I think this is too early for an APY reduction. Short term prices matter so we don't risk having to dig into the treasury to prop the price back up (worst case). I think it's bad timing with markets being so fragile/uncertain at the moment and the price is susceptible to people dumping if they're unsatisfied with the APY. The only way this makes sense to me now is if we can get a big boost to the treasury that directly coincides with the APY reduction and widely distribute such news to encourage remaining 3,3
KIP-9: Protocol Maturation and APY Alignment
I made my maths, and 8,000% APY only impacts my long-term projection by USD 15. Even, I am expecting another APY reduction by April-May.
In favor of reducing APY and grant policy minor APY adjustment changes.
Way too early to initiate another reduction hot on the heels of the last one.
Free-falling never has a good end where a gradual controlled descent is a much preferred way to adjust nearly anything.
It seems to me that there are now 3 broad groups of investors in KLIMA based on their buy in price. Those that paid double figures, those that paid triple figures and those that paid four figures.
I wonder where the push and the support for this ill-conceived race to the bottom is coming from?
It would seem that those in the first group could comfortably support this KIP from a position of personal financial comfort and at the same time being able to totally disregard the affects on the financial positions of the other two groups especially those in the four figure group.
I do support a gradual planned and transparent program of adjustments going forward but not this and not now!
With how quickly we're moving, and the robust deal pipeline of integrations ahead (which will all increase shareholder dilution from more bonds) - having a lower reward rate is extremely strategic for Klima to get these up and running. The short-term volatility is just that: short-term volatility! Investors who don't spook, and are here to benefit from all the new integrations we can now sustain, will be quite pleased IMO - FOR BOTH PROPOSALS.
Fonjix2m I totally agree and reduction in APY will only hurt the project no. As we can see price is down already 97.2% which now way is good for any project. I think better way to stop this cascading sell pressure is to introduce withdrawal time limitation.
Say if SKLIMA withdraw within 4 weeks of staking 50% of reward will be slashed and may be decrease reward 10% by every 4 weeks.
something like this:
- staking time period less than 4 weeks from 26/01/2022 16:00 UTC or after 50% reward reduction
- staking time period less than 8 weeks from 26/01/2022 16:00 UTC or after 40% reward reduction
- staking time period less than 12 weeks from 26/01/2022 16:00 UTC or after 30% reward reduction
- staking time period less than 16 weeks from 26/01/2022 16:00 UTC or after 20% reward reduction
- staking time period less than 20 weeks from 26/01/2022 16:00 UTC or after 10% reward reduction
- staking time period more than 24 weeks from 26/01/2022 16:00 UTC or after 0% reward reduction
And once someone withdraw reward reduction starts all over again. Forfeited rewards should be added to treasury to make treasury even stronger.
I'm all in for healthy sustainable protocol but reducing APY will only hurt in such bearish time and it might be very hard to raise from where we are about to headed.
I believe this will be good solution to stop this sell pressure.
Cheers
AussieWayne Even when you segment by groups: it all just boils down to how quickly every1 is diluted?
I think you've seen so much downside, the upside is tough to fathom.
This proposal will actually help all three 'tiers' of investors you mentioned. This is good for protocol, good for expansion fren. Nobody should vote from a position of 'personal financial comfort'. Everybody should vote from a position of optimal play for the Protocol. This is that.
Raabz Negative reinforcement will reduce outside investment. I strongly recommend against any action that penalizes or locks in users at a penalty.
Adding extra revenue streams is certainly a benefit, but penalizing seed capital that allows Klima to facilitate the WONDER that is on-chain carbon trading... not the play.
Stopping sell pressure is an idea; but we're going to be increasing buy pressure with all of the integrations in our robust deal pipeline. Have you been following, anon?
Would recommend you vote yes here, as lowering the reward rate is EXTREMELY GOOD for the project. It will allow Klima to increase buy pressure and integrate the bonds we have lined up without unnecessarily diluting shareholders, or reducing runway.
If you want to propose this lock penalty, hop over to general and start a Request For Comment, or discuss it in #policy-forum. I think you'll hear similar objections.
Kind of wish there was a poll option that is voting in favor, but delayed by a few weeks. Voting against doesn't mean the proposal is a bad idea (it's excellent and necessary in my opinion), just would be more in favor if pushed back to some time in February.
Too speedy,,,
Steady is answer
How much will the runway increase if this is voted for?
Car54
This argument just continues dilution - higher APY will achieve no tangible benefit. Just a quicker distribution of the total pie.
This proposal increases the total pie.
Don't look backwards: look forwards!
This is really the preparation step for more bonds in our treasury, and more market influence. We lower APY now, reduce protocol obligation, and then ramp up integrations. Klima, and therefore all Klima holders, get new assets at CHEAPER discounts.
- Edited
Most new buyers are not going to buy a token such as Klima with such a steep price drop. The current dilution is the biggest factor in that price drop. A reduced APY to 8000% will make our price chart look less terrifying which will allow our narrative to actually find us new buyers and DAO partners. This will benefit the DAO. Let’s not forget that before Ohm, a really good APY was 50-100%.
optima Well there's the data-driven rationale which you've provided in this post and then there's the practicality of what this proposal means. You've gotta keep in mind it wasn't that long ago that APY was lowered, and so this additional APY easing (while within the larger plan) would seem, on the surface, to be somewhat of a desperation move.
