BIP-87: bveCVX restructure - voting strategy and emissions - Revised with community Feedback

BIP | Badger Improvement Proposals
1

Category: Vault strategies and emissions

Scope: bveCVX and bveCVX/CVX LP rewards management

TL;DR:

  • Change bveCVX voting strategy to selling bribes by default, with an option to strategically replace bribe selling with emissions if deemed reasonable by the Council.
  • Take the following fees in vote weight:
    • 5% to support DAO operations
    • 5% to support bveCVX/CVX LP emissions
    • 5% to support BADGER/WBTC CVX & CRV yield
  • Rewards from the bribe selling would be distributed in 75% bveCVX / 25% Badger.
  • bveCVX would keep participating in the Boost as native balance per BIP 85 and also would become available as collateral on Rari while keeping the rewards and the Boost power.
  • Stop distributing Badger and cvxCRV from the emissions schedule to bveCVX unless it’s deemed cost-efficient to buy the vote weight from it.

Overview

The current state of the Convex bribe market is that every $1 spent on bribes is distributing about 1.26$ to the entire pool that bribed vlCVX votes.

This means that to get breakeven on your bribe, you need to own at least 79% of the pool that you’re voting for.

As Badger currently takes 20% performance fees on most Ethereum vaults and Badger emissions to bveCVX are akin to bribing, even at 100% Curve pool capture the DAO would still be losing 75 cents on a dollar spent on bveCVX’s vote weight.

This means that the Badger flywheel isn’t possible in the current market conditions, and spending Badger and cvxCRV emissions on bveCVX is cost-inefficient for the DAO.

At the same time, if we were to make the voting cost-efficient, a lot of CVX would likely leave the app.

BveCVX holders have signaled that they’re interested in having yields comparable to Votium, and this proposal is meant to implement a more sustainable bveCVX model that:

  • Keeps the bveCVX APR competitive
  • Doesn’t require the treasury to spend Badger or cvxCRV
  • Is supportive of Badger ecosystem
  • Emits a mix of more bveCVX and BADGER bought from bribes.

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Specifics.

By default, bveCVX would be:

  • Selling 85% of its voting power for bribes to buy 75/25 bveCVX and Badger and distribute it to bveCVX holders
  • Selling 5% of its voting power for bribes to buy Badger and distribute it to bveCVX/CVX LPs
  • Selling 5% of its voting power for bribes to buy treasury bveCVX (the operations fee).
  • Voting with 5% of its vote weight for Badger/WBTC LP on Curve.

bveCVX and bveCVX LP would keep being counted as native in the Boost, and could be utilized as collateral on Rari while keeping the rewards and the Boost power. bveCVX LP holders would keep getting the underlying bveCVX rewards from the bveCVX in LP.

The proposal also suggests isolating the treasury’s bveCVX and focusing its voting power on Badger/WBTC Curve V2 pool rewards. Note that as specified below, this default behavior may be changed by the Badger Council.

bcvxCRV and Badger emissions from the treasury towards bveCVX would stop, but there would be an option to buy up to 21.25% of bveCVX voting power by replacing the bribes with Badger emissions if deemed cost-efficient.

The decisions about changing the DAO’s voting with its own weight or replacing a portion of rewards with Badger or other token emissions would have to be:

  • Discussed for at least 48 hours in #bveCVX-voting channel on Discord
  • Ratified by a Badger Council vote.
    • The Badger Council may appoint a subcouncil to handle this decision-making.

Implementation.

If approved by the governance, this BIP would change the way the voting weight is handled for bveCVX.

Extraordinary bcvxCRV and Badger paid from the treasury to bveCVX would stop and be replaced with bveCVX and Badger tokens acquired through bribe selling.

Emissions could be used strategically if deemed reasonable by the Council, replacing the bribe yield.

Do you approve of the changes to bveCVX proposed by BIP-87
  • Yes
  • No

0 voters

4

I voted no.

I wrote a lot of this on the discord but i’ll repost relevant bits here.

I have long maintained that CVX is the most important aspect to the Badger ecosystem since Convex governance went live and we all realized that within the Convex/Curve ecosystem the native support for bitcoin defi yield leaves much to be desired.

The launch of the CVX partner focused ecosystem therefore made a lot of sense! Naturally, over time, it has become clear that the current iteration of bvecvx is not profitable or sustainable long-term for the DAO. The goal should naturally be to update the tokenomics/rewards/influence decision making of the sett to better align the goals of CVX holders and Badger DAO itself. I don’t think the answer is to add further complexity to the ecosystem.

I think a vastly superior option would be to take the fee tokenomics described in this proposal and apply them to the current bvecvx sett. I envision fees like this:

Fees:
* 5% to support bveCVX/CVX LP
* 5% to support DAO operations
* 10% for WBTC/Badger

On the rewards side I understand the goal of wanting to reduce emissions. But Badger is a valuable tool to incentivize CVX deposits into the ecosystem that is critical to ongoing operations. Badger since it’s inception has demonstrated that trading some badger emissions for fees is a good tradeoff (see treasury buildup pre convex governance launch and the hack). In fact that is how setts at Badger have long since provided a portion of yield to this day. Given the importance of CVX trading some Badger emissions for continued growth of CVX deposits makes sense.

