Conversation

SBF
@SBF_FTX
Replying to
@SBF_FTX
2) Right now people are liquidity mining. What does that mean? Well each week about $3m worth of BAL at current prices are airdropped on people who are storing coins in pools. This is way higher than the cost of doing so, so people started putting assets in random pools.
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SBF
@SBF_FTX
3) Very few of these were trading, but most were earning BAL. Any ERC20 token with pricing from
@coingecko
worked. So, earlier today about $100m of USDTHEDGE and USDTBEAR showed up:
Image
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SBF
@SBF_FTX
4) This was a clear indication of what had been going on for the past few weeks: most of the usage was to mine BAL. So what does one do about this, and how did the Balancer community handle it?
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SBF
@SBF_FTX
5) Well, the options were: a) get rid of the BAL distributions b) restrict the set of coins that would be eligible c) (b), and also retroactively apply it d) do nothing What's the right thing for the protocol?
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SBF
@SBF_FTX
6) Well, from a usability standpoint, I think that the best answer is A > B > D > C. Why? Really, liquidity mining is stupid. It's similar to transmining, creating effectively negative fees to create the impression of activity. People should use a product if it's useful!
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SBF
@SBF_FTX
7) If you want to keep it, though, whitelisting is reasonable: it cuts off the stupidest cases while keeping a lot of the value.
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SBF
@SBF_FTX
8) But a key thing here to remember: _this is supposed to be DeFi_!!! And in DeFi, you don't enact arbitrary retroactive rules. In fact in pure DeFi you _can't_ enact retroactive rules, and are really limited even in forward-looking ones.
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SBF
@SBF_FTX
9) DeFi is all about creating permissionless systems that aren't at the mercy of people's whims. That's part of what makes DeFi so hard to do well: if you decide you want to change something, often you can't, or are restricted in how. Permissionlessness is a double edged sword.
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Chris Burniske
@cburniske
Replying to
@cburniske
and
@SBF_Alameda
I see permissionlessness as less having to do w/ "code is law" - these systems must evolve, and do so legitimately, as
@BalancerLabs
aimed to do to address the edge case you raised. Access = permissionless; governance = time-consistent in the ethos it uses to evolve the system
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