Boba Proposal - BOBA Buyback program

Hi,

Leslie from GBV here.

We do understand that the BOBA token will benefit from network usage sometime in the future, but as of now there is no practical mechanism doing this right now.

Keeping in mind:

  • Any large structural change to gas usage could take a long time to implement(i.e. using BOBA to pay for gas using a relayer in addition to ETH)
  • Staking and a more technically complete fee sharing program will take some time (at least Q1 2022)
  • The network is currently cashflow positive (more ETH is gained than is required to secure the L1)

I would like to propose some solutions to bring value to BOBA holders:

  1. BOBA buyback program
  • DAO to conduct BOBA buyback using 100% of ETH gas profits (L2 profits - ETH cost used to secure on L1).
  • Weekly operations. ETH → BOBA and channel to a DAO controlled wallet
  1. Use BOBA from treasury to provide liquidity on bridges/swaps, and revenues all sent to a DAO controlled wallet, effectively removing those tokens from supply. This also has the benefit of increase bridging options to other chains,

These are less technically complete solutions, but importantly, quicker ways to bring value to the BOBA token. In the current crypto/defi environment it pays to move fast and be flexible, and this is a good way to start bringing value right now. It also shows the DAO and foundation mean business.

Would welcome more ideas (e.g. less than 100% in case costs exceed revenues, other ways to buy back, etc).

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Hi Leslie,

great suggestions and I agree with them, but I also have some questions / concerns / ideas.

Why don’t you just remove a portion of the tokens from circulation with an explicit token burn? My concern is that a future DAO vote could decide to do something else with the tokens that are now meant to be removed from circulation, meaning that it would completely reverse these deflationary efforts. So I think that maybe a hybrid approach that actually burns a percentage of the tokens that are bought back, while putting the others in the treasury like you proposed, would be better.

If the tokens in the DAOs treasury are used to provide liquidity for bridges / swaps wouldn’t that greatly reduce the rewards on those bridges / swaps for other token holders since the supply will be so big in comparison to other holders?

Best regards

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Hi Leslie, thank you for making a start with proposals, some comments/questions I have.

  1. How about using 50% of ETH fees (after L1 cost etc), to buy back Boba? Why, well as you mention it can be used to provide liquidity for L1-L2 bridging but if only Boba is used it will only be for that. If all this Boba is used to provide bridge liquidity would that not bring APR down for other (Boba) bridge stakers?

  2. Could the fees collected not be split up to provide (dynamic) liq on other tokens as well for example USDC (33-33-33 split between Boba, ETH and USDC on L1 and L2 as deemed needed or something)?

  3. The buy back “Program” is mentioned in the airdrop details, see below quote.

Quote from Boba Airdrop Details:

Supply and Circulation

The initial circulating supply of $BOBA will be equivalent to that of $OMG, plus 20M from the $BOBA treasury in order to provide liquidity and fund the airdrop bonus (approximately 160M total). The circulating supply will gradually increase over the next four years to reach the maximum supply of 500M. Some of the fees earned by Boba Network will be allocated to purchase $BOBA tokens on behalf of the Boba treasury over time. The treasury will be deployed to fund liquidity mining incentives and build the Boba ecosystem.

There are several other ideas but will need a seperate thread as they would likely need the implementation of a relayer as you mentioned, so I leave it at this for now.

Edit: Added the Boba Airdrop Details Quote.

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Hi Leslie,

As always thank you for your insights on helping the network and especially the token usage in the short term. I really love the proposal. It shows that you guys are willing to help and come up with idea’s to improve the network, in a honest and transparant way. Good luck!

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I 100% support the buyback program. This is a short term solution to add value and shows conviction for the long term in the project like you mentioned towards the end of the proposal. In addition, the option to pay gas fee using boba is also a great idea and like you said will take time to implement. That option alone to pay gas fee using boba should bring in some demand and maybe burning mechanism like jun_the_scammer mentioned should be used.

A great and efficient solution for now is to buyback and have a treasury for whatever that is needed to be addressed in the network. Once the ecosystem grows with more dapps from builders Boba will flourish from it.

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  1. Not opposed to the 100% buyback, which I think should be voted on and implemented right away - there’s no downside as the usage of the Boba tokens in the DAO controlled wallet can be determined later.

  2. My concern for using Boba tokens from the treasury to provide liquidity for swaps and bridges is that it lowers the rewards collected by Boba token holders who already do so. The fast bridge for Boba tokens is not lacking in liquidity right now. Are DEXs and other bridges lacking in liquidity? If so, I am not opposed to this either.