I envision rewards like this:

Rewards:
* Continue to sell 100% of bribe revenue
* 75% of bribe rewards autocompounded to more bvecvx
* 25% of bribe rewards used to purchase badger and distribute (and in the event
it makes sense flexible with other yield sources as described above)
* 10% target weekly badger yield in incentives (governance can increase or
reduce)
* bcvxcrv extra emissions end

Utility:
* bvecvx and bvecvx lp Can be used on Rari & Count in boost

I think this does a few things verses multiple wrapped versions of cvx:

     *You have a single CVX product.  KISS
     *You get greater influence and treasury support vote weight and fees than you 
        would if you broke these up into two smaller sets (20% Total Fee/Influence 
        voting vs 10% and 20% products)
     *You pay for some of that extra fees with badger emissions that already exist 
        and have always been part of Badger yield.  This trades badger for 
       CVX/CRV/Influence in a sustainable way and also continues to make bvecvx as 
       competitive as possible with votium
     *Adds consitent Badger buy pressure and gives yield flexibility with CTDL etc.

I am sure i’m missing some things or misunderstanding others but happy to hear other people’s thoughts as well.

         would if you broke these up into two smaller sets.
1 Like
5

I’m voting no. It’s clear I don’t understand what affect this will have on my primary vault - ibBTC. It seems like this has the potential to siphon CVX away from generating yield on my BTC. It also appears to me that BADGER is the reward on the base bveCVX vault and I’ve got ongoing concerns that BADGER rewads while steps in boost are in place are a bad idea. I’m happy to be educated if I’ve got any of this wrong. IMHO, the BIP is not clear on cause and affect.

1 Like
6

Thanks for the response. I think the main motivation of this is to give more optionality to users. The hypothesis is there are a lot of CVX holders that dont care about BADGER (and the data supports this, many bveCVX depositors that dont hold badger or deposit into other vaults). Adding wrappers is fairly trivial so we are hoping we can provide a fes different ones to meet the desires of most CVX holders. We also thought a 20% straight fee was much higher than competitors and we didnt want that scaring people off. In your model people are only getting 60% of pure CVX return.

We are also trying to limit yield redirection and emissions complexity right now. With this breakdown I do think its getting close to your proposal and maybe there is a market for another flavor with some different behavior. If we are able to eventually get a gauge for bveCVX we may be able to add all of the wrappers to rari as well.

7

will let others weigh in on the specifics but on the steps in boost point, it is imminently being removed.

8

Badger will always be at a disadvantage when it comes to cost efficiency of bribes compared to other bribers because Badger doesn’t realize benefit from bribes without pool capture. For other protocols, they typically bribe a pool because they want the pool to be large to attract liquidity without necessarily any expectation of profiting off of the emissions directed towards that pool. (Although this would change with bribes for Badger/WBTC & bveCVX/CVX I assume)

So I agree that the strategy should be focused on farming other protocol’s bribes and taking a small fee. I think compared to “the union” this strategy of auto-compounding CVX is the most appealing strategy.

Frankly I don’t see much of a market for the new bveCVX, people who would voluntarily give up 10% of the rewards and receive BADGER emissions instead which do not auto-compound. If I could have the option to receive my CVX rewards in this bveCVXcvx pounder vault instead of bveCVX as you have described here I would take it for all of my vaults (namely bcvxcrv).

1 Like
9

That’s my main thesis ser. I think we can capture 5-10 million CVX with a 10% fee pounder. It would be great if we could do it with 15%, but I think that would result in way less deposits.

At the same time, there are people who are Badger MAXIs and are farming BTC for boost. The original idea was that CVX would vote for BTC emissions, but that’s totally inefficent at this point. I think the idea was to provide Badgers somewhere to put their CVX that would help them farm btc.

By being in a sett that.

1: Buys Badger
2: Votes takes some extra fees to vote for emissions on badger creating demand, and perhaps somewhere to farm it for more than that 10% when combined with other efforts.
3: Is good itself for boost allowing the user to earn more BADGER on their BTC.

We provide users a way to get more BADGER and also create buy pressure/support the price.

There has however been a lot of conversations on discord with the community around the fee/yield strucutre and how to make bveCVX competitive.

The following was suggested:

  • 15% bveCVX + Boost
  • 10% bveCVXpounder + no Boost

An extra 5% fee will be charged on both tokens when they are deposited into rari and being used as collateral.

Does that seem better?

10

Note that the BIP has been revised based on feedback from the community here and in discord, and the vote has been reset.

1 Like
11

The restructuring raised in this BIP-87 seems consistent given the underlying state that drives it. However, we must analyze the points and ideas raised by Prince_Tok.

12

I am a much bigger fan of this updated single vault proposal since it is mostly autocompounding :slight_smile:

I would ideally like to see something closer to 75% bveCVX compounding and 10% Badger buy and distribution rather than 63.75/21.25. However, I understand this is a compromise between people who want CVX and Badger and we need it to significantly support Badger considering it’s counted in boost.

Looking forward to a future UX where we are able to customize what we want to do with the CVX yield while minimizing complexity.

4 Likes
13

I think this is a big step forward for the bvecvx product based on many lessons learned the last 6 months.

It aligns with what users want rather than solely supporting the vote influence of badger the protocol.

This model if figured out can be repeated across the many locking tokens with yield influence that will arise in the space the next 12 months.

Locking vaults as a whole I think can be a great revenue stream for Badger.

7 Likes