Detailed plan to compensate V1 users without issuing PERP

@habs4lyfe123 I think we should remove 1.3MM and 2.5MM as the vote option (unless you want to invoke the sign up sheet again for the 1.3MM). Otherwise those amount is not enough to cover everyone even for just the op4-op2 amount.

Same comments to previous proposal around sunsetting V1. If you think that token holders will vote yes to give away their fees then you must be dreaming. We’ve been waiting for fee distribution since V1 and it’s finally coming with V2 - I honestly doubt there will be any token holders (myself included) who will vote yes for this.

The majority of users that matter were compensated - retail. Large whales simply extract from the system through arbitrage. We need to let the team focus on building V2 out so we can compete and get those fees rolling into treasury

Hi @thewei ! Appreciate the feedback :slightly_smiling_face:

Just so I understand, are you saying (a) that you disagree with compensating V1 users or (b) that you prefer using PERP tokens to compensate affected V1 users?

Hi thewei, If I understand correctly, are you mostly worried that the Perp price could drop and/or your stake rewards could be reduced as a result of this proposal?

The treasury fee income is the overflow from stake rewards/LP rewards/insurance fund. So your rewards won’t be affected.

In terms of Perp price and growth, doing the right thing to compensate the users has a tremendous value for Perp’s future growth. It shows the future investors and users that the team is indeed credible, responsible, reputable and trustworthy. This will lay the very foundation of the growth that you wanted.

We know the compensation amount we are talking here could be quite substantial, that’s why we hope to work through it together with the team/stake holders to come to a common solution. I believe the end result would certainly be much better than doing nothing at all.

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Believe it or not, we’re indeed retail users who lost 90% of our free collateral here on this platform. We’re not company or institution, we’re working-class individuals just like most of the users here. We learned arbitrage strategies from Perp’s own ads. Arbitrager are creating value by playing a role in stabilizing the difference between the mark price and the index price. There is nothing morally wrong with arbitrage that excludes the arbitragers from receiving proper compensation.

By compensating the affected arbitragers properly, Perp can help attract prospective arbitragers and retain current ones who will help add stability and security to the platform.

No. I just think that this is a waste of time. As a token holder why would I want my rewards to decrease?

Disagree. How does giving money to a small group of people help with price growth at all in any way? The valuation of the token is going to be based off a multiple of the DAO treasury - meaning the more you siphon it away the lower the valuation of the token.

The team already has a strong track record of building with a group of strong investors that already signal credibility, responsibility and being trustworthy.

Disagree with compensation completely. Would rather team focus on building and growing.

There is no need to compensate arbitrageurs. There is already ample returns as evidenced by the trading volume on the exchange. Prices have been stable on V2.

One last point I’d bet is that the majority of these people talking on the forum and wasting the team’s time don’t hold tokens. I wonder if something like the uniswap temperature check might be interesting in the future as then the team can actually focus on building rather than responding to these pointless proposals

Thewei, your rewards won’t decrease because we will be using the overflow income for the compensation. Stake rewards, LP rewards and insurance fund are already fulfilled and won’t be affected. @LeeKB please chime in to help explain the treasury fee income structure. Thanks!

Reputation is the single most important factor in determining the success of a business. Would you want to put your money to a bank that has a history of lost user funds and angry users? For the long-term prosperity of Perp and therefore its price growth, compensating the affected user is a small price in the grand schema of things. From our side, we’ve been working with the team to lower the compensation amount to a minimum and would like to hear from the large Perp holders on their thoughts on the proposals.

Errr yes it will. You want to spend 40% of fees. Assuming insurance fund is full right now 10% of those fees goes to the DAO treasury. You want to siphon off 40% of that by the sounds of it which affects the size of the treasury and thus the value of the token…

I think it’s been said time and time again from the foundation team that there weren’t lost funds - it’s purely down to the mechanism of the vamm from Perp V1. Had they simply let the exchange do what it did then large whales would have had an edge of retail in exiting positions. So from my point of view (unless foundation team will correct me here in that there are lost funds??) it’s not really relevant.