Lastly, what would the the DAO controlled wallet immediately be used for? Maybe this falls into a different proposal and needs to be more flushed out but perhaps we should consider a dev fund to bring more DApps to the ecosystem. I don’t think a token burn that others have suggested is the right move this early.

I’d vote no on this proposal.

The treasury has 42% of all tokens, 240 million.
100 million tokens go to future team members
50 million go to strategic investors.
And now you want to create a 4th network holder in this DAO wallet, which could be used later, no doubt. The idea provides more uncertain than utility or benefits to average user given that the team has ample funds based on the allotments from the air drop.

Ideally this buyback is going to reduce existing holders share of the network even more. You are not building community, you are effectively reducing community members, likely in favor of whales.

You need buyback and burn with respect to BOBA. The process needs to have a running counter of ETH fees available for buyback and it needs to be listed on the gateway. As it stand now, transparency is key and we do not really have that at all levels, we get told what is going to happen, over and over again, after the fact normally.

If the DAO and foundation “means business” they will burn tokens with ETH fees since ideally the DAO controls the treasury and the foundation and does not need to create a fourth wallet to hold more Boba for some vague reason, when the obvious one is to burn tokens that folks are willing to sell on the market.

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I would agree with a lot of the other commentators in that a buy back and burn programme would be best however I think the proposal is still better than nothing.
With regards to staking and the fee sharing programme - Why will that take to at least Q1 22 to be enacted when network cashflow is currently positive?

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I will vote to decline any buyback program, ESPECIALLY this early.

This reeks of short-term thinking (to arbitrarily inject “value”). The complaint is that we invested in a startup and now there’s an expectation that the startup will have a product this quickly? And since there’s not a product already, clearly we must start extracting value from the token/network?

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The ‘Buy and Burn’ is my vote, as it rewards all stakeholders equally. Just look at how successful BNB have been with this policy.
Also, can we slow the network down, allow more transactions in a block? There was one stage where we were mining a new block every 0.3 seconds, for a transaction that might take 7 days to exit? Put more in the blocks or give folks like Oolongswap the ability to choose their own speed. Lower gas fees is your killer feature, let’s use it.

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Everyone seems to be in agreement with the buyback - what we do with DAO wallet should be a different proposal - whether its a burn, dev fund, incentives, or something else.

As far as the burn, it is too early in my opinion. The ecosystem needs to be built out more before any type of burn begins. A token burn doesn’t have any benefit right now except a short term price gain if any. It doesn’t increase the amount of transactions or activity on the network. How much could we possibly burn right now?

Instead, using it as dev fund might show some good will that we want and will support their DApps. We benefit the most from having their DApps on Boba. More Dapps equals more activity and transactions. Why would anyone want to build on Boba where holders are just thinking about themselves and their token price?

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Personally I would rather see the money re-invested into the bridge. Have some sort of PCV to reduce friction entering and leaving the network, compared to a short pump designed to line my pockets.

Network improved or line our pockets. I know I don’t have the popular opinion here but longer term it will also add value to our token having some sort of PCV on the bridge

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What exactly would they build? Lets be clear the treasury, right now, is worth about 600 million USD… You have 250 USD million for future devs at these price levels and a 100 USD million for partners. Not to mention that all of these tokens are sell pressure waiting to happen from a market perspective. We could burn every BOBA in circulation the team should have enough funds to build.

Buyback and burn sends the message that the current team did the correct outlays and are not worried about their management of those funds.

And to be clear, staking is not here and there is no guarantee it will be here early in Q1 2020 since the could release it 3 months from now.

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Burning tokens makes know sense, what does it achieve? It secures trust that these coins are inaccessible and cannot be sold.

You can do the same thing with PCV lock them up never to be sold, but you can also make use of them in PCV, you can stake them on the bridge reducing friction to enter the network. And every time someone enters thru the bridge, you will generate a fee. This fee will belong to PCV and also never be sold. Reducing the supply continually

So I would say, if your goal is just to “burn the tokens off the market” PCV will accomplish the same thing and it will get more tokens off the market at the same time. Plus it’s a network improvement compared to just a “burn” that doesn’t improve the network.

A buy and burn would not necessarily be limited to Boba’s network, meaning tokens could be bought off of a CeX. Not to mention that if you buy from one spot, you pay more than what you might normally need to for an asset.

