Hey folks!
According to my previous poll (which you should vote in), it seems like, despite the small sample size, that a reward for UNI holders/voters is on the way.
My question is, how would we structure it? I created a poll for simplicity's sake with everything I could think of, but this is by no means an exhaustive list... And let's keep it high-level for now! I thought it'd be interesting to gather sentiment and start a discussion about this.
[poll type=regular results=on_vote chartType=bar]
One more thing, I know we don't have control over the fee switch or anything yet, so let's not be too hasty. My goal here is to help develop a wise, long-term oriented decentralized financial community. In doing so, we've got the power to really change the world.
Looking forward to hearing from you all! Zer0dot
P.S. I'm also not claiming that any of these options are wise, let alone feasible. Let's discuss!
Hey folks!
According to my previous poll (which you should vote in), it seems like, despite the small sample size, that a reward for UNI holders/voters is on the way.
My question is, how would we structure it? I created a poll for simplicity's sake with everything I could think of, but this is by no means an exhaustive list... And let's keep it high-level for now! I thought it'd be interesting to gather sentiment and start a discussion about this.
[poll type=regular results=on_vote chartType=bar]
One more thing, I know we don't have control over the fee switch or anything yet, so let's not be too hasty. My goal here is to help develop a wise, long-term oriented decentralized financial community. In doing so, we've got the power to really change the world.
Looking forward to hearing from you all! Zer0dot
P.S. I'm also not claiming that any of these options are wise, let alone feasible. Let's discuss!
Everybodys got there own opinion and reasons for that opinion are more than likely to favor each individuals needs at the time.
I love(d) this conversation. Is this something that we can have a bounty/grant around to get a synopsis of the pros/cons of each of these options? I would love a consolidated summary of these points to supplement a vote on further investment.
We should just straight up copy sushis model for fee distribution, they have a second version coming out soon that utilizes k3pr to collect the revenue from each pool. Its been working great and will be flawless in this next iteration.
Everybodys got there own opinion and reasons for that opinion are more than likely to favor each individuals needs at the time.
I love(d) this conversation. Is this something that we can have a bounty/grant around to get a synopsis of the pros/cons of each of these options? I would love a consolidated summary of these points to supplement a vote on further investment.
We should just straight up copy sushis model for fee distribution, they have a second version coming out soon that utilizes k3pr to collect the revenue from each pool. Its been working great and will be flawless in this next iteration.
I think the buy in burn driving up the uni price is the rapid reward to the early uses that can make DAO's boom
I think the buy in burn driving up the uni price is the rapid reward to the early uses that can make DAO's boom
I am against buy and burn because then it becomes impossible to take profit without lowering your exposure to the UNI asset itself.
So effectively you aren't earning a dividend at all unless you cash out of your UNI position.
I would prefer to hold onto my UNI and earn a dividend in either ETH or a Stablecoin or bitcoin
I am against buy and burn because then it becomes impossible to take profit without lowering your exposure to the UNI asset itself.
So effectively you aren't earning a dividend at all unless you cash out of your UNI position.
I would prefer to hold onto my UNI and earn a dividend in either ETH or a Stablecoin or bitcoin
"most people invest to make money not to govern companies or project."
This sums it up. Give a reason for UNI holders to buy the token, which is the yield/fee. Its the reason people buy blue chip dividend earning companies in the stock market. They don't care so much about share holder buybacks... they want income. Give UNI holders income, break the current token mold.
I want to chime in here as Uniswap is one of the greatest projects to come along in a while. And the last thing I'd like to see is another token burn model. Why? Because token burn models don't work.
For a healthy economic system you need velocity of tokens/money. Burn creates a hoarding mentality. Hoarding on the surface sounds great since it boosts scarcity, but the long-term effects dont result in equal amount of price capture.
I want to chime in here as Uniswap is one of the greatest projects to come along in a while. And the last thing I'd like to see is another token burn model. Why? Because token burn models don't work.
For a healthy economic system you need velocity of tokens/money. Burn creates a hoarding mentality. Hoarding on the surface sounds great since it boosts scarcity, but the long-term effects dont result in equal amount of price capture.
Why do you think the largest projects have so many tokens in circulation? Velocity, liquidity. Don't burn this away and make this token useless. Instead use it as a yield generating instrument. Uniswap is a DAO. The code determines the payout, not a central entity. Put the SEC's feet to the fire on this one. Make it an actual payout, set precedent, create value. Don't bend.
My only issue with burning tokens is that, beyond what people already pointed out with large holders gaining more voting power, it doesn't provide any additional incentive for anyone else to buy the token if they're not interested in voting. This further discourages people with smaller wallets from trying to participate since they (rightly) assume it's impossible to wield any serious voting power. If there were another incentive to buy and hold, people might show up for the APY and end up voting anyway.
5th option... keep the fees earned in the native token it was earned in. ie - if fee earned in MKR, keep the fee in MKR. Place these assets in a pool and distribute a % weight token where users can deposit the token into the contract to withdrawal their share.
This allows through diversification of tokens in a model similar to Berkshire Hathaway.
5th option... keep the fees earned in the native token it was earned in. ie - if fee earned in MKR, keep the fee in MKR. Place these assets in a pool and distribute a % weight token where users can deposit the token into the contract to withdrawal their share.
This allows through diversification of tokens in a model similar to Berkshire Hathaway.
Earning fees in this manner means the strongest tokens in the Ethereum ecosystem are earned. And in a way these tokens that rise from small cap, to mid cap, to large cap will outperform the rest of the portfolio... And UNI holders will benefit as a result.
Burns don't work as it creates a lack of velocity, lack of liquidity... Earning fees in this manner makes the UNI token a yield generator instrument where the user is actually earning the Ethereum ecosystem in a sense.
Below is a chart of Bershire Hathaway (BRK.A) shares growing from 1.146mn to 1.653mn in a twenty year period. Share buybacks rarely happened.
Also, Berkshire Hathaway in 2018 collected $3.8 billion in dividends... Buffett loves dividends more than anybody else. But the way he operates his company is unique in that he takes these dividends and buys equity in other companies.
Below is a chart of Bershire Hathaway (BRK.A) shares growing from 1.146mn to 1.653mn in a twenty year period. Share buybacks rarely happened.
Also, Berkshire Hathaway in 2018 collected $3.8 billion in dividends... Buffett loves dividends more than anybody else. But the way he operates his company is unique in that he takes these dividends and buys equity in other companies.
This hints at what he's truly after... diversification of various companies with dividends.
For the record, BRK.B did not witness any shareholder buybacks.
So how does this apply to Uniswap? Diversify through the ecosystem. If there's a way for fees to be generated from the various markets, it should be deposited in a fund based on the diversification line of thinking.
This means as smaller cap coins grow, they'll outperform other tokens. Additionally, as trading volume grows UNI holders will slowly accumulate a larger share of that token. Which somewhat is a self selecting mechanism for the strongest coins.
That's my proposal for what Uniswap should do for the UNI switch... Pool together the fees earned on the platform in the token the fee is earned from. Then UNI tokens earn a token that represents their share of this pool over time. This way anybody can redeem none, some, or all their share at any given time.
Feel free anybody to post a formal proposal using this line of thinking. I don't know how to go about doing such a thing.
(Turns out I can't post the BRK shares outstanding chart... not allowed to post media items... so you'll need to take my word for it unfortunately.)
How would I implement the fee to save gas:
How would I implement the fee to save gas:
Rationale for different steps:
Why I kinda discourage burning the freshly bought UNI: If in the future gas costs became negligible, we could implement some kind of automatic 0.05% fee payment directly to UNI holders, and the burnt UNI at 0x00...00 would claim and burn quite a bit of those fees. So, if they stood in the contract, we could later govern it to distribute it proportionally between UNI holders.
A dividend is economically interchangeable to a burn, but a burn is more gas-efficient, and in many jurisdictions more tax-efficient.
Very interesting discussion, the option to switch on the fee should be available from mid march according to the 180 day time lock.
After reading through all these messages, I see the reasons not to buy and burn but to instead distribute X to all those that stake in the UNI voting contract for the following reasons;
Very interesting discussion, the option to switch on the fee should be available from mid march according to the 180 day time lock.
After reading through all these messages, I see the reasons not to buy and burn but to instead distribute X to all those that stake in the UNI voting contract for the following reasons;
Incentivises staking in the voting mechanism rather than just passive holding (As only those that register to vote get the benefits from fee distribution, encouraging more to vote)
Creates a situation where there is a P/E price of the token. (Based on $5 Uni, 400M volume and 100M tokens voting that's about 6.8)
Similar to point 1, encourages user not to store there Uni on centralised exchanges. (As they'd be missing out on these rewards, reducing that attack vector)
Buy & burn, doesn't properly achieve any of these goals.
The question then becomes what token should be distributed?
I see 5 reasonable choices in my opinion. ETH, DAI, UNI, (ETH/UNI) LP, (DAI/UNI) LP
I like the idea of buying and distributing. Passive income is an incredibly attractive feature. Not sure if staking is the only reasonable way to accomplish this task, but maybe rewards can accumulate and be distributed to wallets during certain contract interactions. Maybe I don't know what I'm talking about.
The script should look like something like this:
Everyday at random time, all Uni fees collected until that time should start conversion to UNI in order from highest to lowest. After conversion is done, automatic sending all purchased tokens to burn address.
From a technical standpoint, only the first option is actually viable IMO. The rest require either breakthroughs in censorship resistance, the introduction of centralized points of failure, or huge amounts of engineering effort.
A periodic uniform price multi-unit auction of withdraw rights to all accumulated fees is the only pragmatic solution I have seen or been able to come up with. Any unclaimed fees would be rolled over to the next auction.
From a technical standpoint, only the first option is actually viable IMO. The rest require either breakthroughs in censorship resistance, the introduction of centralized points of failure, or huge amounts of engineering effort.
A periodic uniform price multi-unit auction of withdraw rights to all accumulated fees is the only pragmatic solution I have seen or been able to come up with. Any unclaimed fees would be rolled over to the next auction.
Any conversation about how we should distribute fees should come with a complete proposal on how to actually achieve the goal, because this problem is much harder than it sounds once you get to actually implementing something.
Yeah you're right that the short term/long term dichotomy was perhaps not the best way to put it. As you said, it's more about the liquidity and how deep the Treasury Pool would be vs the rest of the cryptomarket.
In the article you originally shared, the author recommends restricting the ability to add/remove liquidity from the Treasury Pool to the protocol/governance (i.e.: regular users would not be able to add/remove liquidity). I don't know to what extent this is desirable (maybe it prevents users from gaming the system?), and if it is a must-have, how that would work with the reward schemes you describe in B) and C)? I'm being a bit nit-picky here, but that's because I think this is an interesting idea that deserves thorough discussion.
all Uni fees collected until that time should start conversion to UNI in order from highest to lowest. After conversion is done, automatic sending all purchased tokens to burn address.
This is not something that can easily be done on Ethereum in a censorship resistant and trustless way.
"most people invest to make money not to govern companies or project."
This sums it up. Give a reason for UNI holders to buy the token, which is the yield/fee. Its the reason people buy blue chip dividend earning companies in the stock market. They don't care so much about share holder buybacks... they want income. Give UNI holders income, break the current token mold.
I want to chime in here as Uniswap is one of the greatest projects to come along in a while. And the last thing I'd like to see is another token burn model. Why? Because token burn models don't work.
For a healthy economic system you need velocity of tokens/money. Burn creates a hoarding mentality. Hoarding on the surface sounds great since it boosts scarcity, but the long-term effects dont result in equal amount of price capture.
I want to chime in here as Uniswap is one of the greatest projects to come along in a while. And the last thing I'd like to see is another token burn model. Why? Because token burn models don't work.
For a healthy economic system you need velocity of tokens/money. Burn creates a hoarding mentality. Hoarding on the surface sounds great since it boosts scarcity, but the long-term effects dont result in equal amount of price capture.
Why do you think the largest projects have so many tokens in circulation? Velocity, liquidity. Don't burn this away and make this token useless. Instead use it as a yield generating instrument. Uniswap is a DAO. The code determines the payout, not a central entity. Put the SEC's feet to the fire on this one. Make it an actual payout, set precedent, create value. Don't bend.
My only issue with burning tokens is that, beyond what people already pointed out with large holders gaining more voting power, it doesn't provide any additional incentive for anyone else to buy the token if they're not interested in voting. This further discourages people with smaller wallets from trying to participate since they (rightly) assume it's impossible to wield any serious voting power. If there were another incentive to buy and hold, people might show up for the APY and end up voting anyway.
5th option... keep the fees earned in the native token it was earned in. ie - if fee earned in MKR, keep the fee in MKR. Place these assets in a pool and distribute a % weight token where users can deposit the token into the contract to withdrawal their share.
This allows through diversification of tokens in a model similar to Berkshire Hathaway.
5th option... keep the fees earned in the native token it was earned in. ie - if fee earned in MKR, keep the fee in MKR. Place these assets in a pool and distribute a % weight token where users can deposit the token into the contract to withdrawal their share.
This allows through diversification of tokens in a model similar to Berkshire Hathaway.
Earning fees in this manner means the strongest tokens in the Ethereum ecosystem are earned. And in a way these tokens that rise from small cap, to mid cap, to large cap will outperform the rest of the portfolio... And UNI holders will benefit as a result.
Burns don't work as it creates a lack of velocity, lack of liquidity... Earning fees in this manner makes the UNI token a yield generator instrument where the user is actually earning the Ethereum ecosystem in a sense.
Below is a chart of Bershire Hathaway (BRK.A) shares growing from 1.146mn to 1.653mn in a twenty year period. Share buybacks rarely happened.
Also, Berkshire Hathaway in 2018 collected $3.8 billion in dividends... Buffett loves dividends more than anybody else. But the way he operates his company is unique in that he takes these dividends and buys equity in other companies.
Below is a chart of Bershire Hathaway (BRK.A) shares growing from 1.146mn to 1.653mn in a twenty year period. Share buybacks rarely happened.
Also, Berkshire Hathaway in 2018 collected $3.8 billion in dividends... Buffett loves dividends more than anybody else. But the way he operates his company is unique in that he takes these dividends and buys equity in other companies.
This hints at what he's truly after... diversification of various companies with dividends.
For the record, BRK.B did not witness any shareholder buybacks.
