On the back of Balancer’s liquidity mining program, lately there have been a number of issues such as a lack of incentives to hold BAL after farming, uneven reward factors based on risk/reward profiles, and a slowdown in trading volume. With LPs competing for a scarce weekly resource of 145,000 BAL per week, naturally we are seeing attempts at gaming of the system to maximize farming ROI. To mitigate the issues at hand, over the weekend the Balancer community proposed and pushed through 3 proposals.
As mentioned by Placeholder in its recent thesis, the expectation long term is for a BAL to find a recurring model for value capture in order to capitalize the network sustainably over time. Not without it’s growing pains, the community is slowly taking form and shaping the direction of the protocol.
What to expect going forward: Greater incentives for holders to provision BAL liquidity instead of dumping, incentives also driving increased liquidity provisioning to higher fee pools to align with long term sustainability, and a liquidity rotation to more useful pools that have greater trading demand. As seen in the summary cheat sheet below, the proposals are net bullish for the protocol.
With large MTA, DAI, and YFI inflow