The PVC approach is limited to the protocol. Additionally, Dune shows ETH Dune Analytics deposits declining and transactions going down. The friction BOBA is experiencing right now with regard to onboarding is that the process is too expensive and they do not manage liquidity at the protocol level properly. A PCV will not solve that problem, at all. They shipped a Ford Pinto and needed a BMW…

Now, I can see a PCV being adopted if, and only if, Boba launched a DeX like Synapse has for bridging purposes. Right now folks provide liquidity to the gateway and get one of the worst ROIs around and Boba is not doing anything to address that publicly, at all. A DeX, which we have been promised for ages, it seems, by Boba would be great since it actually helps solve some real problems facing the network with regard to liquidity and usage… Give traders a discount for holding Boba and trading… Of course, we will not get this since it is too obvious.

Lastly, even if they launched a PCV exchange for Boba Tuesday, I’d still be for buy and burn until we got staking since this proposal is a short term thing, the way way I read it and I do not see a massive amount of Boba being burned… if you look at actual network usage.

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It seems like general consensus that a buyback occur + LP some treasury funds. Lock up everything earned in a special DAO wallet until we can work out what to do with it.

The amount accumulated in the DAO wallet should be transparent. I think knowing how much is accumulating could give a better idea on what to do with it later.

Burning it immediately does nothing since the buyback already occurred, and if its locked, there’s no sell pressure for now. Gives more flexibility.

Separately, how much treasury funds are currently available? There was 20M unlocked with part of it being used to fund airdrop bonuses. The rest of the treasury doesn’t unlock for another year.

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  1. This would only be for BOBA, not other tokens. But can be discussed separately to starting the buyback. Could be a quicker way to get started. The idea is to have something quick set up so the intentions promised are put in place.
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My (anecdotal) views on buy and burn are:

  1. This is more flexible, and the idea is not to touch the wallet for now.
  2. In the interests of getting started, this is more flexible. Can discuss burning later.
  3. Generally speaking I feel ‘buy and burn’ doesn’t really bring as much value to the token as expected. Exchange tokens have been doing this for a while, but we have seen less of this going on. The exception is if the tokens have no limited supply (e.g. Pancake).
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The point about burning, not just locking them away, or adding value in the traditional sense, it is about credibility. I tend to think that GBV and BOBA have a lot to prove still given how the past year has played out.

The community went from potentially having a network token in OMG to BOBA since, one thing was OMG’s limited token supply mean there was not enough coins basically (I read that or heard it on one of the official team things)… so a new token was needed. Again, we were told this was the best approach, no vote or say, just the assumption it was the best idea. Now, you have a token that is only traded in a handful of places, without a lot of major players listing the coin so far. And we are told a DAO wallet is smart to use so BOBA can be bought and locked up, then maybe used later… for some vague reason.

The team did not deliver a DeX. The team did deliver a layer two solution but lets be honest if you talk to anyone that has came to the network the process has not been good. Conversely, if they use a different gateway things almost always work.

Normal folk are going to ask why are you buying coins, to lock away in DAO wallet, given all the coins you told the community they needed for proper liquidity functions. Now, you are backdooring another pool of tokens, which will be bought from existing users with fees that would have normally been used to reward Boba holders.

Average folks are going to wonder what the point of you ever stopping the buyback would be since you have been promising staking for a year, in various forms. Again, if you look at the talk folks say Boba has no utility, period and your DAO wallet has some folks seeing green candles.

However, those of us that have been at this a while and see stuff like “burning tokens have no utility or purpose” since most coins have stopped doing it, is ignoring the fact Boba still has a lot to prove. If you are locked into buying and burning it is a sort of insurance that we get staking in Q1 2022 or we keep buying and burning.

If you would have proposed a DeX with it, to be launched, and the Boba tokens bought to be used as incentive for liquidity providers, it would have seemed more appealing to me.

Currently, it just seems like that the team seen the price dropping and the realized the chart reads like $1 .00 to $2.00 was in the cards and solution was dreamed up that did not require effort beyond buying Boba and putting it a wallet that the team could influence its use, later on.

To be crystal clear, I tend to think this proposal will pass and that is fine. But I have sincere doubts about Q1 2022 and view this, no skin in the game, solution to price support and utility as weak sauce.

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Alternative suggestion, would it be possible to use some of the excess ETH funds to subsidise the gas costs for people moving from L1 and/or a buyback of Boba?

Oolongswap ser?