So how does this apply to Uniswap? Diversify through the ecosystem. If there's a way for fees to be generated from the various markets, it should be deposited in a fund based on the diversification line of thinking.
This means as smaller cap coins grow, they'll outperform other tokens. Additionally, as trading volume grows UNI holders will slowly accumulate a larger share of that token. Which somewhat is a self selecting mechanism for the strongest coins.
That's my proposal for what Uniswap should do for the UNI switch... Pool together the fees earned on the platform in the token the fee is earned from. Then UNI tokens earn a token that represents their share of this pool over time. This way anybody can redeem none, some, or all their share at any given time.
Feel free anybody to post a formal proposal using this line of thinking. I don't know how to go about doing such a thing.
(Turns out I can't post the BRK shares outstanding chart... not allowed to post media items... so you'll need to take my word for it unfortunately.)
How would I implement the fee to save gas:
How would I implement the fee to save gas:
Rationale for different steps:
Why I kinda discourage burning the freshly bought UNI: If in the future gas costs became negligible, we could implement some kind of automatic 0.05% fee payment directly to UNI holders, and the burnt UNI at 0x00...00 would claim and burn quite a bit of those fees. So, if they stood in the contract, we could later govern it to distribute it proportionally between UNI holders.
A dividend is economically interchangeable to a burn, but a burn is more gas-efficient, and in many jurisdictions more tax-efficient.
Very interesting discussion, the option to switch on the fee should be available from mid march according to the 180 day time lock.
After reading through all these messages, I see the reasons not to buy and burn but to instead distribute X to all those that stake in the UNI voting contract for the following reasons;
Very interesting discussion, the option to switch on the fee should be available from mid march according to the 180 day time lock.
After reading through all these messages, I see the reasons not to buy and burn but to instead distribute X to all those that stake in the UNI voting contract for the following reasons;
Incentivises staking in the voting mechanism rather than just passive holding (As only those that register to vote get the benefits from fee distribution, encouraging more to vote)
Creates a situation where there is a P/E price of the token. (Based on $5 Uni, 400M volume and 100M tokens voting that's about 6.8)
Similar to point 1, encourages user not to store there Uni on centralised exchanges. (As they'd be missing out on these rewards, reducing that attack vector)
Buy & burn, doesn't properly achieve any of these goals.
The question then becomes what token should be distributed?
I see 5 reasonable choices in my opinion. ETH, DAI, UNI, (ETH/UNI) LP, (DAI/UNI) LP
I like the idea of buying and distributing. Passive income is an incredibly attractive feature. Not sure if staking is the only reasonable way to accomplish this task, but maybe rewards can accumulate and be distributed to wallets during certain contract interactions. Maybe I don't know what I'm talking about.
The script should look like something like this:
Everyday at random time, all Uni fees collected until that time should start conversion to UNI in order from highest to lowest. After conversion is done, automatic sending all purchased tokens to burn address.
From a technical standpoint, only the first option is actually viable IMO. The rest require either breakthroughs in censorship resistance, the introduction of centralized points of failure, or huge amounts of engineering effort.
A periodic uniform price multi-unit auction of withdraw rights to all accumulated fees is the only pragmatic solution I have seen or been able to come up with. Any unclaimed fees would be rolled over to the next auction.
From a technical standpoint, only the first option is actually viable IMO. The rest require either breakthroughs in censorship resistance, the introduction of centralized points of failure, or huge amounts of engineering effort.
A periodic uniform price multi-unit auction of withdraw rights to all accumulated fees is the only pragmatic solution I have seen or been able to come up with. Any unclaimed fees would be rolled over to the next auction.
Any conversation about how we should distribute fees should come with a complete proposal on how to actually achieve the goal, because this problem is much harder than it sounds once you get to actually implementing something.
Yeah you're right that the short term/long term dichotomy was perhaps not the best way to put it. As you said, it's more about the liquidity and how deep the Treasury Pool would be vs the rest of the cryptomarket.
In the article you originally shared, the author recommends restricting the ability to add/remove liquidity from the Treasury Pool to the protocol/governance (i.e.: regular users would not be able to add/remove liquidity). I don't know to what extent this is desirable (maybe it prevents users from gaming the system?), and if it is a must-have, how that would work with the reward schemes you describe in B) and C)? I'm being a bit nit-picky here, but that's because I think this is an interesting idea that deserves thorough discussion.
all Uni fees collected until that time should start conversion to UNI in order from highest to lowest. After conversion is done, automatic sending all purchased tokens to burn address.
This is not something that can easily be done on Ethereum in a censorship resistant and trustless way.
Well the way I was imagining it was that the fees would accumulate, you would not need to collect them every time they are distributed. You could wait to claim it until you need it or the gas price is low enough. Those who rush to collect would be penalized by the high gas price. But you're right that even if a fraction of UNI holders are impatient and collect immediately, then that would paralyze the network (just like when the UNI airdrop happened).
One solution could be to have a staking mechanism, where you accumulate dividends only for the time when you stake your UNI (kind of like YFI dividends) and the dividends are transferred to you only when you unstake. This would solve the gas problem and would also incentivize people to hold their UNI longer.
Well the way I was imagining it was that the fees would accumulate, you would not need to collect them every time they are distributed. You could wait to claim it until you need it or the gas price is low enough. Those who rush to collect would be penalized by the high gas price. But you're right that even if a fraction of UNI holders are impatient and collect immediately, then that would paralyze the network (just like when the UNI airdrop happened).
One solution could be to have a staking mechanism, where you accumulate dividends only for the time when you stake your UNI (kind of like YFI dividends) and the dividends are transferred to you only when you unstake. This would solve the gas problem and would also incentivize people to hold their UNI longer.
This is not perfect however, because if you want to use your dividends to do something else but keep receiving dividends, you would have to unstake and restake (although this could be done atomically with a smart contract).
The point is that there are a lot of options when it comes to implementing dividend distribution (the EVM being Turing complete and all) and I'm sure we can find a middle ground that doesn't involve burning. If you want a good example of why burning might not be a good idea, take a look at CREAM (they burned ~67% of the supply on Sep. 19 and the token now trades even lower than before).
I think just voting to Uniate the fee switch would be most important now then we have 6 months to implement it
We are talking about maybe 50-200 txs per day for sushi, vs perhaps 1000-2000 per day on uni to gather fees in a pool, doesnt need to be daily, could be weekly etc.
That is a very interesting solution!
On the surface it seems like that could be a viable approach. However, depending on the wider market, it might not guarantee an increase in price in the short term.
Let's look at a toy example:
That is a very interesting solution!
On the surface it seems like that could be a viable approach. However, depending on the wider market, it might not guarantee an increase in price in the short term.
Let's look at a toy example:
Imagine Uniswap accrues 0.1 ETH in fees, which it adds to the treasury pool. Now the pool has 900 UNIs and 1.1 ETH, which, assuming ETH's value has not changed, would make each UNI worth 4.4$ (to preserve the 90/10 value ratio).
Now if this Treasury Pool was the only place where UNI was traded, then indeed the market price of UNI would have risen (since the Treasury Pool would be the only market maker). However, in practice, UNI would still be traded on other exchanges at the old price (i.e.: 4$), which means that there are arbitrage opportunities (e.g.: buying from other exchanges at 4$ and selling through the Treasury Pool at 4.4$) which would bring the price quoted by the Treasury Pool back down to where it was before. So in the short term, people might just arbitrage the Treasury Pool and the token's value would not necessarily increase.
In the long term, on the other hand, if the protocol continuously adds the ETH fees to the Treasury Pool, then the arbitrageurs will end up raising the price on other exchanges to bring it on-par with the price quoted by the Treasury Pool (since arbitrageur would be continuously buying UNI from elsewhere and selling it to the Treasury Pool, raising the price of UNI market-wide)!
So yeah I can see how over the long term this approach would gradually raise the price of UNI without the disadvantage of burning. Tbh I have not spent too much time thinking about this so don't take my analysis as gospel. A more thorough economical analysis would be needed to really understand the side effects of this approach.
TL;DR: Long term, it could work. Short term, unsure.
I haven't thought this to its full extent, but what if token holders receive benefits in the use of Uniswap. Maybe with lower fees per transaction or some options of scalable discounts depending on your holdings.
That way it can promote the use of holding UNI and also of using more the protocol instead of just holding passively and collecting gains just parking your money in UNI.
I haven't thought this to its full extent, but what if token holders receive benefits in the use of Uniswap. Maybe with lower fees per transaction or some options of scalable discounts depending on your holdings.
That way it can promote the use of holding UNI and also of using more the protocol instead of just holding passively and collecting gains just parking your money in UNI.
Maybe it can be some sort of levels, depending of time staked or number of votes per month or something that encourages participation with your holdings (I'm new to governance)
What do you guys think?
Sushi is distributing fees fine one layer 1, the vast majority of holders don't pay anything, only the whales do when they "serve" aka convert the fees to sushi. Fees are distributed to sushi holders just like they would for a LP in a pool, you get them when you withdraw.
Many have highlighted the problems with the "buy and burn" approach and I agree completely, burning tokens are a cheap way to artificially boost the short term value of a token without creating new value.
That leaves two valid options IMO:
Many have highlighted the problems with the "buy and burn" approach and I agree completely, burning tokens are a cheap way to artificially boost the short term value of a token without creating new value.
That leaves two valid options IMO:
The two main things we should consider when weighing these options are:
UNI dividends:
Non-UNI dividends:
In the case where dividends are payed out in a non-UNI token, I have a small preference for payment in stablecoin, as this would make the value of distributions much more stable and predictable (ETH remains somewhat volatile) which is something valuable when considering that the dividends would be passive income. However, I recognize the problem of choosing which stablecoin to use (most of them are centralized and some might even be ponzis), so an ETH dividend might be the best practical choice.
I leave out concerns about taxation (if you want to pay less in taxes, then vote for a government that will lower taxes, don't try to come up with a sketchy distribution scheme that may or may not create taxable events) and network fees as these are superficial concerns that are unrelated to the core discussion about the future of the protocol.
You make good points, but I believe a good dividend scheme would also put a floor on the value of UNI. Moreover, after the first four years, inflation will remain stable at 2% per year. If the protocol (i.e.: the fees and by extension the dividends) grow by more than 2% a year, which IMO is probably a low estimate given the growth of DeFi in general, then the intrinsic growth of UNI will outpace inflation. In other words, burning is not the only way to increase value. The new tokens (from inflation) mostly to the community treasury, and if we use that new wealth to grow the protocol, then the value will not be negatively affected.
My two cents is for option 2; Redirect a portion of LP fees to a UNI buy and distribute to holders.
Why?
I want to be rewarded directly, i want to see something in my wallet for holding UNI.
A token burn may or may not add value, a % of fees will add value to me and my holdings.
My two cents is for option 2; Redirect a portion of LP fees to a UNI buy and distribute to holders.
Why?
I want to be rewarded directly, i want to see something in my wallet for holding UNI.
A token burn may or may not add value, a % of fees will add value to me and my holdings.
Personally on a side note. This airdrop of UNI has been disastrous for the price. I have lost 50% in value. We should not do anymore UNI airdrops
If we fix a small amount, say the 400 UNI that were airdropped. That will encourage a lot of users to acquire or hold their UNI instead of dumping, so they can have that edge, as a user of the protocol. And that will also evenly distribute holdings so it can have more voters for governance purposes
Burning tokens and distributing them to all holdes has the same effect. Those with more tokens will receive more reward in the same proportion to their bags. Or do you mean the reward should go to all holders in the same amount (e.g. holding 1 token gives the same reward as holding 1000?). In that case, holders would just split up their tokens in several accounts... My conclusion: burning UNI-tokens is the most fair and effective reward model.
Well the way I was imagining it was that the fees would accumulate, you would not need to collect them every time they are distributed. You could wait to claim it until you need it or the gas price is low enough. Those who rush to collect would be penalized by the high gas price. But you're right that even if a fraction of UNI holders are impatient and collect immediately, then that would paralyze the network (just like when the UNI airdrop happened).
One solution could be to have a staking mechanism, where you accumulate dividends only for the time when you stake your UNI (kind of like YFI dividends) and the dividends are transferred to you only when you unstake. This would solve the gas problem and would also incentivize people to hold their UNI longer.
Well the way I was imagining it was that the fees would accumulate, you would not need to collect them every time they are distributed. You could wait to claim it until you need it or the gas price is low enough. Those who rush to collect would be penalized by the high gas price. But you're right that even if a fraction of UNI holders are impatient and collect immediately, then that would paralyze the network (just like when the UNI airdrop happened).
One solution could be to have a staking mechanism, where you accumulate dividends only for the time when you stake your UNI (kind of like YFI dividends) and the dividends are transferred to you only when you unstake. This would solve the gas problem and would also incentivize people to hold their UNI longer.
This is not perfect however, because if you want to use your dividends to do something else but keep receiving dividends, you would have to unstake and restake (although this could be done atomically with a smart contract).
The point is that there are a lot of options when it comes to implementing dividend distribution (the EVM being Turing complete and all) and I'm sure we can find a middle ground that doesn't involve burning. If you want a good example of why burning might not be a good idea, take a look at CREAM (they burned ~67% of the supply on Sep. 19 and the token now trades even lower than before).
I think just voting to Uniate the fee switch would be most important now then we have 6 months to implement it
We are talking about maybe 50-200 txs per day for sushi, vs perhaps 1000-2000 per day on uni to gather fees in a pool, doesnt need to be daily, could be weekly etc.
That is a very interesting solution!
On the surface it seems like that could be a viable approach. However, depending on the wider market, it might not guarantee an increase in price in the short term.
Let's look at a toy example:
That is a very interesting solution!
On the surface it seems like that could be a viable approach. However, depending on the wider market, it might not guarantee an increase in price in the short term.
Let's look at a toy example:
Imagine Uniswap accrues 0.1 ETH in fees, which it adds to the treasury pool. Now the pool has 900 UNIs and 1.1 ETH, which, assuming ETH's value has not changed, would make each UNI worth 4.4$ (to preserve the 90/10 value ratio).
Now if this Treasury Pool was the only place where UNI was traded, then indeed the market price of UNI would have risen (since the Treasury Pool would be the only market maker). However, in practice, UNI would still be traded on other exchanges at the old price (i.e.: 4$), which means that there are arbitrage opportunities (e.g.: buying from other exchanges at 4$ and selling through the Treasury Pool at 4.4$) which would bring the price quoted by the Treasury Pool back down to where it was before. So in the short term, people might just arbitrage the Treasury Pool and the token's value would not necessarily increase.
