I am not talking about the emotional side of this matter. just the math. also, the whole governance move makes it so that even if the the team did not intend uni to be a ponzi, we can turn it into one.
How who and where has anyone promised returns please point me to that?
I advise you to read the post Mr_Po wrote one more time and analyse what it is exactly that he is saying. I think you are too hung up on the word āponzinomicsā and not really thinking about what is meant by it.
I have read it Burning and Distributing in my opinion has the same outcome I think that getting hung up on the idea that Burning would definitely mean people who HODL will benefit the most isnt true but hey weāll agree to disagree and leave it at that as weāre both not contributing anything to this post really more than going back and forth with what is clearly conflicting views
@Zer0dot know you set up a poll at the top of this post but you could consider setting up a poll on the Uniswap Snapshot Page to get an idea of where people stand as this is clearly a very important topic for many
I would argue that burning UNI, distributing UNI as a reward and distributing ETH as a reward, in the long term will have the same effect on UNI price, let me explain why:
- I already explained why buying UNI to burn them or to distribute them at the end of the day is the same thing. You can either have more UNI that are worth less or less UNI that are worth more.
- Now letās compare distributing UNI and distributing ETH. Itās true that by distributing UNI weāre artificially pumping up the price since we need to buy them (in the short term). But at the end of the day the users are the one that will decide what to do with their tokens. If a user prefer to hold ETH over UNI he will sell the token that he earned, and so he will create sell pressure. And the same is true if we distribute ETH. We donāt artificially create buy pressure on UNI-ETH. But since some users will prefer to hold UNI over ETH they will use the ETH they earned to buy more UNI and so they will create buy pressure.
So, letās say that 50% of users prefer to hold ETH and 50% prefer to hold UNI. If we give the reward in ETH, 50% will swap it for UNI, and if we give the reward in UNI 50% will swap it for ETH. At the end of the day the result is exactly the same in long term.
Basically what Iām trying to say is that the market will decide the direction of UNI price, not UNI governance. If a reward is distributed to UNI holder then UNI price will go up in any cases.
And about the centralization of governanceā¦ thatās going to happen even if we distribute ETH because UNI whales will use it to buy more UNI. So even here, the market will decide.
I know, there is not even $1 bilion UNI existing so it would impossible to have $1 bilion UNI in order books. I would estimate that right now the amount of UNI āprovided as liquidityā to exchange is around $100-300 milion, considering $26 milion is on UniSwap alone. So, $300k would still not be a large amount. We can expect the amount of liquidity to 10x once the total supply is circulating. But the point is that the market will adjust itself.
And weāre not burning token just for the sake of it. We would be burning token with the value that is produced by UniSwap. That is something completely sustainable in the long term.
It would be a Ponzi if we were creating value from thin air, but weāre not.
Also throwing around the word āPonziā in a loose manor is very dangerous but seems to be not uncommon along with other words such as Scam, Pyramid Scheme etc (not sure why Ponzi and Ponziism got brought into this conversation)ā¦ Those word in my opinion should really be reserved for real Ponzis, Scams, Pyramid Schemes and not just thrown around as it devalues the face value of the word when a real Ponzi etc is happening. Again it should be reserved and not just thrown around as a cover up of a statement of anger or frustration not without substantial backing and proof towards it being a āPonziā anyway
There are two distinguishable components in the current discussion: buying and burning.
When it comes to burning the tokens is isolation, I donāt think that it does anything meaningful. For the most part is just a Sisyphean labor - to try to deflate a superinfationary economy.
When it comes to buying the token ā even without burning it, it does make a dent. Letās start with some simplistic generalized examples.
Having 0.05% UNI fees with 300 mil volume per day, it would mean 4.5 mil buying event for UNI tokens monthly and 54 mil yearly.
- In isolation, if we would just buy 54 million worth of tokens on the market, it would not make 554 miilion dollar market cap out of 500 mil m cap. It is more likely that it would bring the market cap closer to 1 bil, but I might be way off in my estimates.
- Now, add that to the fact that when we introduce the mechanic the sell order books will naturally thin out in anticipation of these events ā and these events will generally become tradeable.
Again, for simplicity, it wouldnāt have to be like that, but lets say we offer daily UNI market buys at 1 PM UTC, it would create a daily mini pump & dump event. - Over time because of the way market caps work, the UNI market buys and the expectations of these buys would disproportionally pump the price of the token that would stimulate the mania phase around it. People would buy heavily overpriced UNI tokens, and at the end of the day the bubble would burst, and the price would find the bottom around or maybe below the accurate valuation of the protocol. Leaving a lot of unhappy people who lost their money by getting excited over UNI behind.
Iām not saying that weāre going to prevent boom & bust cycles for UNI. Iām calling on not making them worse than they have to be.
When we distribute ETH rewards people can still decide to buy UNI with them, but it will be their decision, and they will likely have their personal reasons behind it.
I donāt see why the governance of the protocol should make these decisions for the people.
If we just distribute the ETH rewards, there will be people who buy UNI with them and people who donāt. This way people have a choice, and this choice will result in UNI supply being distributed more towards people who have decided to buy it.
