if you give tokens to whales, then it will be a failure of the protocol, and there can be no question of decentralization
I truly believe having an active community of hundreds of small to medium sized backers, rather than 3-5 whales, is much better for the health of the protocol.
Yes - those who contributed larger sums should be rewarded. Which is why I agree that some of the rewards should remain “uncapped” - as is the case with the current proposal.
However, If all rewards had been proportional to the amount contributed to the Backer pools, the two largest backers would receive 30% of all rewards. (They contributed $1,69M in total). This also means those two backers would hold a very large voting power in any future proposal.
We need to foster a large community of Backers. Finding and assessing great borrowers, setting high quality norms and holding borrowers accountable are all mission-critical activities that doesn’t need a large amount of capital. Small-medium sized backers had to put in just as much time doing their due diligence as larger backers. They also had to pay the same gas fees.
ZERO Backers received a net APY of ~2000%
In the spreadsheet, only those who contributed <1000 USDC received a theoretical APY of >2000%, however:
Interacting with the protocol had very high gas costs. I took a look at an arbitrary wallet, and found that the net APY is much lower.
No backers received 200% apy either. The closest would be Backers that contributed >200,000 USDC. They received an APY of 202-206%. In other words, they got GFI tokens valued at over $400,000 for providing $200,000 in stablecoins. No matter how you look at this - it is an absolutely insane return.
I believe the proposal by Blake and Mike is a very fair approach.
The capped part will encourage smaller backers to contribute to the protocol with their time - finding and assessing Borrowers and holding them accountable. As well as participating in decentralised governance.
The uncapped part will encourage larger Backers such as yourself to do the same, but also to contribute sizeable first-loss capital to the Protocol.
The retroactive Backer airdrop is divided into 4 parts. The fourth part is the “Theoretical liquidity mining”. This part would award Backers with rewards for the pools they are participating in as if their pools successfully participated in Backer Liquidity mining.
This part would change with the amendment by Blake and Mike
Hmmm I agree that large backers shouldn’t hold most of the rewards, that’s why I am saying having a cap on the capital contribution for 4-5 days (say 10,000/20,000 max per person, which Goldfinch did implement for first two backer pools I guess) and then if the fund doesn’t get filled, then opening that cap would make sense so that everyone is given a fair chance to contribute whatever they can. If the fund gets filled, that would be FANTASTC! We get all the diversification we need. Otherwise, big investors can take up the slack and help fill the borrower pool so that the borrowers are happy and come again. In this case, you are giving everyone a chance and there is very less probability for big investors to scoop up the whole thing. I believe in giving EVERYONE a FAIR/EQUAL CHANCE but don’t believe in UNFAIR/UNEQUAL REWARDS (socializing profits) and giving special treatment to any one group of investors (irrespective of their capital contribution).
Anyway, if Goldfinch had told investors that rewards for large contributors will be capped and they will get 5-10x lesser rewards than smaller contributors, do you think any big investor would have contributed as much as they did? I doubt it. Capping rewards and rewarding some group of investors 200-300% and some other group 1900% (regardless of costs) doesn’t sound right to me. If it sounds right to you and the greater Goldfinch community, then I leave it here! I think, an efficient system should be about giving everyone EQUAL OPPORTUNITY/CHANCE and EQUAL REWARDS.
Hope you got my point. I am not against small investors OR supporting large investors. I am only against unequal rewards. Thanks!
You want everyone to be treated equally, but want larger Backers to be treated “more equal than others”
What I’m saying is - and I’m repeating myself at this point - Backers contributed in two ways.
They spent dozens of hours learning how to be Backers. Finding and assessing great borrowers, setting high quality norms and holding borrowers accountable are all mission-critical activities that doesn’t need a large amount of capital. They also poured many hours into assessing each individual Borrower pool.
- The time it takes to learn being a great Backer is the same, no matter the size of your portfolio. Thus, some of the rewards are capped - to recognize the time each individual spent learning the ins- and outs of being a Backer. And the time spent assessing each individual pool.