In the long term, on the other hand, if the protocol continuously adds the ETH fees to the Treasury Pool, then the arbitrageurs will end up raising the price on other exchanges to bring it on-par with the price quoted by the Treasury Pool (since arbitrageur would be continuously buying UNI from elsewhere and selling it to the Treasury Pool, raising the price of UNI market-wide)!
So yeah I can see how over the long term this approach would gradually raise the price of UNI without the disadvantage of burning. Tbh I have not spent too much time thinking about this so don't take my analysis as gospel. A more thorough economical analysis would be needed to really understand the side effects of this approach.
TL;DR: Long term, it could work. Short term, unsure.
I haven't thought this to its full extent, but what if token holders receive benefits in the use of Uniswap. Maybe with lower fees per transaction or some options of scalable discounts depending on your holdings.
That way it can promote the use of holding UNI and also of using more the protocol instead of just holding passively and collecting gains just parking your money in UNI.
I haven't thought this to its full extent, but what if token holders receive benefits in the use of Uniswap. Maybe with lower fees per transaction or some options of scalable discounts depending on your holdings.
That way it can promote the use of holding UNI and also of using more the protocol instead of just holding passively and collecting gains just parking your money in UNI.
Maybe it can be some sort of levels, depending of time staked or number of votes per month or something that encourages participation with your holdings (I'm new to governance)
What do you guys think?
Sushi is distributing fees fine one layer 1, the vast majority of holders don't pay anything, only the whales do when they "serve" aka convert the fees to sushi. Fees are distributed to sushi holders just like they would for a LP in a pool, you get them when you withdraw.
Many have highlighted the problems with the "buy and burn" approach and I agree completely, burning tokens are a cheap way to artificially boost the short term value of a token without creating new value.
That leaves two valid options IMO:
Many have highlighted the problems with the "buy and burn" approach and I agree completely, burning tokens are a cheap way to artificially boost the short term value of a token without creating new value.
That leaves two valid options IMO:
The two main things we should consider when weighing these options are:
UNI dividends:
Non-UNI dividends:
In the case where dividends are payed out in a non-UNI token, I have a small preference for payment in stablecoin, as this would make the value of distributions much more stable and predictable (ETH remains somewhat volatile) which is something valuable when considering that the dividends would be passive income. However, I recognize the problem of choosing which stablecoin to use (most of them are centralized and some might even be ponzis), so an ETH dividend might be the best practical choice.
I leave out concerns about taxation (if you want to pay less in taxes, then vote for a government that will lower taxes, don't try to come up with a sketchy distribution scheme that may or may not create taxable events) and network fees as these are superficial concerns that are unrelated to the core discussion about the future of the protocol.
You make good points, but I believe a good dividend scheme would also put a floor on the value of UNI. Moreover, after the first four years, inflation will remain stable at 2% per year. If the protocol (i.e.: the fees and by extension the dividends) grow by more than 2% a year, which IMO is probably a low estimate given the growth of DeFi in general, then the intrinsic growth of UNI will outpace inflation. In other words, burning is not the only way to increase value. The new tokens (from inflation) mostly to the community treasury, and if we use that new wealth to grow the protocol, then the value will not be negatively affected.
My two cents is for option 2; Redirect a portion of LP fees to a UNI buy and distribute to holders.
Why?
I want to be rewarded directly, i want to see something in my wallet for holding UNI.
A token burn may or may not add value, a % of fees will add value to me and my holdings.
My two cents is for option 2; Redirect a portion of LP fees to a UNI buy and distribute to holders.
Why?
I want to be rewarded directly, i want to see something in my wallet for holding UNI.
A token burn may or may not add value, a % of fees will add value to me and my holdings.
Personally on a side note. This airdrop of UNI has been disastrous for the price. I have lost 50% in value. We should not do anymore UNI airdrops
If we fix a small amount, say the 400 UNI that were airdropped. That will encourage a lot of users to acquire or hold their UNI instead of dumping, so they can have that edge, as a user of the protocol. And that will also evenly distribute holdings so it can have more voters for governance purposes
Burning tokens and distributing them to all holdes has the same effect. Those with more tokens will receive more reward in the same proportion to their bags. Or do you mean the reward should go to all holders in the same amount (e.g. holding 1 token gives the same reward as holding 1000?). In that case, holders would just split up their tokens in several accounts... My conclusion: burning UNI-tokens is the most fair and effective reward model.
Hey everyone, I wanted to share some thoughts in regards to those arguing for a UNI burn with the fee switch rather than a daily dividend of revenues. First off, looking at all of these defi governance tokens that have come to market this year. They have all all come to market with the promise of future revenues being distributed to token holders through some sort of governance vote. I am of the opinion that the governance aspect of these tokens is relatively valueless and it is those future cashflows to token holders is where something like a COMP, BAL, or UNI comes from. However, the majority of these defi coins can't add in revenue "pass throughs" to token holders yet because they don't make enough money to warrant their valuations. (see revenues and PE ratios here: https://www.tokenterminal.com/) Any additional fees for token holders in these platforms could theoretically be forked away, and would lead to investors have to value these current low cashflows/revenues rather hope of future cashflows rerating prices lower. I outline this because UNI doesn't have this problem, Uniswap makes so much money that if the fee switch is turned on today, valuing those cashflows has UNI at a higher price than it currently is.
Hopefully this shows that the fee switch should be turned on, now turning to Burns. Burns are most common in CEFI tokens so I will look their. Looking at BNB, BNB's token has seen its highest valuations when the token MAKES people money, not saves people money. What I mean is this: BNB did very well when you had to use BNB to buy IEO's when they were pushing every IEO up to 2-5x in a month. It is also doing well now that you can stake BNB for their "yield farming" product Binance launchpool. In both cases, BNB is used to make more money for token holders. When IEO's slowed down at the end of last year, BNB was only used to save people money on trading fees and their burn and the market priced their token lower. Now looking at UNI, a burn does not make users money, it instead hopes that the burn will make UNI deflationary. We know this won't be the case because of the UNI supply schedule and vesting periods. By distributing a daily dividend with the fee switch holding UNI makes people money. This is a subtle difference but one worth highlighting here when discussing whether revenues should go to a dividend vs Burn. I am strongly in camp daily dividend. This is a jumble of thoughts so feel free to ask questions and I will do more to explain my thoughts.
strongly vote for distributing fees either by eth or tokens.
MKR and BNB have demonstrated that Burn mechanisms have extremely unreliable effects in terms of distributing fees.
In addition, i dont think network fees and logistics should be a deciding factor this AT ALL.
strongly vote for distributing fees either by eth or tokens.
MKR and BNB have demonstrated that Burn mechanisms have extremely unreliable effects in terms of distributing fees.
In addition, i dont think network fees and logistics should be a deciding factor this AT ALL.
Buy and burn vs Distiributing fees is an extremely significant, token economic-level issue which should be decided on its own merits.
Network fees and distribution logistics are a solvable problem. Synthetix, BAL, and MStable are all dealing with - there are tried and true case studies of how to do this.
Network fees should absolutely not be a reason to be deciding buy and burn vs fee distribution.
Buy and burn. Efficient, not only code but on taxes as well.
You can always just change it, because fees are paid one way doesnt mean we cant simply change to another one with a vote.
Buying and burning doesnt incentivize anything. I think to be able to earn uni you should be part of a staking pool similar to sushi, and each pool can "serve" the fees to this pool, when you withdraw you have more uni then when you came in with. Alternatively fees are collected in ETH or perhaps DAI or tBTC. Would personally prefer tBTC.
I also think about it with economic perspectives and new LPs that not only from earnings but also as capital addition, but for me the most important thing is the product, for many legislations a distributed broadcast network a general use, "distributed digital currencies ”as currency, and they are topics that, thinking about economics, give market evaluations for the quality of the product that for me also influences the price
Todavía no tengo mucha opinión sobre esto, pero me inclino más hacia la distribución de ETH o una moneda estable o algo a los participantes activos de la gobernanza. Esto podría ser difícil de hacer y quizás contribuir a que no se mantengan las paridades de la moneda estable.
Hey everyone, I wanted to share some thoughts in regards to those arguing for a UNI burn with the fee switch rather than a daily dividend of revenues. First off, looking at all of these defi governance tokens that have come to market this year. They have all all come to market with the promise of future revenues being distributed to token holders through some sort of governance vote. I am of the opinion that the governance aspect of these tokens is relatively valueless and it is those future cashflows to token holders is where something like a COMP, BAL, or UNI comes from. However, the majority of these defi coins can't add in revenue "pass throughs" to token holders yet because they don't make enough money to warrant their valuations. (see revenues and PE ratios here: https://www.tokenterminal.com/) Any additional fees for token holders in these platforms could theoretically be forked away, and would lead to investors have to value these current low cashflows/revenues rather hope of future cashflows rerating prices lower. I outline this because UNI doesn't have this problem, Uniswap makes so much money that if the fee switch is turned on today, valuing those cashflows has UNI at a higher price than it currently is.
Hopefully this shows that the fee switch should be turned on, now turning to Burns. Burns are most common in CEFI tokens so I will look their. Looking at BNB, BNB's token has seen its highest valuations when the token MAKES people money, not saves people money. What I mean is this: BNB did very well when you had to use BNB to buy IEO's when they were pushing every IEO up to 2-5x in a month. It is also doing well now that you can stake BNB for their "yield farming" product Binance launchpool. In both cases, BNB is used to make more money for token holders. When IEO's slowed down at the end of last year, BNB was only used to save people money on trading fees and their burn and the market priced their token lower. Now looking at UNI, a burn does not make users money, it instead hopes that the burn will make UNI deflationary. We know this won't be the case because of the UNI supply schedule and vesting periods. By distributing a daily dividend with the fee switch holding UNI makes people money. This is a subtle difference but one worth highlighting here when discussing whether revenues should go to a dividend vs Burn. I am strongly in camp daily dividend. This is a jumble of thoughts so feel free to ask questions and I will do more to explain my thoughts.
strongly vote for distributing fees either by eth or tokens.
MKR and BNB have demonstrated that Burn mechanisms have extremely unreliable effects in terms of distributing fees.
In addition, i dont think network fees and logistics should be a deciding factor this AT ALL.
strongly vote for distributing fees either by eth or tokens.
MKR and BNB have demonstrated that Burn mechanisms have extremely unreliable effects in terms of distributing fees.
In addition, i dont think network fees and logistics should be a deciding factor this AT ALL.
Buy and burn vs Distiributing fees is an extremely significant, token economic-level issue which should be decided on its own merits.
Network fees and distribution logistics are a solvable problem. Synthetix, BAL, and MStable are all dealing with - there are tried and true case studies of how to do this.
Network fees should absolutely not be a reason to be deciding buy and burn vs fee distribution.
Buy and burn. Efficient, not only code but on taxes as well.
You can always just change it, because fees are paid one way doesnt mean we cant simply change to another one with a vote.
Buying and burning doesnt incentivize anything. I think to be able to earn uni you should be part of a staking pool similar to sushi, and each pool can "serve" the fees to this pool, when you withdraw you have more uni then when you came in with. Alternatively fees are collected in ETH or perhaps DAI or tBTC. Would personally prefer tBTC.
I also think about it with economic perspectives and new LPs that not only from earnings but also as capital addition, but for me the most important thing is the product, for many legislations a distributed broadcast network a general use, "distributed digital currencies ”as currency, and they are topics that, thinking about economics, give market evaluations for the quality of the product that for me also influences the price
Todavía no tengo mucha opinión sobre esto, pero me inclino más hacia la distribución de ETH o una moneda estable o algo a los participantes activos de la gobernanza. Esto podría ser difícil de hacer y quizás contribuir a que no se mantengan las paridades de la moneda estable.
I also think about it with economic perspectives and new LPs that not only from earnings but also as capital addition, but for me the most important thing is the product, for many legislations a distributed broadcast network a general use, "distributed digital currencies ”as currency, and they are topics that, thinking about economics, give market evaluations for the quality of the product that for me also influences the price
Todavía no tengo mucha opinión sobre esto, pero me inclino más hacia la distribución de ETH o una moneda estable o algo a los participantes activos de la gobernanza. Esto podría ser difícil de hacer y quizás contribuir a que no se mantengan las paridades de la moneda estable.
a bep2 network that is Uni governance for stake payments and vote delegation if possible with a Uni Wallet and change the network for the exchange?
I also think about it with economic perspectives and new LPs that not only from earnings but also as capital addition, but for me the most important thing is the product, for many legislations a distributed broadcast network a general use, "distributed digital currencies ”as currency, and they are topics that, thinking about economics, give market evaluations for the quality of the product that for me also influences the price
Todavía no tengo mucha opinión sobre esto, pero me inclino más hacia la distribución de ETH o una moneda estable o algo a los participantes activos de la gobernanza. Esto podría ser difícil de hacer y quizás contribuir a que no se mantengan las paridades de la moneda estable.
a bep2 network that is Uni governance for stake payments and vote delegation if possible with a Uni Wallet and change the network for the exchange?
Exactly people that want burn so bad have big stacks and want to increase their voting power and returns. Us little guys get screwed. I think buying uni and distribute will give the little guys some more skin in the game .
I think an argument can be made that burning is equitable and efficient with respect to rewards, but it would also result in more governance centralization than other options. I think a mechanism that evolves the allocation ratios in the way described in the original token announcement would be ideal (e.g cycling community tokens right back to the community).
Account airdrops are more decentralized, and while that worked for the introduction of the token, that would probably have an issue too since there's a misaligned incentive now to, say, create as many Metamask accounts as you can and connect them all to Uniswap.
Against both burn and UNI purchase. They're just a gimmicky ways to get the price up for early adopters so they can sell. Useful for bootstrapping projects, but uniswap is already past that. It should focus on increasing the actual value.
The other two choices do that. I personally prefer in the respective tokens, but I understand the arguments with gas and small holders. Can we not allow a choice?
Against both burn and UNI purchase. They're just a gimmicky ways to get the price up for early adopters so they can sell. Useful for bootstrapping projects, but uniswap is already past that. It should focus on increasing the actual value.
The other two choices do that. I personally prefer in the respective tokens, but I understand the arguments with gas and small holders. Can we not allow a choice?
