So, I just wanted to share my thoughts on this subject. First I want to give you my understanding of this process (make sure I’m not misunderstanding anything), followed by some questions/concerns.
1.) The BAL Rewards are granted to EOAs that are providing liquidity through Balancer. This is an acknowledgement of initial entitlement to such rewards.
2.) By staking our Balancer Pool Tokens (bpt) within the PieDAO staking contracts, we voluntarily give up the rights to those Rewards on the basis that we are rewarded Governance Tokens (DOUGH) in exchange for providing liquidity for new Pies.
3.) Those BAL Rewards are converted to ETH which is converted into DOUGH and then recycled back into the PieDAO vault where the Governance Tokens are used to incentivize the liquidity for new Pies being created, ad nauseum.
4.) The method of Purchasing DOUGH will be accompanied with the mandate (through the multi-sig controlling the vault) that its core mission is to provide price stability of the DOUGH token.
Question: Is this mandate designed to counteract the assumption that the streaming DOUGH rewards will be Sold back into the market maker at a higher rate than the perceived short-term demand? Do you have any concerns about this practice?
Concern: Initial Members of the DAO/“Whales” : I have noticed that of the almost 300 votes made on-chain, the vast majority of them are 100% Yes (with very similar DOUGH amounts) – with few proposals being rejected due to a failure to meet quorum requirements.
While this is completely understandable, my concern is that early decisions of the DAO (such as unilaterally making the decision to take BAL rewards – and instead of distributing them to LP’s, we issue an artificially inflated DOUGH token) are incredibly important in shaping the future of this project.
I bring this up, not as a slight towards this process, but as an example that when these decisions become standardized as the “model” (for financial portfolios in our case), it forces new users to participate in a governance process that is inflexible to change. (I also understand that this is universal problem for all yield farming projects.)
Now, if you say that this is the only way to make this system sustainable, I will take your word for it. At the end of the day, I want to see PIES because it has true utility for stable long-term financial investments…with that being said, I think that transparency is the ultimate goal for a model such as this. I know most people just want returns, returns, returns, but if your vision is to incorporate fair governance processes of not only PieDAO, but governance of the underlying assets of each PIE, these early decisions (made in a pseudo-centralized manner) should be continually reviewed alongside the growth in the number of DOUGH owners.
This transparency also extends to understanding how much liquidity is being provided to the pools by these initial members of the DAO/“Whales”. They have a significant influence on what PIES proposed by the community get liquidity, how much DOUGH incentives are issued for providing that liquidity.
Anyway, thanks for hearing me out, and I am really excited for this project to succeed.
Note: Apologies for conflating PIP 19 with the discussion here on providing Liquidity for outside projects (although my thoughts can be applied throughout).