems like a failure, and the metric we need to look at is the chart I posted above. We either try another asset, or we just shut down LB.
https://tezos.gitlab.io/alpha/liquidity_baking.html
last part tells you how to signal to shut it down. but like I said, the math makes it practically impossible.
I am strongly opposed to disabling LB from bakers. First of all, as I’ve always said, Liquidity Baking is a wonderful fantastic thing for the ecosystem. It’s merely the token that’s there right now that’s wrong for many reasons, and USDtz is the right token for many reasons. That’s all. I am confident that we will change the token but we don’t need to, nor should we, do anything else before then.
It’s still important to build up liquidity baking even if it’s not perfect yet. More integrations in wallets. More integrations in exchanges. More analytics tools. More reporting and attention. Please see the long term perspective of what Liquidity Baking can and will do for the ecosystem. It is very much a seed. It will help bring Tezos DeFi TVL from $100 million to $100 billion. That is the long term ‘offset’ of the subsidy. Not a literal offset but one that makes it worth it.
The inflation rate, yes is 7200 XTZ per day, which is 2,628,000 tez per year. Yes, that’s a lot of Tez but in terms of the overall supply in circulation, 861,394,987.23 XTZ as of this tweet, that’s a little less than 0.305% added inflation per year. Figure 4 months until a token comes in that can produce enough volume to offset the inflation fully comes in. For 4 more months, we’re talking inflation of 1/10th of 1% or 1/1000th of the total supply.
In fact, I am of thorough conviction that when USDtz comes in, that USDtz volume in LB will be so high that it will not only offset its own subsidy completely but go so far as to offset the subsidy of its predecessor in LB, tzBTC. Let’s focus on that.
Let’s focus efforts on efforts to make liquidity baking better through the on-chain governance process. Not like this. This is not the way. Let’s build on all the progress we made, so to underscore Tezos values — that of a true digital commonwealth. PsCUK lost the vote, but achieved a political WIN. We are lucky to have on-chain governance. It keeps us united. Without unity Tezos has nothing; with unity Tezos has everything.
We can shut down LB, AT LEAST, until tzBTC is ready, obviously is not ready, and it could pass months and months with the same issue that is so hard to mint, and that there is only 1 entity that can do it, and they don’t even answer emails.
Or until another asset is ready, it could be USDtz, or another, i don’t care, i just don’t want to see inflation for YEARS, it could pass years until finally all the entities involved with tzbtc (gatekeepers, keyholders) finally put their shit together and start offering a reliable way, so anyone can easily send KYC, mint, and unmint, without having to send old communication technology like emails to them. Come on people. The end doesn’t justify the means, the end is liquidity, and the means are the sacrifice of the individual XTZ hodler, who puts their hard work earned money into XTZ. The burning fee was supposed to cover all the inflation generated for LB, it didn’t work as expected, and now all hodlers are being sacrificed in the name of liquidity.
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Hi Kevin,
Firstly, thanks for all the extensive feedback on this topic. This may be a naive question (and if it has been addressed previously I may have missed it), but instead of a full replace of tzBTC with USDtz, would it be possible to LB with both options? In other words, does this have to be an ‘either/or’ situation?
I’m not sure if two pools would be feasible, ideally the subsidy wouldn’t be increased but instead split across the two (weighted towards size, or something). Maybe this breaks the math but figured I would ask.
If possible, this seems like a less-contentious option, and tezos would benefit from LP from both pools.
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Please don’t presume to speak for me. Thank you.
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Hi, there will be some version of that for the next proposal. There are two issues with tzBTC that I’ve raised:
- tzBTC is distributed in a very centralized and expensive manner that makes it challenging to acquire or to otherwise bring in to secondary markets without the liquidity provider incurring a loss.
- BTC the wrong denomination to for a low-risk profile investment unless you’re solely targeting holders that are perennially long/bullish on BTC and Tez, and who do not believe that there will be a prohibitively significant decoupling of the price of Tez relative to BTC.
However, the best part of losing a proposal round in the on-chain governance process is you can learn from those who disagreed, reflect on their words, and adapt that to your thinking and actions for the next time. That’s how we grow, how I grow, and how I hope everyone can grow.
Since many people do fit the category of wanting both Tez and BTC as their investment pair, and because there have been signals from the intellectual architects of LB that high correlation would be preferable, we will submit a proposal for a better BTC option than tzBTC — that is, BTCtez (BTCtz).
Distribution of BTCtz has all the benefits that USDtz offers in that regard, while keeping the BTC-backed denomination.