(I really like the respective tokens because it means Team Uni ends up as a minor voting party in every other governance token)
I believe the burn is the only way to efficiently achieve the goal of rewarding UNI holders evenly. This is especially true if the burn is done in such a way where the whole burn happens in a single tx (as opposed to burning small pieces with every transaction). I'd imagine this would be similar to how the MKR heal function works.
The "distribute to holders" options require interactions with each holder, which could become incredibly expensive and bad for the network.
I think you should do some real research before spamming forum or you work for some decentralized exchange maybe?
Exactly people that want burn so bad have big stacks and want to increase their voting power and returns. Us little guys get screwed. I think buying uni and distribute will give the little guys some more skin in the game .
I think an argument can be made that burning is equitable and efficient with respect to rewards, but it would also result in more governance centralization than other options. I think a mechanism that evolves the allocation ratios in the way described in the original token announcement would be ideal (e.g cycling community tokens right back to the community).
Account airdrops are more decentralized, and while that worked for the introduction of the token, that would probably have an issue too since there's a misaligned incentive now to, say, create as many Metamask accounts as you can and connect them all to Uniswap.
Against both burn and UNI purchase. They're just a gimmicky ways to get the price up for early adopters so they can sell. Useful for bootstrapping projects, but uniswap is already past that. It should focus on increasing the actual value.
The other two choices do that. I personally prefer in the respective tokens, but I understand the arguments with gas and small holders. Can we not allow a choice?
Against both burn and UNI purchase. They're just a gimmicky ways to get the price up for early adopters so they can sell. Useful for bootstrapping projects, but uniswap is already past that. It should focus on increasing the actual value.
The other two choices do that. I personally prefer in the respective tokens, but I understand the arguments with gas and small holders. Can we not allow a choice?
(I really like the respective tokens because it means Team Uni ends up as a minor voting party in every other governance token)
I believe the burn is the only way to efficiently achieve the goal of rewarding UNI holders evenly. This is especially true if the burn is done in such a way where the whole burn happens in a single tx (as opposed to burning small pieces with every transaction). I'd imagine this would be similar to how the MKR heal function works.
The "distribute to holders" options require interactions with each holder, which could become incredibly expensive and bad for the network.
I think you should do some real research before spamming forum or you work for some decentralized exchange maybe?
I think you should do some real research before spamming forum or you work for some decentralized exchange maybe?
Every year Berkshire Hathaway number of outstanding shares decrease! As picture below shows...
The Power of Compounding:
Compound interest has been described by Albert Einstein as "The most powerful force in the universe"
Compound interest is a fundamental component of wealth creation.
In the interest of every UNI holder especially the small ones are buying back and burning UNI tokens as that approach will maximize profit and create compounding wealth effect.
That is exactly what the most successful investor Warren Buffett is doing, reinvesting all profits, buying back shares and not paying dividends.
Berkshire Hathaway , led by the most successful investor Warren Buffett doesn't pay dividend, he buys back shares. If you need income, you simple sell 1% or 2% of your shares every year, it's better than dividend and probably tax efficient for many people.
The voting power doesn't change for anyone with token burn. (example if token supply reduce 50%, the guy with previous 5% vote power will have 10%, and guy with 0.01% will have 0.02% voting power, everyone doubles)
The voting power doesn't change for anyone with token burn. (example if token supply reduce 50%, the guy with previous 5% vote power will have 10%, and guy with 0.01% will have 0.02% voting power, everyone doubles)
The similar thing exist in stock market when company buy back shares.
If you buy back tokens, you are reducing supply. When buy back demand outstrip sellers, price will start to go up. That's good incentive to invest in something that appreciate in value.
Statistic show that only 25.7% shareholders in US public companies vote on annual meetings. Why do you think crypto will be different? Most people invest to make money not to govern companies or projects.
Sorry if this has been discussed, but why not pass the fees along as a sort of dividend in the form of stablecoins? Buy and burn is great at low prices like this, but that model is not always efficient if you're buying back at a high valuation.
I really think in addition to rewarding uni holders in the future a lock should be implemented as well
Thanks for gaming that out everyone--
I think your short term/long term dichotomy is insufficient. Obviously, it all comes down to the liquidity. If the "treasury pool" is sufficiently deep, the arbitrage will only move the price up. It sounds like what you're saying is that the pool won't have the liquidity fast enough to be the market anchor for price.
Thanks for gaming that out everyone--
I think your short term/long term dichotomy is insufficient. Obviously, it all comes down to the liquidity. If the "treasury pool" is sufficiently deep, the arbitrage will only move the price up. It sounds like what you're saying is that the pool won't have the liquidity fast enough to be the market anchor for price.
I don't think we have to worry about the pool being subject to short term arbitrage, but I could be wrong.
There's a couple things we can do to keep the treasury pool highly liquid until the treasury itself is large enough to achieve parity with other market makers.
A.) The existing UNI/ETH pool is pretty liquid already with only fee rewards as an incentive
B.) we can incentivize LPs to the treasury pool in and of themselves with additional UNI, scaling inversely with treasury balance
C.) Could also set it up so that the pool needs to capitalize to a certain threshold of the market before going live. This would also incentivize UNI holders to deposit to bootstrap the autonomous buyback machine.
Frankly, I hope there are some folks more educated than myself who can chime in on this idea with the type of analysis you're describing.
@wintermute How about the elegant solution proposed here:
https://www.placeholder.vc/blog/2020/9/17/stop-burning-tokens-buyback-and-make-instead
TL;DR: Buybacks get in the way of issuance and the ability to re-invest in the protocol. Excellent way to redistribute value to shareholders, but poor for the protocol long-term.
@wintermute How about the elegant solution proposed here:
https://www.placeholder.vc/blog/2020/9/17/stop-burning-tokens-buyback-and-make-instead
TL;DR: Buybacks get in the way of issuance and the ability to re-invest in the protocol. Excellent way to redistribute value to shareholders, but poor for the protocol long-term.
Instead of burning, use an imbalanced Balancer-style liquidity pool, stacked to be bullish on your platform token. eg, weighted 90/10 UNI/ETH.
Deposit profits in ETH; this drives the price up just like a burn model.
Bonus of making UNI/ETH a more liquid pair without having to issue additional UNI, and of compounding the treasury via the pool fees.
Obviously, Uniswap only currently allows for 50/50 pools on its own platform, and it wouldn't really do to house our treasury on Balancer... but this looks like the simple and elegant solution we're looking for.
Thoughts?
Your argument does make sense in general, but I think it gets too complex in the end. We have to come up with a simple, yet elegant solution and I do not think the burn is the optimal decision overall, but it fits best given the situation. If it were not for the gas fees and etc... ETH distribution is the optimal choice. One can try to work a solution around it, but it will never be frictionless.
I do not think CREAM represents a good example as this is a case of an extreme burn. UNI would have more of a steady buy and burn which could have a completely different ramifications I´d say.
Your argument does make sense in general, but I think it gets too complex in the end. We have to come up with a simple, yet elegant solution and I do not think the burn is the optimal decision overall, but it fits best given the situation. If it were not for the gas fees and etc... ETH distribution is the optimal choice. One can try to work a solution around it, but it will never be frictionless.
I do not think CREAM represents a good example as this is a case of an extreme burn. UNI would have more of a steady buy and burn which could have a completely different ramifications I´d say.
Having said all of this, I do understand why people are against the burn. Personally, in an ideal world without gas fees, I would also be against it, but it is what it is.
thats true, maybe thats why they implemented the 6 months time lock for the fee switch. Uniswap v3, optimistic rollups incoming (?)
However, I´d say that the burn brings value to the table, but also the ETH brings value to the table, the only difference is the network usage. We avoid congesting the network with fees.if we vote in for the burn. We can always switch it to eth redistribution after the ETH 2.0 rolls out. The reason why the ETH redistribution would not put a floor under the UNI token as of now are the enormous gas fees which could totally paralyse the network if large amounts get moved everyday.
I have thought about this and I was initially in the ETH distribution camp, but then I realized that buy and burn is the most fair option for everybody newcomers and early adopters alike.
I have to admit this thread has kickstarted a great discussion concerning the cornerstone of the Uniswap platform as a whole and the comparatively related value of its native UNI token.
I have thought about this and I was initially in the ETH distribution camp, but then I realized that buy and burn is the most fair option for everybody newcomers and early adopters alike.
I have to admit this thread has kickstarted a great discussion concerning the cornerstone of the Uniswap platform as a whole and the comparatively related value of its native UNI token.
First, I´d like to segment my 2 cents into parts so everybody can easily navigate my answer.
Initially, I would like to add my two cents regarding the value of the token and boom and bust cycles. UNI´s value has to be by definition inherently tied to the fee structure Uniswap is currently generating otherwise the coin has no value. You could argue that the governance aspect adds enough value to the token, but think about this: Why would you hold a governance token unless you plan to vote? The expected outcome is facing extreme inflation alongside falling demand which would end in a disaster for any of the early adopters of the token. This is, of course, not the best course of action. Regarding the boom and bust cycles mentioned above – when you are dealing with an innovation of the magnitude we are seeing right now, a boom and bust cycle is an inevitable consequence of human behavior. Our task is to minimize its destructive impact on the project as a whole. If you take a look at any of the innovative companies in the stock market, all of them had a boom and bust cycle; however, only those companies which had a solid foundation survived. Even though the cycle cannot be broken, it can be mitigated. The key to any human action is an incentive. You need to reward early adopters while treating late comers with respect as well.
ETH redistribution is not a practical solution due to the fact that the value of the UNI token would suffer as the demand for it would not outweigh the continuous inflation. The UNI holders would have to buy more and more in order to retain their share which could only get us so far because of gas fees. However, if gas fees are fixed, then this could be also another way to distribute alpha.
In the current state of affairs, buy and burn token would put a floor under the UNI price and change people´s incentives. Why would you sell something which you know will go up in value? Therefore, you hold and you do not dump and you eliminate gas fees.
The argument that burn would be outpaced by inflation is flawed in multiple aspects. Initially, the burn would outpace the inflation and then there are two scenarios which could happen. If Uniswap continues to grow, the fees would grow; therefore, the burn would be more poweful and would outpace the inflation. However, this applies vice versa as well, if the volumes drop, fees drop, burn is less powerful, inflation stays the same. There is a silver lining to the last outcome though as the price of UNI token would reach a point where the fees collected would be able to buy so much UNI that it would outpace the inflation.
That is why burn places a floor under the prices and retains value for everybody unless gas fees are fixed. Cheers.
It's really not optimal. Sushi is a small project. Uniswap's "footprint" on ethereum will be enormous with the volume of claims required across a huge number of pools.
The long tail of Uniswap is orders of magnitude greater than SushiSwap. Has anyone calculated the annualised gas used for what you're describing?
As someone constantly afflicted by L1 gas we need to look at how we can do better.
I've read through this thread a number of times now and the more I think about this, the more it becomes clear that there is no good solution to distributing protocol fees on Layer 1.
While the protocol switch should be considered (although I think we need to consult Liquidity Providers first), the mechanism for distributing funds should not be rushed.
I've read through this thread a number of times now and the more I think about this, the more it becomes clear that there is no good solution to distributing protocol fees on Layer 1.
While the protocol switch should be considered (although I think we need to consult Liquidity Providers first), the mechanism for distributing funds should not be rushed.
It may be that there are far more efficient and value-creating distribution methods possible with the OVM on Layer 2.
Strongly disagree with "buy and burn". I'm sure many would argue that burning tokens does not provide the same value to holders as if they were paid an income directly.
Instead, I would suggest that distribution is established on layer 2. Whether it is possible to "harvest" fees into the treasury on L2 for UNI holder claims I am not sure. But this should be something investigated when the other two options are sub-optimal (buy and burn or individual gas-consuming claims).
Wouldnt you agree that its best to take this poll to the snapshot page at least? If we can't agree on the poll option, at least lets somehow proceed forward.
We'll know where actual "money" stands, and we will have a better picture how we could proceed things.
Wouldnt you agree that its best to take this poll to the snapshot page at least? If we can't agree on the poll option, at least lets somehow proceed forward.
We'll know where actual "money" stands, and we will have a better picture how we could proceed things.
-- I think one of the things lacking with current Uni governance, is lack of action - essentially nothing is done, not a lot of people are discussing, etc. We need to take action, so its better if we put this on snapshot, create some buzz around the community, so that we get a better representation of voters, rather than this niche forum (I think large share of token holders don't even visit this site).
I disagree under the basis that we the community and Governance token holders should be able to come to a consensus that we either want to Burn the tokens or Distribute the tokens, choosing an indecisive idea is not beneficial and to me just make it look like someone wanted something unthought and poorly thought out to go out quickly to take advantage and earn before a good idea can be thought out.
Proposals shouldn't be a quick thing, in my opinion proposals in my should be carefully thought out, considered and tested ideas.
I disagree under the basis that we the community and Governance token holders should be able to come to a consensus that we either want to Burn the tokens or Distribute the tokens, choosing an indecisive idea is not beneficial and to me just make it look like someone wanted something unthought and poorly thought out to go out quickly to take advantage and earn before a good idea can be thought out.
Proposals shouldn't be a quick thing, in my opinion proposals in my should be carefully thought out, considered and tested ideas.
Also a consensus has to be reached on what proposals we want to actually put through. Better for the community to take the time and only propose a few serious ideas than have many spam and not well thought out/rushed ideas IMO
There's a lot more discussion to be had! I think I'll wait, we don't have control over the fee switch as of yet anyway. :)
Keep the discussion rolling guys!
Exactly if a whale wants to split their bag they'll probably be able to split it pretty easily there is no way to offset a whale without unbalancimg the system and unfairly rewarding smaller accounts which would just be biased.
Better to have an unbiased system IMO and focus on the important stuff like Governing and making the platform better than arguing over how to stop whales from manipulating this one individual token which would be very difficult to stop and in my opinion is a waste of energy.
Exactly if a whale wants to split their bag they'll probably be able to split it pretty easily there is no way to offset a whale without unbalancimg the system and unfairly rewarding smaller accounts which would just be biased.
Better to have an unbiased system IMO and focus on the important stuff like Governing and making the platform better than arguing over how to stop whales from manipulating this one individual token which would be very difficult to stop and in my opinion is a waste of energy.
Whale will eventually sell off once the price is right for them every project and token experiences whales getting in early and having a large cut of the supply nothing you can do as these people are lucky enough to have a large fortune to be able to buy the tokens in the first place
I think you should do some real research before spamming forum or you work for some decentralized exchange maybe?