From a reputational standpoint the protocol already has a solid one:

  • Team is doxxed
  • Solid investors and backers
  • Constantly delivering product for >2 years
  • Growth

Anyways, I don’t think we will see eye to eye around any of these points but I honestly doubt at this point any of these votes will pass given my points above.

The 40% refers to 40% of fees that are placed in the treasury:

  1. Perpetual protocol commits to making recurring purchases of P100 tokens from this new liquidity pool with [40]% of the fees destined for the treasury on an hourly/daily/weekly basis.

This is separate from the fees shared with PERP stakers. I guess you can still argue that these fees would presumably go toward protocol development, promotion or rewards etc., but as of right now there is no plan for how the treasury fee income will be spent.

So this confirms my point above - the DAO treasury is reduced in size and thus the value of the PERP token goes down (given a lot of valuations right now are based on the size of the treasury this directly siphons value out)

My bad, didn’t read your point above correctly :sweat_smile:

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Thewei, I’m glad that we’re having this conversation, because it seems there’s a misunderstanding. You said 10% fee goes to DAO treasury. That refers to the trading fee. What this proposal is proposing is the 40% of that 10% trading fee. I personally have proposed 17.5% instead of 40% in my proposal here, and we can go as low as 10% if we invoke a sign-up sheet to lower the compensation amount to 1.28M, so that’s 10% of that 10% trading fee. Is that something that would earn your support?

My point is that you are taking an amount from the trading fees that are supposed to go to the DAO treasury. I’m against any form of these fees going from treasury for this proposal

Are you sure about that? No compensation is pretty much like committing a suicide for Perp’s reputation. The market responded to your statement and has crashed below $0.6.

I trust the team/major stake holders would do the right thing and find a common solution to recover Perp value to its former glory. The trade off is obvious, it’s a small price for Perp’s long term success.

Wow great way to do correlation = causation. Eth price has tanked because of my comment as well. It’s not like all tokens are correlated to the price of ETH at all.

I got a chance to look further into the example given of a plan by bZx and tbh it does not look good.

The price of bZx’s P125 token is around 0.044 currently (it was issued at 1 P125 = $1 USD).
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This means users either have to wait a very long time to receive their payout, or accept a massive reduction of their expected payout.

Speaking personally, I’m not confident that this proposal would benefit v1 users or be positive for the Perpetual DAO’s reputation. The only part I’m not sure about is the mention of “buying demand” here:

@habs4lyfe123 sir can you comment further?

@LeeKB thanks for the thoughtful post here.

There are successful examples. See the LEO token buy-back program enabled by Bitfinex

The issue with bZx’s P125 token is that their revenue generation is too low relative to the overall amount they are trying to repay. As a result, the amount of people looking for any kind of liquidity for their P125 overwhelms the buying demand from the protocol fees, and thus pushes the price down.

I believe this ratio can be improved for PERP in a way that make sense for the affected V1 users. I’d be happy to edit this proposal as part of the combined proposal to reflect this potential.

At the end of the day, the value here is that affected V1 users get repaid via revenue instead of further PERP issuance, this minimizing dilution for the rest of the community.

Thanks for the Bitfinex example! That looks much better, although I still think we should do more analysis of their case, e.g. what their revenue stream is compare to Perp (Finex regularly has 500m days … in a bear market … for spot trading). Also it seems they have some/all of the funds already, maybe?

In response to the New York attorney general’s claim the company had lost the $850 million, Bitfinex responded that the funds had in fact been locked up on a payments platform called Crypto Capital.

In today’s announcement, the firm said any funds recovered from Crypto Capital would be used to buy and burn LEO tokens, as would an amount worth “at least 80% of recovered net funds” from its 2016 hack of cryptos worth $80 million at the time.

:point_up_2:source

Given this proposal seems like it would benefit from further analysis and preparation, maybe we should let proposal 863 proceed first and come back to this proposal if there’s interest from the community?