There have been some discussions lately on Discord and on the forum here regarding the improvement of the AuraBal/veBal peg and the AuraBal accumulation. The issue has also been addressed on Olympus’ Forum.
Currently, Aura’s BAL fee (25% of all BAL farmed) is used the following way:
20.5% goes to auraBAL stakers. This is paid out as BAL .
4% goes to AURA lockers. This is paid out as auraBAL .
0.5% goes to the harvest caller. This is paid out as BAL .
This proposal aims to strengthen Aura’s accumulation of veBal by doing the following with the 20.5% that goes to auraBal stakers:
If the peg is off by more than 0.6% then the Bal normally given for staking AuraBal is used to market buy auraBal and then emit it to stakers.
Else – the peg is within 0.6% or better, then we use the Bal farmed to mint auraBal and then distributed it to stakers.
Given that the AuraBal|80BAL-20ETH pool is a stablepool with 0.6% fee, a spread of 0.6% provides plenty of liquidity for stakers wanting to exit with size. It also makes minting AuraBal more profitable than “swapping in”, creating a net gain for Aura. Which is the desired effect of this proposal.
MEV risk should be fairly low, given that the pool is a deep stableswap pool and that the compounding happens fairly often.
Additionally, I propose that Aura’s team develop (if possible) an autocompounder for AuraBal that sells the bb-a-usd for AuraBal and reinvests the total AuraBal rewards. Aura should be distributed aside and not sold for the autocompounding to avoid selling pressure.
For reference, Aura’s position on the auraBAL issue would be this:
It’s good that this discussion is happening, but my recommendation would be to see what solutions that we can come up with using the above post as a starting point, rather than introducing anything too radical immediately.
The implementation outlined in there sounds good. To work 0xMaha’s post into Yakitori’s proposed solution, the way forward could be to:
Create new wrapper reward contract for auraBAL that has auraBAL and AURA as reward tokens
If the peg is off by more than 0.6%, this wrapper reward contract will use all BAL and bbaUSD earned from the base auraBAL reward pool to market buy auraBAL
If the peg is off by less than 0.6%, this wrapper reward contract will use all BAL and bbaUSD to mint auraBal.
Change fees in current wrapper split to 18.5% auraBAL and 2% platform fee (platform fee capped at 2%). Send this extra 2% directly to the new wrapper as auraBAL to make the new wrapper’s base yield much higher than the existing wrapper. This means that there is a strong incentive for auraBAL stakers to migrate to the new contract as the rewards are higher
In the proposed solution, the big question is whether some AuraBal stakers will prefer to receive Bal instead of AuraBal and thus won’t migrate to the new wrapper. The last bullet point effectively reduces the rewards to people who stay with the current method, sending a piece of their rewards to people who migrate. It’s worth considering if sending 2% of the current wrapper’s fees (a bit less than 10%) to the new wrapper is enough.
@Contributor Agreed we want to work within the solution outlined by 0xMaha
Have you guys had a look at Alchemix’s reward structure ?
Maybe by locking the stakers’ rewards in a similar way it would allow the possibility for each individuals to choose between :
Keeping the underlying BAL reward locked until claimable or forfeiting part of the yield to claim early
Providing the ETH equivalent to mint auraBAL out of the bal rewards to compound the yield.
Also, it would solve the part where you buc back the auraBAL.
That sounds neat but I think a lot of Aura’s appeal is that it’s pretty simple and straightforward. Once a new user wraps their head around a few topics (emissions, staking, veBal boosts) everything else is very simple. You stake your stuff and start seeing numbers up up (in real time!) on the /Claims page. Adding complexity beyond that risks complicating onboarding and activating new users.