Every year Berkshire Hathaway number of outstanding shares decrease! As picture below shows...
The Power of Compounding:
Compound interest has been described by Albert Einstein as "The most powerful force in the universe"
Compound interest is a fundamental component of wealth creation.
In the interest of every UNI holder especially the small ones are buying back and burning UNI tokens as that approach will maximize profit and create compounding wealth effect.
That is exactly what the most successful investor Warren Buffett is doing, reinvesting all profits, buying back shares and not paying dividends.
Berkshire Hathaway , led by the most successful investor Warren Buffett doesn't pay dividend, he buys back shares. If you need income, you simple sell 1% or 2% of your shares every year, it's better than dividend and probably tax efficient for many people.
The voting power doesn't change for anyone with token burn. (example if token supply reduce 50%, the guy with previous 5% vote power will have 10%, and guy with 0.01% will have 0.02% voting power, everyone doubles)
The voting power doesn't change for anyone with token burn. (example if token supply reduce 50%, the guy with previous 5% vote power will have 10%, and guy with 0.01% will have 0.02% voting power, everyone doubles)
The similar thing exist in stock market when company buy back shares.
If you buy back tokens, you are reducing supply. When buy back demand outstrip sellers, price will start to go up. That's good incentive to invest in something that appreciate in value.
Statistic show that only 25.7% shareholders in US public companies vote on annual meetings. Why do you think crypto will be different? Most people invest to make money not to govern companies or projects.
Sorry if this has been discussed, but why not pass the fees along as a sort of dividend in the form of stablecoins? Buy and burn is great at low prices like this, but that model is not always efficient if you're buying back at a high valuation.
I really think in addition to rewarding uni holders in the future a lock should be implemented as well
Thanks for gaming that out everyone--
I think your short term/long term dichotomy is insufficient. Obviously, it all comes down to the liquidity. If the "treasury pool" is sufficiently deep, the arbitrage will only move the price up. It sounds like what you're saying is that the pool won't have the liquidity fast enough to be the market anchor for price.
Thanks for gaming that out everyone--
I think your short term/long term dichotomy is insufficient. Obviously, it all comes down to the liquidity. If the "treasury pool" is sufficiently deep, the arbitrage will only move the price up. It sounds like what you're saying is that the pool won't have the liquidity fast enough to be the market anchor for price.
I don't think we have to worry about the pool being subject to short term arbitrage, but I could be wrong.
There's a couple things we can do to keep the treasury pool highly liquid until the treasury itself is large enough to achieve parity with other market makers.
A.) The existing UNI/ETH pool is pretty liquid already with only fee rewards as an incentive
B.) we can incentivize LPs to the treasury pool in and of themselves with additional UNI, scaling inversely with treasury balance
C.) Could also set it up so that the pool needs to capitalize to a certain threshold of the market before going live. This would also incentivize UNI holders to deposit to bootstrap the autonomous buyback machine.
Frankly, I hope there are some folks more educated than myself who can chime in on this idea with the type of analysis you're describing.
@wintermute How about the elegant solution proposed here:
https://www.placeholder.vc/blog/2020/9/17/stop-burning-tokens-buyback-and-make-instead
TL;DR: Buybacks get in the way of issuance and the ability to re-invest in the protocol. Excellent way to redistribute value to shareholders, but poor for the protocol long-term.
@wintermute How about the elegant solution proposed here:
https://www.placeholder.vc/blog/2020/9/17/stop-burning-tokens-buyback-and-make-instead
TL;DR: Buybacks get in the way of issuance and the ability to re-invest in the protocol. Excellent way to redistribute value to shareholders, but poor for the protocol long-term.
Instead of burning, use an imbalanced Balancer-style liquidity pool, stacked to be bullish on your platform token. eg, weighted 90/10 UNI/ETH.
Deposit profits in ETH; this drives the price up just like a burn model.
Bonus of making UNI/ETH a more liquid pair without having to issue additional UNI, and of compounding the treasury via the pool fees.
Obviously, Uniswap only currently allows for 50/50 pools on its own platform, and it wouldn't really do to house our treasury on Balancer... but this looks like the simple and elegant solution we're looking for.
Thoughts?
Your argument does make sense in general, but I think it gets too complex in the end. We have to come up with a simple, yet elegant solution and I do not think the burn is the optimal decision overall, but it fits best given the situation. If it were not for the gas fees and etc... ETH distribution is the optimal choice. One can try to work a solution around it, but it will never be frictionless.
I do not think CREAM represents a good example as this is a case of an extreme burn. UNI would have more of a steady buy and burn which could have a completely different ramifications I´d say.
Your argument does make sense in general, but I think it gets too complex in the end. We have to come up with a simple, yet elegant solution and I do not think the burn is the optimal decision overall, but it fits best given the situation. If it were not for the gas fees and etc... ETH distribution is the optimal choice. One can try to work a solution around it, but it will never be frictionless.
I do not think CREAM represents a good example as this is a case of an extreme burn. UNI would have more of a steady buy and burn which could have a completely different ramifications I´d say.
Having said all of this, I do understand why people are against the burn. Personally, in an ideal world without gas fees, I would also be against it, but it is what it is.
thats true, maybe thats why they implemented the 6 months time lock for the fee switch. Uniswap v3, optimistic rollups incoming (?)
However, I´d say that the burn brings value to the table, but also the ETH brings value to the table, the only difference is the network usage. We avoid congesting the network with fees.if we vote in for the burn. We can always switch it to eth redistribution after the ETH 2.0 rolls out. The reason why the ETH redistribution would not put a floor under the UNI token as of now are the enormous gas fees which could totally paralyse the network if large amounts get moved everyday.
I have thought about this and I was initially in the ETH distribution camp, but then I realized that buy and burn is the most fair option for everybody newcomers and early adopters alike.
I have to admit this thread has kickstarted a great discussion concerning the cornerstone of the Uniswap platform as a whole and the comparatively related value of its native UNI token.
I have thought about this and I was initially in the ETH distribution camp, but then I realized that buy and burn is the most fair option for everybody newcomers and early adopters alike.
I have to admit this thread has kickstarted a great discussion concerning the cornerstone of the Uniswap platform as a whole and the comparatively related value of its native UNI token.
First, I´d like to segment my 2 cents into parts so everybody can easily navigate my answer.
Initially, I would like to add my two cents regarding the value of the token and boom and bust cycles. UNI´s value has to be by definition inherently tied to the fee structure Uniswap is currently generating otherwise the coin has no value. You could argue that the governance aspect adds enough value to the token, but think about this: Why would you hold a governance token unless you plan to vote? The expected outcome is facing extreme inflation alongside falling demand which would end in a disaster for any of the early adopters of the token. This is, of course, not the best course of action. Regarding the boom and bust cycles mentioned above – when you are dealing with an innovation of the magnitude we are seeing right now, a boom and bust cycle is an inevitable consequence of human behavior. Our task is to minimize its destructive impact on the project as a whole. If you take a look at any of the innovative companies in the stock market, all of them had a boom and bust cycle; however, only those companies which had a solid foundation survived. Even though the cycle cannot be broken, it can be mitigated. The key to any human action is an incentive. You need to reward early adopters while treating late comers with respect as well.
ETH redistribution is not a practical solution due to the fact that the value of the UNI token would suffer as the demand for it would not outweigh the continuous inflation. The UNI holders would have to buy more and more in order to retain their share which could only get us so far because of gas fees. However, if gas fees are fixed, then this could be also another way to distribute alpha.
In the current state of affairs, buy and burn token would put a floor under the UNI price and change people´s incentives. Why would you sell something which you know will go up in value? Therefore, you hold and you do not dump and you eliminate gas fees.
The argument that burn would be outpaced by inflation is flawed in multiple aspects. Initially, the burn would outpace the inflation and then there are two scenarios which could happen. If Uniswap continues to grow, the fees would grow; therefore, the burn would be more poweful and would outpace the inflation. However, this applies vice versa as well, if the volumes drop, fees drop, burn is less powerful, inflation stays the same. There is a silver lining to the last outcome though as the price of UNI token would reach a point where the fees collected would be able to buy so much UNI that it would outpace the inflation.
That is why burn places a floor under the prices and retains value for everybody unless gas fees are fixed. Cheers.
It's really not optimal. Sushi is a small project. Uniswap's "footprint" on ethereum will be enormous with the volume of claims required across a huge number of pools.
The long tail of Uniswap is orders of magnitude greater than SushiSwap. Has anyone calculated the annualised gas used for what you're describing?
As someone constantly afflicted by L1 gas we need to look at how we can do better.
I've read through this thread a number of times now and the more I think about this, the more it becomes clear that there is no good solution to distributing protocol fees on Layer 1.
While the protocol switch should be considered (although I think we need to consult Liquidity Providers first), the mechanism for distributing funds should not be rushed.
I've read through this thread a number of times now and the more I think about this, the more it becomes clear that there is no good solution to distributing protocol fees on Layer 1.
While the protocol switch should be considered (although I think we need to consult Liquidity Providers first), the mechanism for distributing funds should not be rushed.
It may be that there are far more efficient and value-creating distribution methods possible with the OVM on Layer 2.
Strongly disagree with "buy and burn". I'm sure many would argue that burning tokens does not provide the same value to holders as if they were paid an income directly.
Instead, I would suggest that distribution is established on layer 2. Whether it is possible to "harvest" fees into the treasury on L2 for UNI holder claims I am not sure. But this should be something investigated when the other two options are sub-optimal (buy and burn or individual gas-consuming claims).
Wouldnt you agree that its best to take this poll to the snapshot page at least? If we can't agree on the poll option, at least lets somehow proceed forward.
We'll know where actual "money" stands, and we will have a better picture how we could proceed things.
Wouldnt you agree that its best to take this poll to the snapshot page at least? If we can't agree on the poll option, at least lets somehow proceed forward.
We'll know where actual "money" stands, and we will have a better picture how we could proceed things.
-- I think one of the things lacking with current Uni governance, is lack of action - essentially nothing is done, not a lot of people are discussing, etc. We need to take action, so its better if we put this on snapshot, create some buzz around the community, so that we get a better representation of voters, rather than this niche forum (I think large share of token holders don't even visit this site).
I disagree under the basis that we the community and Governance token holders should be able to come to a consensus that we either want to Burn the tokens or Distribute the tokens, choosing an indecisive idea is not beneficial and to me just make it look like someone wanted something unthought and poorly thought out to go out quickly to take advantage and earn before a good idea can be thought out.
Proposals shouldn't be a quick thing, in my opinion proposals in my should be carefully thought out, considered and tested ideas.
I disagree under the basis that we the community and Governance token holders should be able to come to a consensus that we either want to Burn the tokens or Distribute the tokens, choosing an indecisive idea is not beneficial and to me just make it look like someone wanted something unthought and poorly thought out to go out quickly to take advantage and earn before a good idea can be thought out.
Proposals shouldn't be a quick thing, in my opinion proposals in my should be carefully thought out, considered and tested ideas.
Also a consensus has to be reached on what proposals we want to actually put through. Better for the community to take the time and only propose a few serious ideas than have many spam and not well thought out/rushed ideas IMO
There's a lot more discussion to be had! I think I'll wait, we don't have control over the fee switch as of yet anyway. :)
Keep the discussion rolling guys!
Exactly if a whale wants to split their bag they'll probably be able to split it pretty easily there is no way to offset a whale without unbalancimg the system and unfairly rewarding smaller accounts which would just be biased.
Better to have an unbiased system IMO and focus on the important stuff like Governing and making the platform better than arguing over how to stop whales from manipulating this one individual token which would be very difficult to stop and in my opinion is a waste of energy.
Exactly if a whale wants to split their bag they'll probably be able to split it pretty easily there is no way to offset a whale without unbalancimg the system and unfairly rewarding smaller accounts which would just be biased.
Better to have an unbiased system IMO and focus on the important stuff like Governing and making the platform better than arguing over how to stop whales from manipulating this one individual token which would be very difficult to stop and in my opinion is a waste of energy.
Whale will eventually sell off once the price is right for them every project and token experiences whales getting in early and having a large cut of the supply nothing you can do as these people are lucky enough to have a large fortune to be able to buy the tokens in the first place
How are the fee rewards received? In ether or liquidity tokens..
Burning most of it makes sense
I completely agree, unfortunately the whole Burn vs Distribute is still a question very much at large in the forum which is partially why I mentioned best not to rush the process.
From what I've seen on this forum there doesn't seem to be a very clear consensus and or there are still people asking for clarification on the topic so until this is sorted I feel like decisions like this are kind of put on hold.
I completely agree, unfortunately the whole Burn vs Distribute is still a question very much at large in the forum which is partially why I mentioned best not to rush the process.
From what I've seen on this forum there doesn't seem to be a very clear consensus and or there are still people asking for clarification on the topic so until this is sorted I feel like decisions like this are kind of put on hold.
Again my personal view others might argue otherwise
May I suggest the poll on snapshot page be a little bit less complicated?
i.e. one YES option and one NO option.
I don't have a legal background, but I know that distributing rewards to wallets is more riskier (from a perspective of securities), than burning it. Added with facts like people mentioned above (too complicated to handle, lots of fees, etc.), burning seems to be the only viable option.
May I suggest the poll on snapshot page be a little bit less complicated?
i.e. one YES option and one NO option.
I don't have a legal background, but I know that distributing rewards to wallets is more riskier (from a perspective of securities), than burning it. Added with facts like people mentioned above (too complicated to handle, lots of fees, etc.), burning seems to be the only viable option.
I think it would make sense if we voted on the implementation of LP fees to buy UNI and burn.
In case of a positive poll vote, I would expect another following snapshot poll that would define how big the fee should be.
A wise choice in my opinion would have said wait aswell myself as you appear to be on a similar page as me that this is a very undecided topic
How can we take this forward and propose the most voted for solution to be implemented?
We need to step things up :)
Could always do half and half to start with and see how it goes and then vote to go one way.
Well I'm really happy we got a discussion going, thanks for your input folks!
I don't really have much of an opinion on this as of yet, but I'm leaning more towards distributing ETH or a stablecoin or something to active governance participants. This could be difficult to do, and perhaps contribute against maintaining the stablecoin pegs.
Well I'm really happy we got a discussion going, thanks for your input folks!
