Yes. Growing liquidity is more important than value extraction. The main focus of this SIP is not value extraction.
What are your thoughts on the interconnection between SOV value, Liquidity Mining incentives that are based on SOV value and liquidity? Wouldn’t a higher SOV value favor larger pool liquidity due to higher APY?
I have responded to this here:
My overall view is:
As an example, imagine a programme where if you buy SOV off market and lock it up for a 5 year HODL, we double your SOV (by adding an equivalent amount of SOV to your HODL contract). This would need to be paired with an education campaign to teach people about why Sovryn is not the present but the future. Sovryn’s could organize meetups in their cities and I could come as a visiting speaker. I am trying a first example of this next week at a University.
Thank you for the feedback. I think this is a good discussion that can only help Sovryn move forward.
There are pros and cons to this proposal and it is certainly not an easy decision. So I think it’s good to discuss something like this as a SIP and give bitocracy the opportunity to vote on it. There seems to be interest from the community.
Maybe this is the spark for something better.
I have the aspiration to be the first community member to bring a SIP to a vote. That doesn’t necessarily mean that it will get the majority the first time 
But I just have to give it a try!
Every SIP has been proposed by a community member.
Yago can you elaborate on how liquidity impacts the success of Zero? I understand adding ZUSD to the stability pool. Is that what you mean by liquidity? Or did you mean something else?
For Zero to remain healthy and not experience a lot of redemptions, ZUSD needs to be useful. Having the ability to trade with ZUSD and attract ZUSD into a liquidity pool (AMM) for trading is important as a use case for ZUSD.
Value is Supply and Demand. Demand for Sovryn Dollars must be top of mind for us. Liquidity provision of DLLR in the AMM, in the form of liquidity, is one vector of demand.
Hi Sovryns!
We’ve had a good discussion on this topic. There are arguments for and against this SIP. My intention is to bring this SIP to a vote and let the bitocracy decide.
How to proceed?
I’d like to give a small talk about this SIP on the next community call this thursday.
And i would like to ask the Sovryns who are in favor of this SIP to delegate voting power so that i can put the SIP up for election.
In order to bring this SIP to a vote, at least 1,231,000 VP is needed.
If you are interested in delegating your voting power temporarily for this SIP, please check out this Sovryn wiki link: Participating in Bitocracy | S O V R Y N
This article (last section) explains everything you need to know.
I’ve also created an adress for the VP delegation:
0x56Cd794Fc058349B48188113Ba70f064C0143587
Hopefully, we can vote on this SIP next week!
Thanks for your support!
Sacro
I don’t think small changes like this will make a big difference either, but at least its some form of change that acknowledges we have an issue.
This is on the Thursday agenda. @Sacro will have 3 minutes to present his case in favor?
Who would like to present a case in opposition?
I agree. This isn’t a silver bullet. But it seems like a pretty reasonable incremental change which would be a step in the right direction. I see no reason to oppose it. I’d vote in favor.
So far i got 1,443,813 VP delegated, thanks to those who support this SIP!
Looks like I’m late to delegate, however you have my support to take this to a community vote. I just delegated ~600k. It’s good to see a possible protocol adjustment being proposed by the general community. With that said it has to make sense as part of the larger strategy being overseen by the core development team. Good luck.
don’t forget to vote brother
Thank you all for the delegation of Voting Power. As of now, i got
2,109,230 Voting Power delegated.
That’s a huge accomplishment and enough to bring this SIP to a vote.
Sacro - I think one very important thing, missing from the SIP, is a plan to monitor it’s impact. How will we know if it adversely effects volume? Is there a plan to introduce this on some pairs as a test first?
I think it’s important we have a practice of testing our assumptions.
Using the subgraph, i am already collecting data about AMM volume. This will be continued and i am happy to share it with the bitocracy on a regular basis.
Besides that, it may remain difficult to monitor the impact of this SIP because of overall market conditions and other factors. As an example, the recent exploit really shows on the AMM volume.
Also, arbitrage opportunities between Sovryn and CEX’es seem to shrink which may lead to less volume. *Edit:Or maybe it leads to more use of Sovryn instead of Cex’es. We should monitor that as well.
With that being said, it is really important to monitor the impact of this change. Sovryn did great with the implementation of the graph and we have that data as well as historic data easily available and can react accordingly. If this SIP gets implemented and AMM volumes get crushed, it must be reverted. But doing nothing instead isn’t an option for me and i have yet to see better proposals.
I would have to check back with you or @Ororo whether it would be possible with the SIP-31 implementation to target only specific pairs.
But most pairs have no considerable volume right now anyway, so we’re basically just talking about the BTC/XUSD and maybe the BTC/SOV pair.
Edit:
Overall, a it’s a minor change of 5 basispoints so i would expect the impact to remain noise, not signal.
You know, just listening to the conversation between Sacro and Light, which pretty much centers around treasury vs stakers. Would it make sense for Sovryn treasury to stake a certain amount of SOV? Maybe I’m missing something.
This way, Sovryn treasury would collect fees just like the rest of us, Incentive to increase dapp usage would go up, tokenomics wise it would lock up an amount of tokens.
Additionally, these benefits could help the SOV token price which would benefit the treasury monetarily.
The only downside I can think of is the dilution of rewards for current stakers.
A good idea in itself, but I see a big problem here.
As you already mentioned, the rewards would be diluted.
I can understand John Light’s argumentation very well. And I share the opinion that you would not have to distribute 100% of the platform revenue to stakers. You could also put some aside for Sovryn. However, the revenues are so small that this would have virtually no impact on the balance sheet.
To be honest, it looks like this: The Core Team and also Treasury/Bitocracy are sitting on a large amount of SOV. And they deserve their SOV. A large portion of these could already be staked, but that is not happening. Platform revenue is far too small for that. I believe it is because the core team is aware of this problem and accepts its own financial disadvantages for the benefit of Sovryn. Fortunately, the bitocracy SOV tokens (~30 mil.) are not really liquid, as it takes SIP’s to move them. Staking APY would drop from 4% to a few basis points if these tokens were staked. The little bit of demand for SOV would collapse, the price would go down further, which in turn would kill rewards and thus AMM liquidity.
For the current state of Sovryn and user numbers, there is simply far too much SOV in circulation. The number of staked tokens must be in balance with the platform revenue in order for the token price to develop constructively. That is my goal.
Wasn’t able to join the community call. I really appreciate your stepping forward and taking action (so much so, that this almost outweighs the worry I have). The worry is this and already expressed by others: a tiny fee increase does little in financial terms for stakers, but can deter certain trade-oriented users from joining or using the system. If it is just a small fee change that could do little harm and only help a bit, all is fine, but when it is a change that does little for stakers and could potentially affect growth, then I’m less sure. I would be in full support if the volume would be really high compared to the revenue to stakers, but it isn’t currently, as volumes are low. So then I become undecided: I really respect your initiative as an initiative, but then I do doubt whether this is a helpful change. (Sorry if I repeat stuff that was discussed in the call, there is no recording yet).