However, volume of trade will likely be a fraction of the XTZ-USD pair as is the nature of XTZ-BTC pairs on any marketplace, so we will submit XTZ-USDtz again as an option as well.
You can expect multiple proposals next time. Respectively: a proposal for XTZ-USDtz, a proposal for XTZ-BTCtz, as well as a proposal for XTZ-USDtz and XTZ-BTCtz together.
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This sounds exciting, could you please explain a little bit further about LB for both USDtz/BTCtz ? Is the subside simply split 50%-50% or in some more dynamic ways ?
I saw protocol I (Protocol I · Milestones · Tezos / tezos · GitLab) will likely reduce LB escape threshold from 50% to 33%, this is welcome and fair. But it’s still good to add a proposal without LB for next upgrade. After all, there are indeed some community people want to remove it and it’s not a small enough noise to ignore. I strongly believe in LB will continue so provide all major choices can only improve the overall confidence . And the USDtz LB proposal is also a proof that it really didn’t bring too much development pressure to core team at all.
The subsidy is not a big deal at all compared to how much value LB will bring to the Tezos ecosystem, and I mean that in terms of real dollars. LB, if successful, can increase the value of tez (XTZ) many multiples in price. If successful, LB can escalate Tezos DeFi TVL from the <100M it is right now to the 10s-100s of billions of dollars, which is where Ethereum DeFI is now Of course that would likely do wonders for the price of XTZ.
The problem people have with the subsidy is that the supply of tez increases, diluting the value of their own tez supply relative to the whole. However, cost-benefit analysis; if the benefit to the price of tez that LB affords it as a consequence of its success exceeds the cost that will come from the dilution of supply, then it is a net value and therefore worth it.
First of all, it doesn’t increase the supply enough that people should get so worked up wanting to escape hatch LB. We’re talking 2.5 tez per block, which is 7200 tez per day. that’s 2,628,000 per year out of a current total supply of 865,566,320. That’s 0.3% per year (three tenths of 1%…) that’s it!!!
And that’s before the subsidy offset that comes from trading volume because the fee (.1% of every trade) is burned to in part or in full offset the subsidy.
We are well within the early point LB as an experiment that it is worth ITERATING so to perfect it. The value is far too great for Tezos DeFi. Escaping LB would hold Tezos DeFi back and I believe it would strongly hurt Tezos. I was very disheartened to see my words and charts adulterated for this purpose. It shows they missed my point completely.
Nothing in my proposal was to criticize the subsidy. The subsidy is a good thing. It gives investors a stable confident expectation of return, which is what will pour billions of dollars in to Liquidity Baking and thus for Tezos DeFi in many multiples in secondary and tertiary extensions to the many independent DeFi projects we have on Tezos today. These LB investors who will come in (outside money, institutions) are those investors who do not want the variability of a fee-based %return from an traditional liquidity pool contract, but rather the guarantee of 2.5 tez per block in proportion to their investment to the whole. That’s the incentive.
We will propose an equal subsidy for both pairs, which together would be a 0.6% supply increase only. I assure you, the intended result of this is to create a benefit that far far…far…exceeds a 0.6% supply increase. And that’s without the offset. Let’s talk about the offset. I honestly believe that the XTZ-USDtz LB pool will be so successful in terms of trading volume that it will not only offset its full subsidy (to which it needs to achieve 7,200,000 XTZ volume per day average), but can also offset the subsidy of its counterpart, the XTZ-BTCtz LB pool (which will independently achieve enough liquidity to offset itself). Perhaps it will even offset the subsidy that had been issued through now with the wasteful tzBTC. All of this while expanding Tezos DeFi and the independent projects within it with billions of dollars in TVL.
Bakers: Do not escape hatch LB just because tzBTC is a failure. It’s not the fault of LB. It’s the fault of tzBTC. Give us a chance to make LB worth it by changing the token pair, and I promise you you will be happy with the results. The next proposal round starts in 4 weeks.
This will be very hard to get bakers’ support. Promise won’t work in blockchain world. I really would like to believe but there must be a good way to measure the LB successful rate. For example, if after 6 month, the trading volume/burning fee is less than 70% of subsidy, the LB subsidy will be removed or reduced automatically without the need for bakers to signal escape hatch.
If this kind of flexible LB subsidy logic exists, bakers probably happily to support even more LB pairs without the fear.