I don't really have much of an opinion on this as of yet, but I'm leaning more towards distributing ETH or a stablecoin or something to active governance participants. This could be difficult to do, and perhaps contribute against maintaining the stablecoin pegs.
With that said, I believe the long-term value of a UNI token should be tied to protocol fees in some way or another.
Might be worth doing, but I think we need a bit more clarity on the discussions here first. The options I set up might not be optimal, let alone exhaustive!
I would argue that burning UNI, distributing UNI as a reward and distributing ETH as a reward, in the long term will have the same effect on UNI price, let me explain why:
I would argue that burning UNI, distributing UNI as a reward and distributing ETH as a reward, in the long term will have the same effect on UNI price, let me explain why:
Basically what I'm trying to say is that the market will decide the direction of UNI price, not UNI governance. If a reward is distributed to UNI holder then UNI price will go up in any cases. And about the centralization of governance... that's going to happen even if we distribute ETH because UNI whales will use it to buy more UNI. So even here, the market will decide.
Daily volume is not the same thing. I can trade 1 token ten times and the volume would reflect ten trades. but if you burn that 1 token right after the first trade, those ten trades would not happen. day traders buy and sell the same stack of tokens multiple times a day, effectively doing my example on a large scale.
And we're not burning token just for the sake of it. We would be burning token with the value that is produced by UniSwap. That is something completely sustainable in the long term. It would be a Ponzi if we were creating value from thin air, but we're not.
@Zer0dot know you set up a poll at the top of this post but you could consider setting up a poll on the Uniswap Snapshot Page to get an idea of where people stand as this is clearly a very important topic for many
Next step for this might be the OG poster @Zer0dot to make a poll on the Snapshot page.
From there you'd need to find someone with 1% of the total supply to actually propose something officially, a process in my opinion that shouldn't be rushed thus why I feel/think the snapshot page is a good first start to see how many people are interested in delegating to this proposal and who would vote what way to see if there would be enough votes to want to pass it
How who and where has anyone promised returns please point me to that?
I would disagree plenty of project participate in Buy and Burn schemes also Buy and Burn schemes do not = Ponzi as Uni never promised anyone high returns they never even promised any returns so the Ponzi claim in here are just invalid
Would ladvise people to look up what a Ponzi scheme is before throwing the term around in the future
I don’t think that buying UNI in order to burn it would have such a drastic impact on the market, unless UNI was largely undervalued. Let’s look at the number: We’re having around $300M volume each day. If 0,1% of it went in fee to burn UNI (and this would be a large amount) then we would burn $300k UNI each day. This may seem like a large number, but it really is not in comparison to the daily volume on UNI which is $1 bilion. And now we only have 10% of the total supply circulating, in future this ratio would be even larger.
It would be a Ponzi if we were creating value from thin air, but we’re not.
It would be a Ponzi if we were creating value from thin air, but we’re not.
Also throwing around the word "Ponzi" in a loose manor is very dangerous but seems to be not uncommon along with other words such as Scam, Pyramid Scheme etc (not sure why Ponzi and Ponziism got brought into this conversation)... Those word in my opinion should really be reserved for real Ponzis, Scams, Pyramid Schemes and not just thrown around as it devalues the face value of the word when a real Ponzi etc is happening. Again it should be reserved and not just thrown around as a cover up of a statement of anger or frustration not without substantial backing and proof towards it being a "Ponzi" anyway
As mentioned before burning and distributing all in all have the exact same effect burning the tokens reduces the number of tokens in supply meaning each token is worth more, yes it means whales would get more money but these whales had to put money into the token to get those tokens so it’s not like they’re exactly being given a free handout.
I would agree that Ethereum fee distribution would be a valuable option if it was easy to implement. But I don't think it really is, especially with the high cost of operations on Ethereum layer 1. But I don't know, I may be wrong and ETH distribution may be easier to implement once we are on layer 2.
I have read it Burning and Distributing in my opinion has the same outcome I think that getting hung up on the idea that Burning would definitely mean people who HODL will benefit the most isnt true but hey we'll agree to disagree and leave it at that as we're both not contributing anything to this post really more than going back and forth with what is clearly conflicting views
How are the fee rewards received? In ether or liquidity tokens..
Burning most of it makes sense
I completely agree, unfortunately the whole Burn vs Distribute is still a question very much at large in the forum which is partially why I mentioned best not to rush the process.
From what I've seen on this forum there doesn't seem to be a very clear consensus and or there are still people asking for clarification on the topic so until this is sorted I feel like decisions like this are kind of put on hold.
I completely agree, unfortunately the whole Burn vs Distribute is still a question very much at large in the forum which is partially why I mentioned best not to rush the process.
From what I've seen on this forum there doesn't seem to be a very clear consensus and or there are still people asking for clarification on the topic so until this is sorted I feel like decisions like this are kind of put on hold.
Again my personal view others might argue otherwise
May I suggest the poll on snapshot page be a little bit less complicated?
i.e. one YES option and one NO option.
I don't have a legal background, but I know that distributing rewards to wallets is more riskier (from a perspective of securities), than burning it. Added with facts like people mentioned above (too complicated to handle, lots of fees, etc.), burning seems to be the only viable option.
May I suggest the poll on snapshot page be a little bit less complicated?
i.e. one YES option and one NO option.
I don't have a legal background, but I know that distributing rewards to wallets is more riskier (from a perspective of securities), than burning it. Added with facts like people mentioned above (too complicated to handle, lots of fees, etc.), burning seems to be the only viable option.
I think it would make sense if we voted on the implementation of LP fees to buy UNI and burn.
In case of a positive poll vote, I would expect another following snapshot poll that would define how big the fee should be.
A wise choice in my opinion would have said wait aswell myself as you appear to be on a similar page as me that this is a very undecided topic
How can we take this forward and propose the most voted for solution to be implemented?
We need to step things up :)
Could always do half and half to start with and see how it goes and then vote to go one way.
Well I'm really happy we got a discussion going, thanks for your input folks!
I don't really have much of an opinion on this as of yet, but I'm leaning more towards distributing ETH or a stablecoin or something to active governance participants. This could be difficult to do, and perhaps contribute against maintaining the stablecoin pegs.
Well I'm really happy we got a discussion going, thanks for your input folks!
I don't really have much of an opinion on this as of yet, but I'm leaning more towards distributing ETH or a stablecoin or something to active governance participants. This could be difficult to do, and perhaps contribute against maintaining the stablecoin pegs.
With that said, I believe the long-term value of a UNI token should be tied to protocol fees in some way or another.
Might be worth doing, but I think we need a bit more clarity on the discussions here first. The options I set up might not be optimal, let alone exhaustive!
I would argue that burning UNI, distributing UNI as a reward and distributing ETH as a reward, in the long term will have the same effect on UNI price, let me explain why:
I would argue that burning UNI, distributing UNI as a reward and distributing ETH as a reward, in the long term will have the same effect on UNI price, let me explain why:
Basically what I'm trying to say is that the market will decide the direction of UNI price, not UNI governance. If a reward is distributed to UNI holder then UNI price will go up in any cases. And about the centralization of governance... that's going to happen even if we distribute ETH because UNI whales will use it to buy more UNI. So even here, the market will decide.
Daily volume is not the same thing. I can trade 1 token ten times and the volume would reflect ten trades. but if you burn that 1 token right after the first trade, those ten trades would not happen. day traders buy and sell the same stack of tokens multiple times a day, effectively doing my example on a large scale.
And we're not burning token just for the sake of it. We would be burning token with the value that is produced by UniSwap. That is something completely sustainable in the long term. It would be a Ponzi if we were creating value from thin air, but we're not.
@Zer0dot know you set up a poll at the top of this post but you could consider setting up a poll on the Uniswap Snapshot Page to get an idea of where people stand as this is clearly a very important topic for many
Next step for this might be the OG poster @Zer0dot to make a poll on the Snapshot page.
From there you'd need to find someone with 1% of the total supply to actually propose something officially, a process in my opinion that shouldn't be rushed thus why I feel/think the snapshot page is a good first start to see how many people are interested in delegating to this proposal and who would vote what way to see if there would be enough votes to want to pass it
How who and where has anyone promised returns please point me to that?
I would disagree plenty of project participate in Buy and Burn schemes also Buy and Burn schemes do not = Ponzi as Uni never promised anyone high returns they never even promised any returns so the Ponzi claim in here are just invalid
Would ladvise people to look up what a Ponzi scheme is before throwing the term around in the future
I don’t think that buying UNI in order to burn it would have such a drastic impact on the market, unless UNI was largely undervalued. Let’s look at the number: We’re having around $300M volume each day. If 0,1% of it went in fee to burn UNI (and this would be a large amount) then we would burn $300k UNI each day. This may seem like a large number, but it really is not in comparison to the daily volume on UNI which is $1 bilion. And now we only have 10% of the total supply circulating, in future this ratio would be even larger.
It would be a Ponzi if we were creating value from thin air, but we’re not.
It would be a Ponzi if we were creating value from thin air, but we’re not.
Also throwing around the word "Ponzi" in a loose manor is very dangerous but seems to be not uncommon along with other words such as Scam, Pyramid Scheme etc (not sure why Ponzi and Ponziism got brought into this conversation)... Those word in my opinion should really be reserved for real Ponzis, Scams, Pyramid Schemes and not just thrown around as it devalues the face value of the word when a real Ponzi etc is happening. Again it should be reserved and not just thrown around as a cover up of a statement of anger or frustration not without substantial backing and proof towards it being a "Ponzi" anyway
As mentioned before burning and distributing all in all have the exact same effect burning the tokens reduces the number of tokens in supply meaning each token is worth more, yes it means whales would get more money but these whales had to put money into the token to get those tokens so it’s not like they’re exactly being given a free handout.
I would agree that Ethereum fee distribution would be a valuable option if it was easy to implement. But I don't think it really is, especially with the high cost of operations on Ethereum layer 1. But I don't know, I may be wrong and ETH distribution may be easier to implement once we are on layer 2.
I have read it Burning and Distributing in my opinion has the same outcome I think that getting hung up on the idea that Burning would definitely mean people who HODL will benefit the most isnt true but hey we'll agree to disagree and leave it at that as we're both not contributing anything to this post really more than going back and forth with what is clearly conflicting views
I don’t think that buying UNI in order to burn it would have such a drastic impact on the market, unless UNI was largely undervalued. Let’s look at the number: We’re having around $300M volume each day. If 0,1% of it went in fee to burn UNI (and this would be a large amount) then we would burn $300k UNI each day. This may seem like a large number, but it really is not in comparison to the daily volume on UNI which is $1 bilion. And now we only have 10% of the total supply circulating, in future this ratio would be even larger.
just a math error here, Daily volume is not the same thing. I can trade 1 token ten times and the volume would reflect ten trades. but if you burn that 1 token right after the first trade, those ten trades would not happen. day traders buy and sell the same stack of tokens multiple times a day, effectively doing my example on a large scale.
As mentioned before burning and distributing all in all have the exact same effect burning the tokens reduces the number of tokens in supply meaning each token is worth more, yes it means whales would get more money but these whales had to put money into the token to get those tokens so it’s not like they’re exactly being given a free handout.
In effect it introduces Ponzinomics concepts to the token functionality.
In short, ponzinomics induce sell-side liquidity crises. This means there’s not enough supply on the red side of the order book so every marginal dollar entering the system keeps pushing the price up and up /Tony Sheng/
While introducing these concepts would mean price appreciation for the current token holders, it would accelerate the boom & bust cycles for the token.
In a rough approximation this would likely mean that earlier UNI buyers and holders would gain disproportionate amount of value at the expense of future UNI buyers and holders, who would get excited about the token, lose money on its bust cycle and typically come to a conclusion that this all is a scam.
I'm quoting these two sections on purpose in this order, since I think Uniguy didn't fully grasp what Mr_Po was saying. "if we burn half of the supply the other half has more value" its not that simple. you're not burning the supply evenly, so hodlers are in a strong position while newcomers are forced to buy from an ever diminishing supply, leaving the door open for hodlers to dump their stacks at higher prices. that's the ponzinomics that's being talked about here. so yeah, UNI is not a ponzi but a buy and burn is ponzinomics.
apart from the fact that burning UNI is still a horrible idea for governance reasons. its kind of like getting the keys to a house and then throwing the key away to make your house more exclusive..
I advise you to read the post Mr_Po wrote one more time and analyse what it is exactly that he is saying. I think you are too hung up on the word "ponzinomics" and not really thinking about what is meant by it.
Exactly 10% is 10% regardless or whatever the figure may be much better to burn the supply and make each token more valuable than continue to distribute but either way its the same thing
I am not talking about the emotional side of this matter. just the math. also, the whole governance move makes it so that even if the the team did not intend uni to be a ponzi, we can turn it into one.
First of all, let me specify that I don't think we should start burning token this year. UniSwap is pretty new as a platform and right now there is so many things already going on. I don't think that burning token is needed for now. Is more something that we should do in the long term once the platform is already well established.
Burning token UNI is not going to centralize governance, please remmber that there is a 2% perpetual inflation rate. The two things will tend to compensate in the long run.
First of all, let me specify that I don't think we should start burning token this year. UniSwap is pretty new as a platform and right now there is so many things already going on. I don't think that burning token is needed for now. Is more something that we should do in the long term once the platform is already well established.
Burning token UNI is not going to centralize governance, please remmber that there is a 2% perpetual inflation rate. The two things will tend to compensate in the long run.
Yes, but UNI holders are the ones who govern the system. The point is, why should UNI holders be motivated to keep enhancing UniSwap? If they are rewarded by a token burn, that would be a good incentive. Since there is a 2% perpetual inflation, if in 1 year less than 2% of the tokens is burned overall the UNI holders are losing value. If more than 2% is burned then they're growing their value. But since the amount of tokens burned is proportional to how well is UniSwap doing, this is the incentive for UNI holders.
I don’t think that buying UNI in order to burn it would have such a drastic impact on the market, unless UNI was largely undervalued. Let’s look at the number: We’re having around $300M volume each day. If 0,1% of it went in fee to burn UNI (and this would be a large amount) then we would burn $300k UNI each day. This may seem like a large number, but it really is not in comparison to the daily volume on UNI which is $1 bilion. And now we only have 10% of the total supply circulating, in future this ratio would be even larger.
