Category: Gravity [graviAURA]
Proposed by: $1500Badger with feedback from community, Badger core team and Balancer team
Scope: [Gravity, Aura]
Objective: Impose regulations on graviAURA LPs to better support BadgerDAO, BalancerDAO graviAURA holders and LPrs.
graviAURA tokens inside of a Balancer gauge will not overvote for the guage they are in if the gauge has 10% or more of the total vote weight. The graviAURA vote weight will instead vote for core pools based on the bribe distribution with 90% of its vote weight and the usual 10% vote weight fee will be taken by BadgerDAO.
Current graviAURA Functionality:
- Naked graviAURA in BadgerDAO vault will vote for bribes. The vote weight will be used in the following way: BagerDAO takes a 10% fee in vote weight to use as it sees fit and the remaining vote weight will be split 67.5% selling bribes to emit graviAURA and 22.5% selling bribes to emit Badger both to naked graviAURA in the vault on the Badger app.
- graviAURA in gauges will vote for itself minus a 10% fee in vote weight that BadgerDAO may use to its discretion. This mechanism is meant to allow DAOs and protocols to bootstrap liquidity on Balancer.
This BIP will add regulations to type 2) graviAURA in LPs to better align the interests of BadgerDAO, BalancerDAO and graviAURA LPs.
An overlooked issue with graviAURA’s original implementation is what happens when outside influence votes for a graviAURA pool. This can create a situation where graviAURA is not serving it’s purpose as a liquidity boostrap, but instead becomes a bane on both graviAURA and balancer. A large veBAL holder or group of holders are able to vote for graviAURA pools and get outsized emissions by benefiting from graviAURA’s positive feedback loop. Using the DIGG/WBTC/graviAURA pool as a historical example, a large veBAL holder was able to vote for this pool much larger than the liquidity in the pool. While in the short run this benefits anyone inside of the LP it creates a parasitic situation for BalancerDAO and BadgerDAO. Emissions are drained from the Balancer ecosystem and DIGG is raised to an artificially high price reducing the Boost incentives for BadgerDAO users looking to use it for optimizing boost.
Looking at the history of Balancer (BIPs) proposals it is likely that in its current state the DIGG gauge will go the way of the CREAM gauge which was removed altogether. Without regulation graviAURA Lps are likely to go the way of the CREAM gauge and be banned by Balancer through governance unless a fix is implemented.
In order to limit the strength of outside voting for graviAURA pools the following initial regulations can be set on graviAURA gauges on Balancer:
-Any votes from graviAURA in pools that would bring the total % of voting for that pool above 10%, will not vote for itself but instead do the following::
10% of the excess vote weight will be at the discretion of the BadgerDAO Council and directed to WBTC/BADGER yields by default.
90% of the excess vote weight will be used to vote for bribes on the following balancer core pools as defined by Balancer BIP-19. Future core pools appointed by balancer governance will also be included.:
- wstETH 0xcD4722B7c24C29e0413BDCd9e51404B4539D14aE
- rETH 0x79eF6103A513951a3b25743DB509E267685726B7
- stMATIC 0xc3bB46B8196C3F188c6A373a6C4Fde792CA78653
- maticX 0xf01541837CF3A64BC957F53678b0AB113e92911b
- 4pool 0xA5A0B6598B90d214eAf4d7a6b72d5a89C3b9A72c
- tricrypto polygon 0x88D07558470484c03d3bb44c3ECc36CAfCF43253
- tricrypto arbitrum 0x359EA8618c405023Fc4B98dAb1B01F373792a126
It is worth noting that this 10% number is a reaction to the current moment and not part of a coherent framework. As such, further governance may arise to change it in the near future based on new graviAURA pools or major shifts in economic conditions
The vote weight between core pools will be determined such that it optimizes bribe earnings for the votes. BadgerDAO will not have time to adapt its voter to do this in the currently running, so will manually split the vote across a few high bribing core pools until code is complete and tested.
Note that all bribes earned by graviAURA voting are paid to individual graviAURA HODLers, as 25% BADGER and 75% graviAURA. BADGER and AURA will not be sold and as a result the direct payout ratio may vary… Directly earned AURA from bribes will be paid out as graviAURA.
The primary reason for the timing of ths BIP comes from concerns from the council about overstepping boundaries of decentralization by regulating graviAURA without token HODLer mandate. The yields on AURA and auraBAL look to be far above the natural yields the pool will support. The initial pools have so far shown decent trading volume and revenue. For these reasons this BIP nullifies the council decision announced here:
https://badger.com/gravity-news/graviaura-regulation.. While at the same time acknowledging that future governance for graviAURAbal and pools with over 20% graviAURA may be required.
On establishing and governing future regulation:
Further work is required on regulation, and this BIP acknowledges that it is a reaction not concrete framework. For this reason, all regulations specified in this BIP are set to expire after 3 months.When more data will be available to measure the health of the program.
The above fix will align the interests of BadgerDAO, BalancerDAO, naked graviAURA depositors and graviAURA LPs in gauges. This will also allow for large veBAL holders to still overvote for graviAURA pools but with diminishing returns.
Using the excess vote weight to vote for bribes will align with Balancer core pools and drive emissions to pools earning the highest fees. This is ideal compared to voting for specific pools as it allows graviAURA to better follow natural market forces and not overvote for pools in an ever changing landscape.
A 3 month time limit will ensure that any interested parties can take the time to bring more complete governance to the table as more data becomes available.
- Yes - Enact this regulation to graviAURA in balancer gauges
- No - Leave the current implementation of graviAURA in balancer gauges as is