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This is an excellent idea and simple, it is true that promises don’t work in blockchain, and we shouldn’t have to campaign to convince the majority of bakers, that LB didn’t work and that we are just losing money with it. Not fair, that some bakers would be willing to keep the experiment going and lose money for a whole year, or years, and that because of them, the rest has to self-sacrifice along with them, because they are not voting to end the subsidy.
0.3% yearly tax is a lot, is 0.3% loss a year. Even if it is very little, it is still something. It should be funded voluntarily, if is that little, fund it with your pockets.
For that to happen, for the price of TEZ to increase due to LB that would make the tax to be worth it, it would need the trading volumes to be enormous anyway. Not just TVL, it would literally need the burning fee to burn at least 50-70% of what is being printed to fund LB. And you are talking about a promise, you are promising me that with USDtz that will happen.
I used your data and charts to shows how LB is making us lose money and hasn’t generated volume, and why it must be shut down. I voted for USDtz (because anything is better than tzBTC at this point) but since it lost the election, the only thing left to not keep losing money is to shut it down. But you were very outraged that i used your charts, but as a TEZ hodler, i can’t be outraged that i’m being taxed and losing money at 0.3% a year? Is childish that you get MAD because i used your charts to illustrate how we are losing money and why it should be ended, do you at least own 100,000 XTZ as a hodler? Because you would care about 0.3% loss a year, IF you were a big hodler.
YOU WANT a 100% tax increase? From 0.3% to 0.6% a year? 0.3% wasn’t enough? GIVE me a break, i assure you, i PROMISE YOU, my ass. Fund it with your pockets!
Bakers pleaseeeeeee do not escape hatch!! Before, let me try again with a 100% tax increase to 0.6%! I promise this time it will work! I assure you it will! That’s how you sound, you are a scoundrel, shameless.
Guys, promises don’t work, too emotional words normally don’t work either. Sometime promises do deliver, and almost always emotional arguments become worse.
Let’s keep it civil, ideas to ideas, opinions to opinions, don’t attack each other just because you find others have ideas you don’t like.
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Even if they worked, is not right, the means doesn’t justify the end. We are talking that a majority vote imposing a tax on the hodler, as if the public good was above the interests of the hodler. Shouldn’t be. The public good should not trample the individual XTZ hodler right to keep the fruits of his labor.
Yep, your opinion is not necessarily false, but aggressive talk just give your opinion negative weight, which mature debaters should avoid as much as possible
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This kind of social programs should be funded voluntarily with the rewards of the @tezosfoundation, not forcing anyone. If not, the TF is there for what? If the TF is not willing to do it voluntarily, why the hodler should be forced instead?
It would be equally wrong, if the majority voted to tax the TF specifically to force the TF to fund LB, than if the majority voted to force the hodler to fund it. Majority is becoming tyrannical.
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Promises are not necessary. Let’s do math! Take a look at USDtz Liquidity-Volume ratio on Quipuswap. Scale the volume to be on par with Liquidity Baking’s current (albeit disappointing) Liquidity. I’ve demonstrated this in previous posts in this thread.
Historical Liquidity Baking volume under the XTZ-tzBTC contract pair
Liquidity Baking - Liquidity pool size
Quipuswap Analytics XTZ-USDtz pool
The XTZ-USDtz pool, despite having 1/25th of the liquidity pool size of Liquidity Baking, is outperforming the volume of XTZ-tzBTC in Liquidity Baking.
Now consider how much easier and more affordable it is to acquire and supply USDtz (or BTCtz) than it is to acquire and supply tzBTC, to achieve the expectations of Liquidity Baking’s size (“It should be well over 100x greater than the current largest liquidity pool”), and scale liquidity-volume based on that ratio.
It would most definitely amount to the volume expectation that will not only cover the cost of its own subsidy but its counterpart, and even make up for all the failure tzBTC cost. Effectively, USDtz will clean up tzBTCs mess.
To completely offset its own subsidy, all that’s needed is 7.2 million XTZ volume per day.
Again, don’t trust my promises. Do the math. Compare it to external market volume. Take any comparitive metric you like. All roads lead to the same conclusion.
I kinda agree with your math if everything plays out nicely, so that’s why I suggest to add a burn fee check logic in your proposal (a simple one: 6 month later, check average daily burning fee for 2 cycles, if burning fee > 50-70% of subsidy, then keep the subsidy, otherwise stop/reduce the subsidy). That way can put a lot more relief to bakers when they decide which proposal to support, at least that’s for me.
You seems confused tzBTC with BTCtz, I think Kevin’s proposal is BTCtz which is the same as USDtz operated by stabletech.
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