Conversation

1) My proposals for updating the COMP distribution system in

Jun 27, 2020

2) Right now most of the borrowing/lending in Compound is on BAT. There's nothing _wrong_ with the BAT activity per se, but it's not poviding much value compared to liquidity in USDT/wBTC/ETH/USDC/etc. How do we move more liquidity to more important markets?

SBF

@SBF_FTX

Jun 27, 2020

3) The core problems are: a) not enough liquidity in USDT/WBTC/USDC b) $700k paid to farmers

SBF

@SBF_FTX

Jun 27, 2020

4) A lot of the problem with (a) is that USDT and wBTC can't be used as collateral. I think the single most important thing is to fix that. (b) is a big cost to the protocol and isn't justified by the BAT farming.

SBF

@SBF_FTX

Jun 27, 2020

5) So some proposals: (i) reduce COMP airdrops from 2880/day to 1k/day. COMP distributions should compensate the cost/capital/risk of providing liquidity; I think the true cost of that is closer to 1/3 of the current airdrop rate. COMP is up 300% or so; we need to adjust drops

SBF

@SBF_FTX

Jun 27, 2020

6) (ii) Make the collateral factors for USDT and wBTC 75%. They're among the most liquid things on the platform, and right now people aren't lending because they can't borrow against them. This is an easy fix.

SBF

@SBF_FTX

Jun 27, 2020

7) (iii) I think COMP should only go to lenders, not borrowers, as current constructed. COMP airdrops are proportional to borrow rate. It makes sense to incentivize people to lend things with high demand, not borrow them.

Replying to

and

I think it's cool to incentivize borrowing in the form of subsidizing costs rather than generating profit. Borrow $1mm in BAT and owe $700 in interest tmrw? Earn say $350 of COMP. Maybe even $699. But giving $1500 is outrageous

SBF

@SBF_FTX

Replying to

@MikeMcDonald89

Yeah totally agree--maybe the real answer here is something like 'limit airdrops on borrows to 1/2 the borrow cost'

7:03 PM · Jun 27, 2020Twitter Web App

Replying to

and

i think both of you are missing the point. obviously having all the liq mining happen in BAT is dumb and dangerous, but i think there may be a large blindspot for why throwing away the money is good, even if some is caught by +EV folks/

Replying to

and

when +EV folks get the money, they provide precious little value to the protocol. its just a bet to them. but many of the people catching small amounts of free money are developers. and developers having fun with the protocol generates large value for the protocol/

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