I don’t think that buying UNI in order to burn it would have such a drastic impact on the market, unless UNI was largely undervalued. Let’s look at the number: We’re having around $300M volume each day. If 0,1% of it went in fee to burn UNI (and this would be a large amount) then we would burn $300k UNI each day. This may seem like a large number, but it really is not in comparison to the daily volume on UNI which is $1 bilion. And now we only have 10% of the total supply circulating, in future this ratio would be even larger.
It's not when you look at the 32,455,541.697773 uni left in the original smart contract worth over $163.5M that are now locked away forever if no one claims them
Bitconnect was a Ponzi Uni isnt. The community choosing to burn tokens wouldnt classify it as a Ponzi either and labeling community members who vote against distribution as "contributing towards turning the project into a Ponzi" is a very dangerous narrative to take.
As mentioned before burning and distributing all in all have the exact same effect burning the tokens reduces the number of tokens in supply meaning each token is worth more, yes it means whales would get more money but so would the smaller hands with the exact same amount of tokens but less in supply. Also FYI these whales had to put money into the token to get those tokens so it's not like they're exactly being given a free handout.
Bitconnect was a Ponzi Uni isnt. The community choosing to burn tokens wouldnt classify it as a Ponzi either and labeling community members who vote against distribution as "contributing towards turning the project into a Ponzi" is a very dangerous narrative to take.
As mentioned before burning and distributing all in all have the exact same effect burning the tokens reduces the number of tokens in supply meaning each token is worth more, yes it means whales would get more money but so would the smaller hands with the exact same amount of tokens but less in supply. Also FYI these whales had to put money into the token to get those tokens so it's not like they're exactly being given a free handout.
On the other hand distributing tokens would be distributing tokens to the smaller hands but also to the whales aswell either way leaving the small hands in the same position they were in before.
All in all they're much of a muchness and will end up with the same result as mentioned before.
Newbie here;What does burn would entail in option 2? here is my rough interpretation and please correct me
:confused:
Distributing UNI to everyone would have the same effect as burning token in making UNI more centralized.... What are you proposing?
Exactly people that want burn so bad have big stacks and want to increase their voting power and returns. Us little guys get screwed. I think buying uni and distribute will give the little guys some more skin in the game .
Distributing UNI to everyone would have the same effect as burning token in making UNI more centralized.... What are you proposing?
Exactly people that want burn so bad have big stacks and want to increase their voting power and returns. Us little guys get screwed. I think buying uni and distribute will give the little guys some more skin in the game .
If we burn 10% of the token, now each holder (big or small) have 10% more voting power.
If we distribute 10% of the tokens, now each holder (big or small) have 10% more voting power.
It's the exact same thing, both burning and distributing will reward holders in the long term. It doesn't matter if you are a big or a small investor.
thanks for the explanation!
Is a creative simple way to raise token value. Though, I see a conflict with the "ideological" statements in the "Introduction to UNI" https://uniswap.org/blog/uni/; which states:
"perpetual inflation rate of 2% per year will start after 4 years, ensuring continued participation and contribution to Uniswap at the expense of passive UNI holders".
thanks for the explanation!
Is a creative simple way to raise token value. Though, I see a conflict with the "ideological" statements in the "Introduction to UNI" https://uniswap.org/blog/uni/; which states:
"perpetual inflation rate of 2% per year will start after 4 years, ensuring continued participation and contribution to Uniswap at the expense of passive UNI holders".
Wouldn't option 2)"buy and burn" benefit the passive holders?
The more I think about governance tokens the more I get confused; lol. I am comparing the proposals with traditional dividends in stocks (i.e. "LP" coming from company's "profit"), however, there is endless issuing of shares. WTF, endless dilution.
Perhaps, a portion of the LP should be used to buy BTC\ETH, then UNI proportionally exchangeable for the stack of Uniswap's BTC\ETH (UNIs burned after redeeming). This sort of makes sense in my head from "economics perspective" but not sure on technical\protocol\transanction-wise feasibility though.
A burn is a horrible idea. UNI is a governance token, whoever holds the most tokens has the power. now for every token we burn, the big stacks become proportionally bigger. think of the team stack, all it takes is a 10% burn for them to be back in the majority seat. UNI was distributed so that we could go for decentralised governance. by burning UNI, all we are saying is "thanks I hate it" and handing it back to centralised entities. I am all for creating value for UNI holders but burning tokens is definitely not the way to go.
The point of burning is that there is no staking needed. Basically fees are collected -> UNI tokens are bought with the fees -> the UNI tokens bought are burned, thus reducing the UNI circulating supply. This reward all UNI token holders in the same way. If 1% of the UNI circulating supply is burned, it is as if UNI is now 1% more valuable as it is 1% more scarce.
Burning is the way. First of all, fees shouldn't be distributed in the respective tokens, it would be too much of an hustle for small UNI holder to manage them with the high ETH fees. Between distributing the fees in ETH or UNI I believe UNI is the better option. This will help UNI price to be more stable since there will always be buy pressure coming from the fees collected. Between distributing UNI and burning them the latter option is much better because it is really easy to implement and the final effect is the same. Distributing UNI equally to everyone is not so easy to implement...
I don’t think that buying UNI in order to burn it would have such a drastic impact on the market, unless UNI was largely undervalued. Let’s look at the number: We’re having around $300M volume each day. If 0,1% of it went in fee to burn UNI (and this would be a large amount) then we would burn $300k UNI each day. This may seem like a large number, but it really is not in comparison to the daily volume on UNI which is $1 bilion. And now we only have 10% of the total supply circulating, in future this ratio would be even larger.
just a math error here, Daily volume is not the same thing. I can trade 1 token ten times and the volume would reflect ten trades. but if you burn that 1 token right after the first trade, those ten trades would not happen. day traders buy and sell the same stack of tokens multiple times a day, effectively doing my example on a large scale.
As mentioned before burning and distributing all in all have the exact same effect burning the tokens reduces the number of tokens in supply meaning each token is worth more, yes it means whales would get more money but these whales had to put money into the token to get those tokens so it’s not like they’re exactly being given a free handout.
In effect it introduces Ponzinomics concepts to the token functionality.
In short, ponzinomics induce sell-side liquidity crises. This means there’s not enough supply on the red side of the order book so every marginal dollar entering the system keeps pushing the price up and up /Tony Sheng/
While introducing these concepts would mean price appreciation for the current token holders, it would accelerate the boom & bust cycles for the token.
In a rough approximation this would likely mean that earlier UNI buyers and holders would gain disproportionate amount of value at the expense of future UNI buyers and holders, who would get excited about the token, lose money on its bust cycle and typically come to a conclusion that this all is a scam.
I'm quoting these two sections on purpose in this order, since I think Uniguy didn't fully grasp what Mr_Po was saying. "if we burn half of the supply the other half has more value" its not that simple. you're not burning the supply evenly, so hodlers are in a strong position while newcomers are forced to buy from an ever diminishing supply, leaving the door open for hodlers to dump their stacks at higher prices. that's the ponzinomics that's being talked about here. so yeah, UNI is not a ponzi but a buy and burn is ponzinomics.
apart from the fact that burning UNI is still a horrible idea for governance reasons. its kind of like getting the keys to a house and then throwing the key away to make your house more exclusive..
I advise you to read the post Mr_Po wrote one more time and analyse what it is exactly that he is saying. I think you are too hung up on the word "ponzinomics" and not really thinking about what is meant by it.
Exactly 10% is 10% regardless or whatever the figure may be much better to burn the supply and make each token more valuable than continue to distribute but either way its the same thing
I am not talking about the emotional side of this matter. just the math. also, the whole governance move makes it so that even if the the team did not intend uni to be a ponzi, we can turn it into one.
First of all, let me specify that I don't think we should start burning token this year. UniSwap is pretty new as a platform and right now there is so many things already going on. I don't think that burning token is needed for now. Is more something that we should do in the long term once the platform is already well established.
Burning token UNI is not going to centralize governance, please remmber that there is a 2% perpetual inflation rate. The two things will tend to compensate in the long run.
First of all, let me specify that I don't think we should start burning token this year. UniSwap is pretty new as a platform and right now there is so many things already going on. I don't think that burning token is needed for now. Is more something that we should do in the long term once the platform is already well established.
Burning token UNI is not going to centralize governance, please remmber that there is a 2% perpetual inflation rate. The two things will tend to compensate in the long run.
Yes, but UNI holders are the ones who govern the system. The point is, why should UNI holders be motivated to keep enhancing UniSwap? If they are rewarded by a token burn, that would be a good incentive. Since there is a 2% perpetual inflation, if in 1 year less than 2% of the tokens is burned overall the UNI holders are losing value. If more than 2% is burned then they're growing their value. But since the amount of tokens burned is proportional to how well is UniSwap doing, this is the incentive for UNI holders.
I don’t think that buying UNI in order to burn it would have such a drastic impact on the market, unless UNI was largely undervalued. Let’s look at the number: We’re having around $300M volume each day. If 0,1% of it went in fee to burn UNI (and this would be a large amount) then we would burn $300k UNI each day. This may seem like a large number, but it really is not in comparison to the daily volume on UNI which is $1 bilion. And now we only have 10% of the total supply circulating, in future this ratio would be even larger.
I don’t think that buying UNI in order to burn it would have such a drastic impact on the market, unless UNI was largely undervalued. Let’s look at the number: We’re having around $300M volume each day. If 0,1% of it went in fee to burn UNI (and this would be a large amount) then we would burn $300k UNI each day. This may seem like a large number, but it really is not in comparison to the daily volume on UNI which is $1 bilion. And now we only have 10% of the total supply circulating, in future this ratio would be even larger.
It's not when you look at the 32,455,541.697773 uni left in the original smart contract worth over $163.5M that are now locked away forever if no one claims them
Bitconnect was a Ponzi Uni isnt. The community choosing to burn tokens wouldnt classify it as a Ponzi either and labeling community members who vote against distribution as "contributing towards turning the project into a Ponzi" is a very dangerous narrative to take.
As mentioned before burning and distributing all in all have the exact same effect burning the tokens reduces the number of tokens in supply meaning each token is worth more, yes it means whales would get more money but so would the smaller hands with the exact same amount of tokens but less in supply. Also FYI these whales had to put money into the token to get those tokens so it's not like they're exactly being given a free handout.
Bitconnect was a Ponzi Uni isnt. The community choosing to burn tokens wouldnt classify it as a Ponzi either and labeling community members who vote against distribution as "contributing towards turning the project into a Ponzi" is a very dangerous narrative to take.
As mentioned before burning and distributing all in all have the exact same effect burning the tokens reduces the number of tokens in supply meaning each token is worth more, yes it means whales would get more money but so would the smaller hands with the exact same amount of tokens but less in supply. Also FYI these whales had to put money into the token to get those tokens so it's not like they're exactly being given a free handout.
On the other hand distributing tokens would be distributing tokens to the smaller hands but also to the whales aswell either way leaving the small hands in the same position they were in before.
All in all they're much of a muchness and will end up with the same result as mentioned before.
Newbie here;What does burn would entail in option 2? here is my rough interpretation and please correct me
:confused:
Distributing UNI to everyone would have the same effect as burning token in making UNI more centralized.... What are you proposing?
Exactly people that want burn so bad have big stacks and want to increase their voting power and returns. Us little guys get screwed. I think buying uni and distribute will give the little guys some more skin in the game .
Distributing UNI to everyone would have the same effect as burning token in making UNI more centralized.... What are you proposing?
Exactly people that want burn so bad have big stacks and want to increase their voting power and returns. Us little guys get screwed. I think buying uni and distribute will give the little guys some more skin in the game .
If we burn 10% of the token, now each holder (big or small) have 10% more voting power.
If we distribute 10% of the tokens, now each holder (big or small) have 10% more voting power.
It's the exact same thing, both burning and distributing will reward holders in the long term. It doesn't matter if you are a big or a small investor.
thanks for the explanation!
Is a creative simple way to raise token value. Though, I see a conflict with the "ideological" statements in the "Introduction to UNI" https://uniswap.org/blog/uni/; which states:
"perpetual inflation rate of 2% per year will start after 4 years, ensuring continued participation and contribution to Uniswap at the expense of passive UNI holders".
thanks for the explanation!
Is a creative simple way to raise token value. Though, I see a conflict with the "ideological" statements in the "Introduction to UNI" https://uniswap.org/blog/uni/; which states:
"perpetual inflation rate of 2% per year will start after 4 years, ensuring continued participation and contribution to Uniswap at the expense of passive UNI holders".
Wouldn't option 2)"buy and burn" benefit the passive holders?
The more I think about governance tokens the more I get confused; lol. I am comparing the proposals with traditional dividends in stocks (i.e. "LP" coming from company's "profit"), however, there is endless issuing of shares. WTF, endless dilution.
Perhaps, a portion of the LP should be used to buy BTC\ETH, then UNI proportionally exchangeable for the stack of Uniswap's BTC\ETH (UNIs burned after redeeming). This sort of makes sense in my head from "economics perspective" but not sure on technical\protocol\transanction-wise feasibility though.
A burn is a horrible idea. UNI is a governance token, whoever holds the most tokens has the power. now for every token we burn, the big stacks become proportionally bigger. think of the team stack, all it takes is a 10% burn for them to be back in the majority seat. UNI was distributed so that we could go for decentralised governance. by burning UNI, all we are saying is "thanks I hate it" and handing it back to centralised entities. I am all for creating value for UNI holders but burning tokens is definitely not the way to go.
The point of burning is that there is no staking needed. Basically fees are collected -> UNI tokens are bought with the fees -> the UNI tokens bought are burned, thus reducing the UNI circulating supply. This reward all UNI token holders in the same way. If 1% of the UNI circulating supply is burned, it is as if UNI is now 1% more valuable as it is 1% more scarce.
Burning is the way. First of all, fees shouldn't be distributed in the respective tokens, it would be too much of an hustle for small UNI holder to manage them with the high ETH fees. Between distributing the fees in ETH or UNI I believe UNI is the better option. This will help UNI price to be more stable since there will always be buy pressure coming from the fees collected. Between distributing UNI and burning them the latter option is much better because it is really easy to implement and the final effect is the same. Distributing UNI equally to everyone is not so easy to implement...
Regarding the legal argument.
No, burning doesn't work with SEC. There were coins that relyed on the burning mechanism. And those coins are not traded anywhere now. If burning would be an option, a lot of security ICOs would adopt this model. Instead, they are frozen in the limbo for years.
Regarding the legal argument.
