[Temperature Check] Temporarily remove DIGG from voting list

Author: philjfry

Summary

This proposal is to temporarily exclude the WBTC/DIGG/graviAURA from the list of vlAURA voting options until it has less than 10% of the veBAL voting share.

Background

The WBTC/DIGG/graviAURA pool currently has 30%+ of veBAL voting share. It is within Balancer’s interest to not pay outsized BAL rewards relative to protocol revenue generated, as made evident by Balancer governance’s decision to kill the CREAM/WETH pool previously. Using Aura’s boosted voting power to vote for this gauge amplifies the problem. The WBTC/DIGG/graviAURA pool has generated ~$400 (1) of trading fees in the last 24 hours, a small fraction of which is routed to Balancer DAO for further distribution. DIGG also has a small circulating market cap of ~$3 million (2). Temporarily removing this option avoids a whale cornering this supply and directing huge emissions with no reciprocal benefit to the underlying protocols.

On Aura the WBTC/DIGG/graviAURA pool has received $0 in incentive revenue from the last incentive round (3). A key function of the AURA token is to generate incentive revenue for Aura lockers.

Based on these reasons the WBTC/DIGG/graviAURA pool represents a harmful gauge to the Aura and Balancer ecosystems. Per the Aura documentation Gauge voting rules and information (4), the pool should be excluded from the vlAURA vote list should it be deemed harmful toward the Balancer or Aura ecosystems: “Gauges which substantially harm the Aura/Balancer ecosystem or that have been explicitly blacklisted by community proposals will be excluded from the list of options.”

Terms

On the next Snapshot vote and any future votes where the veBAL share for the WBTC/DIGG/graviAURA pool is greater than 10%, it will be excluded as a voting option for vlAURA holders.

Voting

This vote will be a single-choice vote. You may vote “For” or “Against” this proposal, or choose to abstain from the vote. By voting “For” this proposal, you are voting in favor of the terms stated above.

Background Information

(1)https://app.balancer.fi/#/pool/0x8eb6c82c3081bbbd45dcac5afa631aac53478b7c000100000
(2)https://www.coingecko.com/en/coins/digg
(3)https://docs.aura.finance/aura/governance/gauge-voting#gauge-voting-rules-and-information
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(4) https://hiddenhand.finance/aura

5 Likes

Welcome to the forum, brother!

5 Likes

nice post. in support

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I think most of us want a proper solution to the dilution problem. Thing is that disabling this pool doesn’t solve the issue. The large veBAL holder entity will just migrate to another pool, and vote with approx. 30% share there. Rinse and repeat.

Disabling gauges like this is only a temporary solution which could help a little bit but not in the long run.

4 Likes

Great post. Whilst I agree that the gauge at the moment is not generating anywhere enough revenue to justify the emissions, I think that voting to remove it from receiving Aura rewards is probably not the best way forward. The advantage we have is that DIGG is a Badger DAO product and they are big allies of Aura. To my mind this means that finding a solution to work more closely with them is probably the best way forward. It would be interesting to see for example what percentage of emitted BAL is converted to auraBAL from those earning tokens from this pool. Badger DAO has their DIGG TCL on Balancer and so is earning a lot of rewards there too, which they are presumably then locking for auraBAL and graviAURA (vlAURA).
My point is there are some benefits to this pool and there may be some creative solutions for Badger and Aura to work on together to get the best possible outcome, with the goal being the slow dilution of this pool over time whilst maximising the capture of auraBAL for the DAO.

For example, what if a treasury swap with Badger DAO was undertaken so that Aura finance received some DIGG and then had the ability to earn on that treasury asset.

My concern is that at least with this gauge we have a partner DAO who is active in the ecosystem and wants the long term success of Balancer and Aura, the same is not necessarily true of some other gauge that will be rotated to if we kill the emissions here.

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I support this proposal but it’s more of a temporary solution though.

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Personally I am in favour of this proposal. It’s abundantly clear that it is not in Balancer’s interest to enable long term abuse of their protocol with microcap gauges receiving massive vote shares. It’s having the opposite effect of what the gauges are supposed to do; create an efficient market that increases the value for all parties.

This is a pool with very low mcap, held and voted for overwhelmingly by this whale, not generating meaningful protocol revenue. This gives the appearance of cynically trying to extract out as much value as possible from their investment.

