Add a “Minimum AADA requirement” for pool creation

Graveyard
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Governance Proposal for V2: Add a “Minimum AADA requirement” for pool creation

Description

Demand holding a minimum amount of AADA (in a wallet, staked, or deposited in a pool) as a requirement for creating a pool.

Since that amount can be put into work simultaneously, I propose that it be 2000 AADA. Looking at some numbers:

  • We have 26 tokens for borrowing and 9 as collateral: 26 * 9: 234 possible pool
  • Suppose there is, a maximum of, an average of 3 competing pools for each pair: 702 pools
  • If we demand 20% of the total AADA circulation to be held as a minimum for pool creation (To have some real utility impact for the token as a use case). We would still have 80% of the supply not used for pool creation.
  • Then we are looking at ~2.2M AADA required for all pools to be created. (And these AADA are still being used for staking)
  • 2.2M AADA / 702 = 3133 AADA per pool
  • So if a 2000 AADA requirement is implemented, and 700 pools were created, then 1.4M AADA is required. Which is a safe number.

Integrate that requirement with Pool NFT, so that when the pool is sold the AADA requirement remains valid, and redeemable by the new pool owner.

Preserve voting power for that locked AADA. (By using the pool NFT?)

Goals/Benefits

  1. Prevent pool creation spam by creating some barriers to opening a pool
  2. Create more use cases for AADA
  3. Prevent the case where everyone opens their own pool, ending with too many of them.
  4. Delegating to the security pool will incentivize the pool owners (who will be more technically capable than the average user) to look for any possible weaknesses in the protocol.
  5. And in general, it is good for the pool owners to also be investors in the project.
  6. Increase the value of Pool NFTs (Since now they hold locked AADA with them).

Summary

The proposal suggests setting a minimum requirement for AADA to create a pool while preserving AADA’s utilities (staking and voting). The proposed amount for the requirement is 2000 AADA. The proposal recommends integrating this requirement with Pool NFTs so that the AADA requirement remains valid and redeemable by the new pool owner. The purpose of this proposal is to prevent pool creation spam, create more use cases for AADA, prevent an excess of pools, incentivize pool owners to look for weaknesses in the protocol, encourage pool owners to invest in the project, and increase the value of Pool NFTs.

13 Likes
2

I support this montion with the caveat that the 2000 minimum can be reviewed if there are major fluctuations to the price of AADA to the downside.

I would also be open to the idea of a basket of AADA, ADA and stables instead of just aada.

4 Likes
3

Well all fees should be reviewed at some point in accordance to price fluctuations.

2 Likes
4

I was skepitcal but I actually like the proposal.
Only remark would be to use these 2000aada to be staked in the safety module.

2 Likes
5

I am still unsure about idea. I’d like to hear team opinion.

1 Like
6

I support this motion, it makes total sense. Let’s VOTE.

3 Likes
7

I think simplicity is the best.
If we let anyone open a pool it might be a mess. Imagine a lot same token pools around and you don’t know who is bad actor or good one.
I would suggest DAO decide pool openings and people who bring LP into pools and AADA security stakers benefit instead inviduals.

2 Likes
8

Great proposal!

IMO it’s makes it more decentralized, no need to sort/delete the pools off chain. The smart contract will handle this.

It could be that 2000 Lenfi deposit will scare people away.

To prevent this:

80% will be locked and when the pool retires this will be returned.

20% will be add to the staking rewards.

9

In general, the idea sounds wonderful, and adding an extra LENFI deposit to the current ~25 ADA deposit for pool creation seems like a perfect prospect for LENFI holders who, logically, want to maximize their returns.

Things to bear in mind in all cases:
Firstly, whether pools created have that or not must be decided before mainnet launch.
Secondly, it would not be entirely a Validator thing. LENFI locked would serve as a validator, and only the poolOwnerNFT holder could unlock it (when destroying the pool). After that, we would only display pools that have the tokens locked. Technically, it’s feasible and doable.

However, there is a critical reason NOT to implement such a proposal. Here’s why:
A Pool Manager cannot close/destroy a pool without having everyone withdraw their funds first. Suppose someone deposits 50, 100, or even 1000 LENFI to open a pool. A LENFI holder could leave as little as 0.00001 ADA in the pool, which would lock the deposited LENFI forever. Of course, that would benefit LENFI holders, but would that benefit the Pool Manager?
The possible solution in this case is the protocol to allow the Pool Manager to “close” the pool without waiting for everyone to withdraw/repay. However, this can only happen if all pools are permissioned, and PM NFTs are in the team’s custody. The idea itself is ridiculous, as it poses a huge centralization risk.

The common expectation is that the platform will have thousands of pools. However, that’s not the case, as it’s easier to filter on the API side than on the validator one. Ultimately, it wouldn’t matter if someone creates 500 pools since every pool is a protocol itself, and such an act cannot harm the platform in any way possible.

7 Likes
13

Maybe first review the total amount