No, burning doesn't work with SEC. There were coins that relyed on the burning mechanism. And those coins are not traded anywhere now. If burning would be an option, a lot of security ICOs would adopt this model. Instead, they are frozen in the limbo for years.
But the good news is, there is no need to worry about SEC. They don't come after decentralized organizations, because there's no one to come after.
One of the primary benefits of introducing governance tokens is that you can have security tokens and you don't need SEC's approval for it.
The staking mechanism is another way to avoid flirting with SEC, when you say: "but people do work to earn these tokens, these are not dividends".
There is no reason to introduce UNI staking, because no work is being done with them. UNI is not a Proof-of-Stake blockchain.
I’ve got one more argument against burning:
The idea of passive income is incredibly psychologically attractive to people.
And it is easily understood by the newcomers, as by default, we live in inflationary economics (and there are economic reasons for it).
I’ve got one more argument against burning:
The idea of passive income is incredibly psychologically attractive to people.
And it is easily understood by the newcomers, as by default, we live in inflationary economics (and there are economic reasons for it).
If we were to give people an option to have 7% APY on their money in an economy with 7% inflation, most people would feel more rewarded by it than by having 0% in a non-inflationary economy.
When it comes to word-of-mouth, imagine a person saying:
Introducing even a 5% deflation into an economic model that inflates 600% over the next four years seems like a wasted opportunity to me.
There are two distinguishable components in the current discussion: buying and burning.
When it comes to burning the tokens is isolation, I don’t think that it does anything meaningful. For the most part is just a Sisyphean labor - to try to deflate a superinfationary economy.
There are two distinguishable components in the current discussion: buying and burning.
When it comes to burning the tokens is isolation, I don’t think that it does anything meaningful. For the most part is just a Sisyphean labor - to try to deflate a superinfationary economy.
When it comes to buying the token – even without burning it, it does make a dent. Let’s start with some simplistic generalized examples.
Having 0.05% UNI fees with 300 mil volume per day, it would mean 4.5 mil buying event for UNI tokens monthly and 54 mil yearly.
I’m not saying that we’re going to prevent boom & bust cycles for UNI. I’m calling on not making them worse than they have to be. When we distribute ETH rewards people can still decide to buy UNI with them, but it will be their decision, and they will likely have their personal reasons behind it. I don’t see why the governance of the protocol should make these decisions for the people.
If we just distribute the ETH rewards, there will be people who buy UNI with them and people who don't. This way people have a choice, and this choice will result in UNI supply being distributed more towards people who have decided to buy it.
I’d like to add an argument against redirecting a portion of LP fees in their respective tokens .
#1 For the majority of addresses these fees will already be somewhat insignificant. But if they were to be distributed in ETH, they could at least cover to some extent the usage of Ethereum blockchain.
I’d like to add an argument against redirecting a portion of LP fees in their respective tokens .
#1 For the majority of addresses these fees will already be somewhat insignificant. But if they were to be distributed in ETH, they could at least cover to some extent the usage of Ethereum blockchain.
If these fees were to be distributed in respective tokens, they would essentially be useless . To transfer these tokens you would have to pay more than they’re worth. It is a form of spam .
It is better to distribute money than to spam .
#2 As Uniswap is a DEX, everyone can theoretically create a pair and get some volume going for it. So everyone can make a scammy token which will then be distributed to all UNI holders .
And it’s not just the possibility, it is the reality.
A lot of Uniswap volume for the past month was made by superinflationary speculative mining tokens that naturally go down in price. So when we offer these tokens as a reward instead of ETH, we effectively distribute 50% less value.
==
So what we get from respective tokens compared to ETH distribution is:
To be honest, it is the most disastrous option out of the ones listed. By far.
==
The second best option to ETH distribution imo is to buy UNI and distribute it. Again, compared to burning now we give people a choice to own their distributed UNI or to sell it, so over time UNI will be distributed more towards people who bought and who didn't sell. I am honestly not sure about all the implications of UNI market buys when we add an option to sell what has been bought.
I think the question at hand is pivotal and the community’s answer to it will define the future of Uniswap protocol.
I voted for ETH distribution and I think that buying and burning is a much worse option than it looks like at the first glance.
#1 Let’s talk about what ETH fee distribution brings to the table.
It ties the value of the token to the amount of fees the Uniswap DEX generates .
I think the question at hand is pivotal and the community’s answer to it will define the future of Uniswap protocol.
I voted for ETH distribution and I think that buying and burning is a much worse option than it looks like at the first glance.
#1 Let’s talk about what ETH fee distribution brings to the table.
It ties the value of the token to the amount of fees the Uniswap DEX generates .
What it means in terms of price appreciation is that it establishes the lower boundary of UNI price .
It does not push the price up, but it protects the people who buy now and in the future from losing their money to at least some extent.
When it comes to mass adoption, this model of fee distribution is a familiar thing for the newcomers from the traditional markets and thus it helps them at being able to make educated investment decisions based on the metrics they are familiar with (P/E etc).
For the long term growth it is quite valuable to have a benchmark on what the actual value the protocol generates and captures is.
This option would dim the boom & bust cycles of the coin and bring it more store-of-value capacity . It would help to establish steady growth that is tied to the underlying value of the protocol.
#2 When it comes to burning the token in isolation , i.e. if we were to burn the UNI tokens from the governance treasury and just reduce the overall supply, that would have a somewhat negligible effect in my opinion:
#3 If we talk about buying and burning the tokens, it is a completely different ball game.
In effect it introduces Ponzinomics concepts to the token functionality.
In short, ponzinomics induce sell-side liquidity crises. This means there’s not enough supply on the red side of the order book so every marginal dollar entering the system keeps pushing the price up and up /Tony Sheng/
While introducing these concepts would mean price appreciation for the current token holders, it would accelerate the boom & bust cycles for the token.
In a rough approximation this would likely mean that earlier UNI buyers and holders would gain disproportionate amount of value at the expense of future UNI buyers and holders, who would get excited about the token, lose money on its bust cycle and typically come to a conclusion that this all is a scam.
The key word is disproportionate .
The earlier network participants do get a lot of value when the network grows. And if the network grows steadily towards a bigger multiplier, everyone is much better off than when one group takes advantage over the others.
In this case it would be earlier buyers taking advantage of later buyers, while the underlying value of the protocol would thin out in comparison to its price.
Let’s take a look at a well known example in crypto: Bitconnect. In this case there was 0 underlying value, so the boom part went high, but the bust part made it go to 0. Early buyers made money off of later buyers, later buyers lost money. It was a zero-sum game.
When it comes to Uniswap, there definitely is underlying value – and if things are done right, the network growth would benefit everyone, including new participants of the system .
When new participants of the system are not taken advantage of, it creates positive feedback loops that foster mass adoption.
And the sum of this game is enormously positive .
Now, bringing this game more towards zero-sum game would over the long run on average hurt all the participants of the network compared to an alternative scenario described above.
==
In my opinion, UNI distribution event is not an another airdrop of a candy wrapper coin, it is an initial value and responsibility distribution .
This fork in the road is pivotal for protocol development.
And one path brings Uniswap closer to Bitconnect, and another one brings it closer to Bitcoin and Ethereum .
Regarding the legal argument.
No, burning doesn't work with SEC. There were coins that relyed on the burning mechanism. And those coins are not traded anywhere now. If burning would be an option, a lot of security ICOs would adopt this model. Instead, they are frozen in the limbo for years.
Regarding the legal argument.
No, burning doesn't work with SEC. There were coins that relyed on the burning mechanism. And those coins are not traded anywhere now. If burning would be an option, a lot of security ICOs would adopt this model. Instead, they are frozen in the limbo for years.
But the good news is, there is no need to worry about SEC. They don't come after decentralized organizations, because there's no one to come after.
One of the primary benefits of introducing governance tokens is that you can have security tokens and you don't need SEC's approval for it.
The staking mechanism is another way to avoid flirting with SEC, when you say: "but people do work to earn these tokens, these are not dividends".
There is no reason to introduce UNI staking, because no work is being done with them. UNI is not a Proof-of-Stake blockchain.
I’ve got one more argument against burning:
The idea of passive income is incredibly psychologically attractive to people.
And it is easily understood by the newcomers, as by default, we live in inflationary economics (and there are economic reasons for it).
I’ve got one more argument against burning:
The idea of passive income is incredibly psychologically attractive to people.
And it is easily understood by the newcomers, as by default, we live in inflationary economics (and there are economic reasons for it).
If we were to give people an option to have 7% APY on their money in an economy with 7% inflation, most people would feel more rewarded by it than by having 0% in a non-inflationary economy.
When it comes to word-of-mouth, imagine a person saying:
Introducing even a 5% deflation into an economic model that inflates 600% over the next four years seems like a wasted opportunity to me.
There are two distinguishable components in the current discussion: buying and burning.
When it comes to burning the tokens is isolation, I don’t think that it does anything meaningful. For the most part is just a Sisyphean labor - to try to deflate a superinfationary economy.
There are two distinguishable components in the current discussion: buying and burning.
When it comes to burning the tokens is isolation, I don’t think that it does anything meaningful. For the most part is just a Sisyphean labor - to try to deflate a superinfationary economy.
When it comes to buying the token – even without burning it, it does make a dent. Let’s start with some simplistic generalized examples.
Having 0.05% UNI fees with 300 mil volume per day, it would mean 4.5 mil buying event for UNI tokens monthly and 54 mil yearly.
I’m not saying that we’re going to prevent boom & bust cycles for UNI. I’m calling on not making them worse than they have to be. When we distribute ETH rewards people can still decide to buy UNI with them, but it will be their decision, and they will likely have their personal reasons behind it. I don’t see why the governance of the protocol should make these decisions for the people.
If we just distribute the ETH rewards, there will be people who buy UNI with them and people who don't. This way people have a choice, and this choice will result in UNI supply being distributed more towards people who have decided to buy it.
I’d like to add an argument against redirecting a portion of LP fees in their respective tokens .
#1 For the majority of addresses these fees will already be somewhat insignificant. But if they were to be distributed in ETH, they could at least cover to some extent the usage of Ethereum blockchain.
I’d like to add an argument against redirecting a portion of LP fees in their respective tokens .
#1 For the majority of addresses these fees will already be somewhat insignificant. But if they were to be distributed in ETH, they could at least cover to some extent the usage of Ethereum blockchain.
If these fees were to be distributed in respective tokens, they would essentially be useless . To transfer these tokens you would have to pay more than they’re worth. It is a form of spam .
It is better to distribute money than to spam .
#2 As Uniswap is a DEX, everyone can theoretically create a pair and get some volume going for it. So everyone can make a scammy token which will then be distributed to all UNI holders .
And it’s not just the possibility, it is the reality.
A lot of Uniswap volume for the past month was made by superinflationary speculative mining tokens that naturally go down in price. So when we offer these tokens as a reward instead of ETH, we effectively distribute 50% less value.
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So what we get from respective tokens compared to ETH distribution is:
To be honest, it is the most disastrous option out of the ones listed. By far.
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The second best option to ETH distribution imo is to buy UNI and distribute it. Again, compared to burning now we give people a choice to own their distributed UNI or to sell it, so over time UNI will be distributed more towards people who bought and who didn't sell. I am honestly not sure about all the implications of UNI market buys when we add an option to sell what has been bought.
I think the question at hand is pivotal and the community’s answer to it will define the future of Uniswap protocol.
I voted for ETH distribution and I think that buying and burning is a much worse option than it looks like at the first glance.
#1 Let’s talk about what ETH fee distribution brings to the table.
It ties the value of the token to the amount of fees the Uniswap DEX generates .
I think the question at hand is pivotal and the community’s answer to it will define the future of Uniswap protocol.
I voted for ETH distribution and I think that buying and burning is a much worse option than it looks like at the first glance.
#1 Let’s talk about what ETH fee distribution brings to the table.
It ties the value of the token to the amount of fees the Uniswap DEX generates .
What it means in terms of price appreciation is that it establishes the lower boundary of UNI price .
It does not push the price up, but it protects the people who buy now and in the future from losing their money to at least some extent.
When it comes to mass adoption, this model of fee distribution is a familiar thing for the newcomers from the traditional markets and thus it helps them at being able to make educated investment decisions based on the metrics they are familiar with (P/E etc).
For the long term growth it is quite valuable to have a benchmark on what the actual value the protocol generates and captures is.
This option would dim the boom & bust cycles of the coin and bring it more store-of-value capacity . It would help to establish steady growth that is tied to the underlying value of the protocol.
#2 When it comes to burning the token in isolation , i.e. if we were to burn the UNI tokens from the governance treasury and just reduce the overall supply, that would have a somewhat negligible effect in my opinion:
#3 If we talk about buying and burning the tokens, it is a completely different ball game.
In effect it introduces Ponzinomics concepts to the token functionality.
In short, ponzinomics induce sell-side liquidity crises. This means there’s not enough supply on the red side of the order book so every marginal dollar entering the system keeps pushing the price up and up /Tony Sheng/
While introducing these concepts would mean price appreciation for the current token holders, it would accelerate the boom & bust cycles for the token.
In a rough approximation this would likely mean that earlier UNI buyers and holders would gain disproportionate amount of value at the expense of future UNI buyers and holders, who would get excited about the token, lose money on its bust cycle and typically come to a conclusion that this all is a scam.
The key word is disproportionate .
The earlier network participants do get a lot of value when the network grows. And if the network grows steadily towards a bigger multiplier, everyone is much better off than when one group takes advantage over the others.
In this case it would be earlier buyers taking advantage of later buyers, while the underlying value of the protocol would thin out in comparison to its price.
Let’s take a look at a well known example in crypto: Bitconnect. In this case there was 0 underlying value, so the boom part went high, but the bust part made it go to 0. Early buyers made money off of later buyers, later buyers lost money. It was a zero-sum game.
When it comes to Uniswap, there definitely is underlying value – and if things are done right, the network growth would benefit everyone, including new participants of the system .
When new participants of the system are not taken advantage of, it creates positive feedback loops that foster mass adoption.
And the sum of this game is enormously positive .
Now, bringing this game more towards zero-sum game would over the long run on average hurt all the participants of the network compared to an alternative scenario described above.
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In my opinion, UNI distribution event is not an another airdrop of a candy wrapper coin, it is an initial value and responsibility distribution .
This fork in the road is pivotal for protocol development.
And one path brings Uniswap closer to Bitconnect, and another one brings it closer to Bitcoin and Ethereum .