Aura is currently a 100% Balancer project. With this in mind, I think any decision we make on this pool (or very similar situations in the future) should be taken with this fact at front of mind. For this decision, my opinion is that what’s bad for Balancer is bad for Aura, and Balancer should come before any other project.

As @Xeonus and @Temmy have pointed out, I agree that it’s likely only a sticking plaster – but I think we should action the proposed terms regardless.

3 Likes

Fully support this proposal and it clearly indicates that the pool can be turned back on when it is capped to 10% of votes. Operating on a faster time scale with this is appreciated.

Pools like the one above earning insane emissions are a massive red flag to any new dao’s who wish to join the Aura fly wheel.

It becomes a whale game which is not beneficial to any new comers.

Let’s pause the pool until we have specific framework in place to avoid this type of manipulation.

2 Likes

Good day,
If the intent is regulation that deploys rules applicable for all pools that may fall within the scope of Aura I’d absolutely support.

Where my view diverges on this proposal is that it is singling out a pool and looking to take action solely against that pool.

Would be nice to see this rewritten such that the same treatment will be applied to any other current or future pools that meet the same criteria that will be used to regulate this pool.

In interest of transparency I was the creator of the Digg pool. The goal of the pool was to establish a sustainable primary liquidity pool for DIGG on Balancer.

I’ll be presumptuous for a moment and assume other smol protocols would also like the opportunity to create sustainable liquidity for their tokens in the Balancer ecosystem.

It becomes less desirable for a smol protocol trying to grow and build to put themselves out there if the ecosystem structure is built to block them out. Or worse, their pools are at risk of being singled out for public execution after they followed the rules.

Imagine what could happen to a small cap token’s value proposition if it is singled out with threats of cutting off the lifeline that helps ensure the token has adequate liquidity to facilitate growth.

How users vote with their veBAL and the rules that regulate the gauge system are still at the root of what needs to be addressed here.

Respectfully,
hash_error

Agreed. This is just the next mole in what will be a never-ending game of whack-a-whole without a structure that imposes consistent and uniform objective standards.

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Reminder that its not removing the gauge, just removing it from the voting list until its below 10%. big difference

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It’s basically the same thing - put up 1 proposal that is uniform and applies to all pools - not just one - put it on snapshot, vote, and then apply it after it passes and in the future.

Make it a consistent policy for now and into the future - not a one off.

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I’m onboard if its regulation the community agrees on that isn’t singling out one pool.

If it’s a rule or rules that will be applied uniformly to current and future pools I completely follow the logic and can get behind that.

In fact the Badger community tried to regulate graviAURA generically is a similar manner but was voted down.

2 Likes

You are not wrong in that it would be ideal to have a policy established.
Can you explain why the graviAURA regulations were voted down? I assume you are talking about this vote Snapshot
It seemed really promising. Seems everyone was in favor but one whale.

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Correct, 1wallet torpedoed our efforts in the snapshot.

If that is the case then it makes even more sense for the pause, until we put rules in place for all pools to adhere to…

I think it’s the same issues that are generally encountered with governance. One wallet has a minority of the governance token but is actively participating, at least in this vote because of its an interest in its outcome, and derails it, while the majority of other wallets that could vote either don’t know or don’t care, so there’s minimal participation from the majority and the participating minority becomes a majority for purposes of that one vote - and derails it.

Maybe. I mean - how many times are band-aids going to be put into place as a temporary solution that becomes the status quo?

I would think that overall efforts, now, are better than a one-off effort now.

Because this issue will just keep coming up while the can continues to be kicked down the road. There won’t be a real solution in place - just band-aid one-offs.

Realistically, this is the direct result of the Cream/ETH gauge vote on Balancer. It was predicted that something like this would then happen with a smolcap token. It then happened. And now we’re running around again with our hair on fire and again only proposing one-off band-aid solutions.

Yes, but framework and rules for all pools to follow in detail are being worked on. Until then, it is in any Aura holders interest to protect the aura and balancer ecosystem, which the cream vote set precedent of. These things are never solved in a day.

I’m happy to hear that an overall solution is being worked on. But, the root problems have existed for much longer than 1 day.

2 Likes