Double so that the price has plummeted. Basically, without factoring what makes sense "on paper", the current status is one that may frighten the hell out of people that have "lost" 50-70% of their initial investment.
The plan may make perfect sense, but moving too fast too soon may also see further negative pressure.
About the only thing that would give full confidence in moving up the APY% cut would be an announcement of new partnerships -- there may indeed be folks or organizations ready to be announced, but I think there would be more comfort if there was more clarity on impending investment ahead of a rate change.
Honestly you cannot be considering further hurting early adopters to the project. Not only did we lost 80%+ of the token value and now you want to reduce the APY further? Not a good show of respect and appreciation for the current holders. Please keep the current APY until end of Q2 at the very least.
My thinking around this is based around numbers.
A month ago, the DAO had an average daily rewards issuance of ca 11k KLIMA. Currently, we are at ca 20k and keeping the current APY for another month, we will be at ca 32k.
A month ago, the average bonding price (across BCT and the two LPs) was ca 40, today we are at 17. The bond price has narrowed as Klima in $ was 4x where it is today and BCT is pretty much flat.
Using these, we can use the DAO PnL accounting to figure out how much KLIMA it will need to mint in order to sustain these levels. For all of you non-crypto people (like me), think of the rebases as the main "cost" item of the DAO.
A month ago, we needed ca $60k daily inflow to sustain the 11k KLIMA rebase rewards. Today we need $111k to support the 20k. All else equal (avg bonding price stays at 17), we would need $178k in a month to sustain the 32k needed. If bond price falls to 10, we'd need $187k, if it goes back to 40, we'd need $171k. If you take the calculation 2 months ahead when the DAO would need 50k KLIMA daily for rebase rewards, at current BCT prices, we'd need demand for $278k instead of $111, or 2.5x increase. At the proposed 8,000% APY, if they started today, we'd be at 41k rebase reward needed.
In case you are wondering why the range, it varies as the DAO issues a lower number of KLIMA, the higher the bonding discount is, meaning also the 10% DAO cut is nominally lower (it is all denominated in KLIMA). Given 1 KLIMA = 1 BCT for the purposes of the DAO calc, you need to add a lower number of KLIMA on top of the rebase need in order to figure out the number of BCT needed. The opposite dynamic happens when the bonding price goes down. Please also bear in mind that all the calcs above show just the money needed to support rebases, ie if we get here, the backing ratio will be 1x compared to the current 5.4x.
For example, yesterday the DAO managed to attract ca $640k, meaning this would have been enough to support 50k rebases in two months at the cost of decreased backing ratio of 1.7x. All else equal, at 41k rebases, the backing ratio would be 2x.
So my thoughts are: can the DAO wait 2 months - I believe yes, even longer IF the current activity continues, which is obviously a big IF. I can be wrong, but it looks to me like the policy team is trying to adjust the APY to be more towards the middle of the 2-30k range (as shown on the roadmap picture). One question is why this is done at 1.7mn KLIMA issued when the range is 1-10mn so we are toward the beginning. Maybe so that we can stay in this phase for longer. These are all trade offs. The timing does seem optically bad given the price action so it depends on the holding period. I hope to stay in Klima much longer than a few months so the additional 2 months at 28k would be nice, but not so detrimental longer-term.
Obviously, for the DAO to reach its desired goals, it has to survive and managing the cost side is important for stability and sustainability. For me, much more important is to work on the revenue side where the DAO needs to make a LOT of progress this year.
Anyway, just my 2 cents.
- Edited
Impermanent Loss (IL) from Klima’s liquidity providing increases as the price ratio of Klima/BCT (Klima per BCT price) or Klima/Usdc drops. In order to reduce our treasury’s IL, we need to hold a steady $KLIMA price as soon as possible. The reduction to 8000% APY will hold up our treasury’s liquidity value during the next couple of months where crypto and therefore KLIMA demand is expected to be low.
You guys are giving Klima the final headshot with this early reduction. Seems you are missing the point here how it all should work, this is going way to fast, with this pace you will have even less apy then OHM. You are just ripping all your investors a new one. Price is tanking for only 1 reasons and that's because the policy sucks. No one will invest in Klima with the apy going down like a rocket. There are only sellers and terrible low volume because no new people are getting in.
completely for reduce apy
- Edited
Rene A few answers to your point. The first is our comparison with olympus, bear in mind that our backing asset is not a stable coin but an asset expected to appreciate and so Olympus needs to bring in less revenue than klima to mint new tokens. The flip side of this is that by driving up offsets prices through bonding we naturally increase treasury value as our backing asset appreciates. A robust treasury is what indicates the value of a protocol not the APY. The second point is related to your statement on why price is tanking. This has been answered hundreds of times by now in the discord but a quick summary is 1)inflated starting price not matched by treasury due to hype around launch 2) liquidation cascades by leverage 3)general bearish sentiment in the market in the last month (Olympus itself has fallen 70% in the last month). These are parts of the volatile space that we find ourselves in. As for no new people getting in that is something that is a main focus of the klima team. We have many participants in Klima who have never been in defi before which goes to show this protocol is attractive but we have to make it easier for retail people to join the space which is no easy task.