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Well Iām really happy we got a discussion going, thanks for your input folks!
I donāt really have much of an opinion on this as of yet, but Iām leaning more towards distributing ETH or a stablecoin or something to active governance participants. This could be difficult to do, and perhaps contribute against maintaining the stablecoin pegs.
With that said, I believe the long-term value of a UNI token should be tied to protocol fees in some way or another.
Might be worth doing, but I think we need a bit more clarity on the discussions here first. The options I set up might not be optimal, let alone exhaustive!
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I also think about it with economic perspectives and new LPs that not only from earnings but also as capital addition, but for me the most important thing is the product, for many legislations a distributed broadcast network a general use, "distributed digital currencies āas currency, and they are topics that, thinking about economics, give market evaluations for the quality of the product that for me also influences the price
a bep2 network that is Uni governance for stake payments and vote delegation if possible with a Uni Wallet and change the network for the exchange?
Iād like to add an argument against redirecting a portion of LP fees in their respective tokens .
#1 For the majority of addresses these fees will already be somewhat insignificant. But if they were to be distributed in ETH, they could at least cover to some extent the usage of Ethereum blockchain.
If these fees were to be distributed in respective tokens, they would essentially be useless . To transfer these tokens you would have to pay more than theyāre worth. It is a form of spam .
It is better to distribute money than to spam .
#2 As Uniswap is a DEX, everyone can theoretically create a pair and get some volume going for it. So everyone can make a scammy token which will then be distributed to all UNI holders .
And itās not just the possibility, it is the reality.
A lot of Uniswap volume for the past month was made by superinflationary speculative mining tokens that naturally go down in price. So when we offer these tokens as a reward instead of ETH, we effectively distribute 50% less value.
==
So what we get from respective tokens compared to ETH distribution is:
- spamming the wallets with dust
- community exposure towards dangerous projects
- extra trouble for UNI holders and extra load on Ethereum blockchain when people have to sell 200 tokens they donāt want to own
- distribution of far less value with the same amount of money
To be honest, it is the most disastrous option out of the ones listed. By far.
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The second best option to ETH distribution imo is to buy UNI and distribute it. Again, compared to burning now we give people a choice to own their distributed UNI or to sell it, so over time UNI will be distributed more towards people who bought and who didnāt sell. I am honestly not sure about all the implications of UNI market buys when we add an option to sell what has been bought.
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Iāve got one more argument against burning:
The idea of passive income is incredibly psychologically attractive to people.
And it is easily understood by the newcomers, as by default, we live in inflationary economics (and there are economic reasons for it).
If we were to give people an option to have 7% APY on their money in an economy with 7% inflation, most people would feel more rewarded by it than by having 0% in a non-inflationary economy.
When it comes to word-of-mouth, imagine a person saying:
- Well, there is an opportunity to have 20% APY on your money with virtually no risks.
- Well, the overall supply of this thing is extremely inflationary at the moment, but itās getting a little bit less inflationary because it is designed in a way that it burns the money it earns. So in 4 years, the amount of money it burns may exceed the inflation, and then your āstocksā will benefit a little bit from that with time. Albeit the price movements will still be unpredictable, but life is life taa-taaāra-ta-ta!
Introducing even a 5% deflation into an economic model that inflates 600% over the next four years seems like a wasted opportunity to me.
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How can we take this forward and propose the most voted for solution to be implemented?
We need to step things up 
Next step for this might be the OG poster @Zer0dot to make a poll on the Snapshot page.
From there youād need to find someone with 1% of the total supply to actually propose something officially, a process in my opinion that shouldnāt be rushed thus why I feel/think the snapshot page is a good first start to see how many people are interested in delegating to this proposal and who would vote what way to see if there would be enough votes to want to pass it
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May I suggest the poll on snapshot page be a little bit less complicated?
i.e. one YES option and one NO option.
I donāt have a legal background, but I know that distributing rewards to wallets is more riskier (from a perspective of securities), than burning it. Added with facts like people mentioned above (too complicated to handle, lots of fees, etc.), burning seems to be the only viable option.
I think it would make sense if we voted on the implementation of LP fees to buy UNI and burn.
In case of a positive poll vote, I would expect another following snapshot poll that would define how big the fee should be.
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I completely agree, unfortunately the whole Burn vs Distribute is still a question very much at large in the forum which is partially why I mentioned best not to rush the process.
From what Iāve seen on this forum there doesnāt seem to be a very clear consensus and or there are still people asking for clarification on the topic so until this is sorted I feel like decisions like this are kind of put on hold.
Again my personal view others might argue otherwise
How are the fee rewards received?
In ether or liquidity tokensā¦
Burning most of it makes sense
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Buying and burning doesnt incentivize anything. I think to be able to earn uni you should be part of a staking pool similar to sushi, and each pool can āserveā the fees to this pool, when you withdraw you have more uni then when you came in with. Alternatively fees are collected in ETH or perhaps DAI or tBTC. Would personally prefer tBTC.
You can always just change it, because fees are paid one way doesnt mean we cant simply change to another one with a vote.
Could always do half and half to start with and see how it goes and then vote to go one way.