[BIP-342] Reallocate wstETH/wETH Protocol Fees [second vote]
title: [BIP-XX] Reallocate wstETH/wETH Protocol Fees author: @Llamaxyz - TokenLogic created: 2023-06-06
Summary
This publication presents the Balancer community an opportunity to bootstrap the wstETH/bb-a-wETH pool by redirecting protocol fees used for bribes from wstETH/wETH to wstETH/bb-a-wETH pool.
Abstract
This publication proposes reallocating the bribe portion of Protocol Fees from the wstETH/wETH pool to the wstETH/bb-a-wETH pool. If the pool was fully migrated, the yield from the Aave wETH Linear Pool (bb-a-wETH) will provide the following benefits:
- Additional yield for Liquidity Providers (approx. 1.2%)
- Boost the Hidden Hand bribe flywheel (approx. 50%)
- Generate additional revenue for Balancer DAO ($0.26M)
Assuming 95% of the 32,060 wETH are deposited into Aave v3 earning 2.41%, Balancer DAO is expected to earn an additional $0.26M in additional annual revenue.
Motivation
The wstETH/wETH pool is a “core pool” under BIP-19 with 50% of the pool generating yield. This means 32.5% of yield generated by this pool is then used for bribing votes on Hidden Hand.
This publication proposes redirecting the bribe portion of the protocol fees towards the wstETH/bb-a-wETH pool. The wstETH/bb-a-wETH pool replaces the wETH with bb-a-wETH and generates additional yield and revenue for Liquidity Providers (LP) and Balancer DAO respectively.
If 95% of the 32,060 wETH in the wstETH/wETH pool was deposited into Aave v3 via bb-a-wETH to earn 2.41%, then an estimated 734.01 wETH in yield would be generated and 251.10 wETH would be directed towards bribes. The results is an approximate 50% increase in bribe funding, assuming wstETH averages 4.82% APY, and would help sustain the pool.
Separate to the additional bribe wETH flows, the Balancer DAO will generate an additional 135.21 wETH in revenue, valued at $0.26M from the wstETH/bb-a-wETH pool relative to the wstETH/wETH pool.
Specification
The bribe portion of the ProtocolFee from wstETH/wETH is to be redirected to bribes for wstETH/bb-a-wETH.
Pools:
Disclosure
This proposal is the sole work of @Llama contributor, @Matthew_Graham, via the legal entity TokenLogic. Llama is a Service Provider to Aave DAO.
Copyright
Copyright and related rights waived via CC0.
| Voter | Cast Power | Vote & Rationale |
|---|---|---|
 Llama | 172,296 | 100% for Yes, let's do it |
 0x25B7...057Fa6 | 130,917 | 100% for No, this is not the way |
 StableNode | 65,485 | 100% for Yes, let's do it |
 0x4032...a8945f | 5,899 | 100% for Yes, let's do it |
 0x5e45...B73248 | 1,170 | 100% for Yes, let's do it |
VOTE POWER
Proposal Status
- Thu June 22 2023, 06:00 pmVoting Period Starts
- Mon June 26 2023, 06:00 pmEnd Voting Period
Current Results
1-Yes, let's do it
3.286M
2-No, this is not the way
137,011.036
3-Abstain
6.474