Using Asset Management Yield to buyback USF to reward Capital Miners

The continued conversations about the implementation of asset management to increase yield to capital suppliers and others are exciting and there continues to be discussion on detailed strategies and deployment.

As part of these discussions @cryptojones suggested that we utilize the yield from asset management to buyback USF before distributing to capital suppliers. This will create additional buy pressure on USF and differs from the current approach.

After some support and additional discussion from some of the community in the discord server, we wanted to start a proposal and get feedback from the community on this idea.

Proposal:
1.) Utilize 100% of the Asset management yield to buy back USF to reward capital suppliers with.
2.) We suggest doing this for a 3 month period and it will be important to track the amounts and impact to determine the move forward plan after that time.
3.) Use the below principles to discourage bad actors from trying to take advantage of this process.

  1. We could set a maximum amount to spend on buybacks daily. The excess will move to the treasury (account dedicated to buybacks) in ETH or whatever the “native” token is for the pool.
  2. Small buybacks often (e.g. 2 per day) is better than 1 big buyback weekly as this could be gamed by traders and bots
  3. Buybacks should happen at random times (again, to reduce predictability)

Please let us know what feedback and questions you have on this proposal and if you support this idea. We will plan to gather additional input and feedback before moving to a vote.

8 Likes

Great summary, lets leave it up for a day or two then move to a scattershot vote.

2 Likes

Looks good! Can’t wait for this to be implemented!

1 Like

Looks great. Will vote in support of this initiative!

1 Like

I have mixed feelings about this proposal.

The initial objective of implementing some AM strategies was to attract more capital by increasing APY for capital providers. If it’s used instead to buy back USF and distribute them to capital providers, then there’s the risk that the buy pressure wouldn’t be strong enough to balance the high current sell pressure, leading to little to no increase of APY, and in turn even more downward trend of USF price.

Is my reasoning flawed? Please let me know your thoughts on this. I’d be happy to be wrong.
If nobody knows and we just need to try in order to see the results, I’d rather opt for the initial plan first.

1 Like

If the distribution happens straight after swapping the pool’s native token (e.g. Eth) for USF then the APY will be the same regardless of the value of USF (minus swap fees).

If anything, this could encourage more users to LP as there will be increased transactions on the ETH/USF pair hence more fees for those providing liquidity.

This, together with USF staking for governance (once implemented) will, in my opinion, cause the opposite as what you suggest.

Generally speaking, I’m hesitant on this kind of strategy longer term because I’d like to see the capital pool grow and increase the collateral pool to increase the buffer, etc. However, since Unslashed is in such an early growth phase - I’m tempted to support this proposal as an experiment and see how it goes. We’ve seen this method being effective in other DeFi protocols and given the short lifespan of the proposal ( 3 months) - I’d say lets give it a try and make a more informed decision , supported by data at the end of this time period.

Looks great : ) Will vote this, good initiative !

In favour of this, let’s try it!

However, I think this won’t move the needle tremendously, because:

With 4k ETH deployed and 10% that’s 400 ETH over 365 days, or in other words: Just over 1 ETH of buy-back per day.

That is only between 0.5% and 3% of the daily volume we see on Uniswap.

1 Like

correct detection. LP rewards must continue. we can start this plan too!

1 Like

Sure, but if we deploy 28k ETH more (which is being discussed currently as the part of the asset management proposal) as the 4k ETH was meant to be a “initial pilot” then those percentages become much more significant and meaningful.

I am working on drafting a proposal for the asset deployment and plan to put this to a vote in the next couple days as well. I think it would work nicely together.

1 Like