The second way a Backer can contribute, is with capital.
- Part of the Retroactive Backer Airdrop is directly propotional to the amount of USDC contributed to the Backer Pools.
- Going forward, the Backer Liquidity Mining will be directly proportional to the amount of USDC you contribute to the Pools
Your proposal completely disregards the time and effort put into being a good Backer. You use the word “Equal”, yet you want the contributions (Time and effort) of smaller backers to be disregarded.
Also - your assumption regarding big investors is delusional at best. You are saying that investors wouldn’t contribute to the Borrower pools, knowing they would get “3x” on their provision? I would be more than happy to see my APY increase by a couple % - maybe go from 18.75% (default) to 22-23% (with GFI farming).
Also note that @velvetdoctors proposal would see 75% of the rewards go to 7.7% of all Backers.
I like how we discuss these things and backers tokens get higher yet the price dumps every day so it would have been better to just distribute day one without more tokens. LPs won and backers totally lost
Hey all, we updated the spreadsheet to reflect the change in Backer Airdrop numbers. The total amount for the airdrop increases to 1.66%. Also, again the point of this amendment was to also recognize that the on-going liquidity mining was likely going to be too low APY’s for Backers, and so thought it would be better to increase those, especially at this early stage.
Hello. How does this proposal account for the return of capital to the Bakers? After all, some receive capital monthly, and someone will receive it in three years. It’s a different risk.
All Backer pools have monthly repayment schedules. There are varying term lengths (1-3 years), but all Backers have capital coming back monthly. Also those who were in longer pools have more of the “theoretical liquidity mining” so they are implicitly being rewarded a bit more.
Hey I want to respond to a few things here about large vs. small investors.
Large Backers are not being penalized - You said “basically you’re discouraging the big backers”, but I think this is a weird way to look at it. The “capped” portion of this is a one-time bonus for small backers to help build community. We aren’t penalizing large Backers in any way. If we didn’t do the capped portion, I don’t think the correct thing would be to keep the % of tokens the same, and give a whole bunch more to large Backers. The airdrop would just be fewer tokens!
2.This capped thing is just for the retroactive airdrop, and not ongoing liquidity mining - As mentioned before, we’re trying to build a community, so a one-time dispersal is useful. But the on-going liquidity mining is strictly driven by amount of capital. So when you say “give it a thought for the future”, we did, . The whole future is exactly that way, strictly by capital contribution.
Large Backers and LPs will always end up capturing the vast majority of actual token rewards anyway (even if the APY’s on this one-time airdrop are higher for smaller backers, the actual number of tokens is still much higher for large Backers).
But overall, I just want to say we’re all in this together. Large Backers are incredibly important, and small Backers will do great research work too. This airdrop in general is about bootstrapping an awesome community of both. WAGMI!
Thanks for the explanation and the amendment! Appreciate it Blake!
For example, in the Cauris pool, only interest is paid monthly, and the principal amount of the loan at the end of the term (in three years), but in other situations, the payment of the principal amount of the loan can be monthly or in year. I believe that this should be taken into account in propousal.
All of the loans so far operate the same way as the Cauris pool. They all have monthly interest repayments with principal being paid at the end. So everyone is the same in that regard. And then I was saying that due to the “Theoretical Liquidity Mining” portion, the Backers who were in the longer pools (3 years, for example) end up generating more GFI rewards, because they generate more overall interest. So really the thing you’re talking about is taking into account, I believe. Unless I’m not quite understanding what you’re saying.
This proposal was discussed and given a preliminary soft approval by the Governance Council on January 24, 2022.
Link to the snapshot vote: Snapshot.
any eta on gettin the tokens airdropped? thx
@Igor has already put up a PR getting things started. And some others from the Warbler team are also working on it. I can’t say exactly when, but pretty soon. Hopefully within a week-ish? We’ll obviously keep the community posted as this is really high priority.
@blakewest We’re ready to complete that theme and merge!
In case people didn’t see it in the Discord, the airdrop for Backers is now live!