GNS as trade collateral, and introduction of GNS vault

General Brainstorm
1

Hey guys.

I wanted to bring up a topic discussed many times before from our members on TG, regarding a GNS vault. But now with BB&B active :sunglasses:

Main reason: Having to sell GNS to use gTrade if not holding USDC/DAI or ETH, we should be able to trade without sell pressure to token, & achieve a discount for holding & using GNS.

Now that BB&B allows us to hold our GNS tokens, I think this makes sense more than before as there are a lot of idle GNS tokens that can be used.

BB&B still carries on as normal, but now vault fees can go towards GNS meaning extra yield. Fee discount can be applied for trading in GNS, in addition to the intrinsic discount they earn just through fee % + burn %.

Potential Benefits:

  • Removes sell pressure for those selling GNS for collateral to trade
  • Those seeking a yield for tax purposes instead of capital gains
  • Potential lock system (Optional for extra yield?)
  • BB&B still functions as normal, those staking is purely extra yield now.
  • Discount for GNS holders, mimics BNB’s great use case of this.
  • We get to keep BB&B for good, and yield comes from the GNS vault.

Cons:

  • Maybe in a high win environment, GNS gets minted a lot, and people sell, which creates less protection for regular USDC/DAI/ETH vaults? Not sure if this would be true though.
  • It would be ideal to have the trade losses act as overcollateral to prevent minting of GNS, but not sure how this would work?

Just to clarify, gGNS is not needed in this, for those worried about tax implications of trading GNS for gGNS making it a sale event.

Please feel free to adds some cons if I am missing any.

I think trading with GNS as collateral has strong argument for it, and that the real pro/con discussion would be whether to make a vault, or have no vault and just allow trading with GNS directly.

Unless I am misunderstanding, if we had no vault & allowed trading with GNS, then mints would happen often, ideally much less than burns. But this may still confuse investors seeings tokens get minted. Investors will likely be more comfortable with strong protection against minting.

Is there a way to have PNL losses in GNS overcollateralize the GNS vault? And prevent minting on losses until that overcollat is gone?

One radical idea I can think of to further incentivize lock system is through PNL loss benefits:

We have fees paid for trades, and PNL losses. Stakers only earn via fees. But what if in a GNS vault, by locking for 3/6/12 months, you get a percentage of PNL losses providing it is negative, + a small bonus in fees to prevent earning no benefit if the PNL was positive over that time period. Should the PNL be positive, than no PNL benefit will be given, however the risk/reward could be massive if there are big PNL losses and not many people lock up their GNS.

2 Likes
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This is an issue that’s come up from time to time and it’s likely more nuanced than we think. Adding to your cons list, what if traders sell their GNS profits for another asset? This introduces an issue of reducing the strength of the long-term backstop even if we’re in a low win-rate environment. I think that adding utility to the coin by providing fee discounts on trades with other collaterals, for example, could bring a unique incentive to holding and/or staking the token. We have a good thing going for us currently with the BB&B model we’ve adopted, I think venturing into uncharted territory like this could be to our detriment.

Great post, would love to hear others’ opinions on this as well.

1 Like
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You can straight mint/burn without a gVault, so the fee that normally goes to the vault can be used as a discount in trading fees to make it more attractive to trade using GNS. You could also use a portion of that fee to discount, and a portion to burn, which may help offset potential positive P/L.

1 Like
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I like this idea, we’ve all done it (sell gns for collat to trade with) so why not cut out the middle man.

I still think a gGNS vault would be a good implementation, OC is essentially burnt anyway and undercollat would obviously still result in GNS minting but there’s probably implications regarding the max supply minting per year parameter if GNS is minted and burn directly.

I’d also be for a gGNS vault acting as all other vaults (maybe less fees on it to incentivise people using it to trade over other collats). It’s been a proven winner and I don’t think there’s need to complicate the design for a GNS vault compared to the others. Also would result in more utility for GNS (stake for fees) and lock up more supply within the vaults, which Kaldes will tell us is good for token price.

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I’m interested in your idea, after that it’s still complicated you should talk to the devs about it