Fundamental change needed in SOV token to secure future funding

Thank you for your reaction Bitcoinskeptic.

We have to decide how we are going to compete with competitors also offering bitcoin backed stablecoins. And I think if ZERO is succesfull we can expect also new competitors entering this space.

Are we going to compete on fee, or do we differentiate ourselves from competitors?

If we chose to compete on fee, this could result us being stuck in a race to the bottom with very low fees, resulting in low value of the SOV token and problems to fund our operations.

Imo we should aim to differentiate ourselves from competitors.

We should communicate clearly we charge a fee to fund our operations, as we want to keep the platform save and reliable, develop the platform, offering other products next to stablecoins, invest in our community, etc, etc.

Trust in the protocol will be the main hurdle to adoption, not paying a one-off fee of 0,5% or 1,0%.

But sure, some users will only look for the lowest fee possible and choose to go to a competitor.

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for small loans a 1% originating fee is acceptable. For big accounts(millions) is a huge no, no.

double the fees is not the best idea + zero is not even public yet.
Increasing/decreasing fees should be a subject better discussed a year or two from now, when we have an idea how the product behaves and how the users interact with it

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Isn’t he origination fee paid only at the opening of the credit line - with minimum 200$ ? Can’t we open a credit line with 200$, pay 0,5% x 200$ + 20$ liquidation fee, and then add infinite rBTC for free?

That is not how it works, it is not exactly a 1 time fee as you explain it. You can add as much btc as you like, but if you increase your 200$ loan to say 1000$, you will pay an additional origination fee for the newly minted 800$ (800$ * 0.5%= 4$) on top of the 1$ you paid at the beginning.

Anyway, we need to have a proper discussion and summary of how Sovryn is going to extend its runway. I doubt that raising the Zero fee to 1% will do, especially with competitors alreay available.

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Revisiting a plan the community was completely against after wasting a year building out other sub tokens is surely completely counter productive. Therw was a very strong no vote against launching more shitcoins. And now after another year of not leaving alpha you want to loop back to that??

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actually the majority were in favour of sub-protocols. Origins and Mynt had an overwhelming yes vote in favour of sub-daos

I believe there was an overwhelming vote against zero and origins hence the tokens currently not existing.

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maybe you should revisit the actual governance vote on both, because what you write is actually false

Perhaps i am mistaken, why were the sub protocol origin and zero scrapped if community was in majority favour?

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that is a very good question

Mises regression theorem. Value of money can be traced back to its value as a commodity.

Satoshi understood this which is why dollar parity for btc didn’t happen until many months after the first block.

Those fearful for creating a utility for SOV fail to understand first principles. Creating utility is exactly what SOV needs if this project is going to survive.

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I fully agree with Sacro.

This forum started with a concern about securing funding in 20 months time. And several proposals have been discussed.

I would like to know what the position of Exchequer is on this topic and what the plan is to secure funding in 20 months time.

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Because Sovryn isn’t a democracy: nor should it be.

I would argue that if sips are put to vote and it passes the the result should be respected and not trivially cancelled. In this scenario the stokers were blindsided and this is shady and despicable imo

Because the community then wasn’t majority in favor. Back then many members came from BCW, which were all of the opinion, that token bloat is bad and that SOV should be the token for everything in the Sovryn ecosystem. At least in the beginning phase. This would give SOV more and more value over time, which then reflects in token price. I myself come from BCW and am still part of it. And I agree with this line of argumentation. For SOV and Sovryn to succeed, SOV needs to be in the center of everything we’re doing.

But this is only my opinion and I am certainly not the smartest guy in this community. So if there are good arguments for separate tokens for each sub protocol, I am all ears.

I’d prefer to see add-on products built around Zero that can generate new revenue sources. For example, what would a Zero liquidation insurance product look like?

I haven’t thought this throw too deeply, but a couple ideas:

  • You could have a pool of rBTC which earns variable APY from LoC’s paying for insurance. The rBTC pool can top up the collateral of at risk LoC’s at certain threshold.

  • The rBTC pool can compensate insured LoC holders for their lost rBTC. As an example, if a $1M LoC gets liquidated it means their rBTC collateral was $1.1M (in normal scenario). Therefore the rBTC pool would compensate them $100K of rBTC.

IDK, just spit balling ideas. It’s particularly interesting as way for rBTC holders to generate yield. We got any insurance actuaries.

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@dseroy this is a cool idea, the cost of insurance would basically be the cost of hedging the position + whatever margin the market requires. If we have hedging tools on the Sovryn platform (ie.e futures or perps) this is just one of the many ways they are useful.

However, insurers can also hedge off-platform, so we don’t need to have the futures on platform for this to work. It occurs to me that a similar idea can be considered for hedging impermanent loss.

One challenge is how to create a market for this type of insurance. Most of our products work on curves and its not immediately obvious to me what the curve required here would be.

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I don’t thing working on a layer where fees are (almost) settled in Bitcoin is idealistic, rather quite the opposite. But I’d support a mechanism of buyback sov/rBtc.

@Martin_Adriaan

Blockquote Becoming a L1/platform was the aim of many projects in 2019-2021, and by now there are quite a few of such platforms with which we would compete (BNB, Cardano, Avalanche, Polkadot, the list goes on). Builders are sparse and in demand, and therefore hard to attract. The more successful of these have really well-funded incubator programs, that are able to provide multi-year funding to promising projects (binance labs is an obvious example). I’m really not sure that steering towards fierce competition with projects that can throw much more funds at their incubation of development is wise.

I believe we have to work on what we offer. A pristine bridge to Btc. Less competition there, Stacks for example.
We are just a tool of coordination for development on this blockchain. The same exact thing might be done with voting via rBtc. And that would gather a wider public as hodlers would feel like contributing directly to a layer of bitcoin, and not a DAO built on it. So…we’re both competing with altcoins and with Btc. Nothing makes us unique, not much advantage especially if you’re not developing with the team and getting paid for it. So yes we should grow as an incubator but even there, are we necessary? Are we even pristine as a bridge DAO? Can we force the path Bitcoin inevitably takes to hold on against other solutions?
Our proposition of value is that there’s no hard collateral on-chain other than Btc, and all will pass through this. But there’s rBtc for that. Can we contribute to RSK adoption?

@yago

Blockquote @Bjorn - if token burn is analogous to stock buyback, staking rewards are analogous to dividend payments.

Burning is analogous to buyback only if shares bought back never hit the market again. Ethereum introduced burning to relieve gas wars. No direct incentive for anyone other then long term holders to high fees now.
But we can’t burn ordinary operations, fees are not paid in Sov. It would be more straightforward to sell the rBtc fees against Sov. We can burn non ordinary operations though, voting (no fees there, just an example) being the main (and only?) one. One could even give up on the sov side of sov/stables pair if you want a more straightforward control on incentives for the latter.

@bitcoinskeptic

Blockquote Most bitcoiners want to accumulate bitcoin and stack sats. If they going to use Sovryn they wont use it to speculate on tokens. And if they do decide to speculate on SOV, RIF, MYNT, MOC or FISH etc they will want profits in RBTC or XUSD. USD and Bitcoin is money which both will likely be around in a few decades. For the RSK tokens its difficult to predict.

If we want to talk about the future, USD is just one of the world currencies. The real difficulty is getting commodities priced on. Bitcoin ties with energy, but all the components in it are what drives fiat strenght/weakness. That and job markets. And lastly, geopolitics.

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