Turning off the GHST Bonding Curve

Ideas
22

now imagine if you could make an awesome return on investment on that FUN $100 game. that’s what we are trying to do here with the Gotchiverse.

23

My main concern with removing the curve is that it goes against what GHST was created for in the first place. A few things to consider:

  • What does removing the curve and inviting massive speculation do to a governance token when we know Pixelcraft Studios will be making more DAO built titles in the future?
  • Some people have been pointing out that it has been proven that funding is not an issue, so why tap into the curve’s assets to add to the funding?
  • The future of NFTs and crypto in general, to succeed amongst government regulation and mass adoption, is stability to an extent. Remember, your wife doesn’t want you to speculate your life savings away and the Genzler wants to protect us.
  • Removing the curve increases speculation, which speculatoooors are not our target audience.
  • I got involved with buying Aavegotchi NFT assets because of the stability in value. Knowing relatively how much my assets would be worth whether in a bull market or a bear market. Going to bed sleeping well knowing my assets won’t go to zero over typical market FUD.
  • We have FUD, FOMO, ALPHA, KEK and GLTR to speculate on, we just need to bring in our target audience…gamers, which will come when more fun gameplay is developed.
  • How many other tokens will the Aavegotchi ecosystem bring to us to speculate on when PC is on their 2nd, 3rd or 4th game? GHST should remain a badass, consistent, semi-stable, governance token while the rest of the ecosystem grows and provides opportunities to moon.

wen kek lambo?

looking forward to more conversation!

8 Likes
24

The idea, to have a public tradable asset, with high volatility and therefore huge upside potential, is actually a very good idea. Currently i would say we have GLTR, but this is different, its not like an aavegotchi Stock if you will.

GHST on the other hand kind of is, but i just think its dangerous and perhaps a shame to ‘sacrifice’ the amazing mechanism we have right now that protects us as asset holders during bear markets for example.

Its just an idea, but maybe we need some other token for this, which serves like an aavegotchi stock, maybe this will also be another layer of complication but i think it would make sense: GHST (with bonding curve) → for buying Gotchi Assets. Gotchi stonks (without Curve) → for betting on the success of aavegotchi.

4 Likes
25

Really well thought out write up.

Agree that speculation as a means of getting fresh capital in the space makes a lot of sense.

I know PC has done an incredible job flushing out the farming part of the gotchiverse, but do wonder if it’d be a good idea to at least get the RPG/playable aspect of the game up before turning off the bonding curve, particularly in a bear market.

It’s a tricky balance of wanting to get more people in the community and avoiding an increasing concentration of digital assets and making it more enticing to speculators but also retaining enough people to want to stay in the space long term.

All that being said, it’s hard to argue against any of the points you raise and while I agree that the alchemica/GLTR tokens do have more speculative interest, everything revolves around GHST. It’s going to be the gateway to getting people on board.

2 Likes
26

How would DAI actually be removed from the bonding curve, would the DAO be burning the treasury or does the DAO have the ability to drain DAI from the curve without burning GHST?

In essence, this idea would cap the current GHST supply and free up 20 million+ DAI. That DAI would be used gradually to pump GHST and presumably to buy other ecosystem tokens to prevent total exodus into GHST. The objective would be to entice new buyers to enter the ecosystem under the belief that GHST and its NFTs will outperform the market, knowing that the DAO will serve as an obligate buyer. In practice the DAO would need to absorb sell pressure from people offloading their tokens into a continual stream of liquidity, with the DAO presumably hoping to push the price of Aavegotchi assets significantly higher once sellers are exhausted.

Will the DAO have price targets? Will it try to achieve a certain dollar value for GHST and adjust accordingly if that level is exceeded or proves too difficult to hold? Similar for NFT floors? How will these price backstops be determined and implemented? Or is the idea to just pump certain assets initially, pledge to occasionally buy more pending review, and let nature take its course?

I have more thoughts on the future of GHST, but I’ll start with these logistical questions about how this idea would be implemented and the metrics the DAO would be using.

5 Likes
27

If the price of GHST is rising because of the buying and burning of GHST with DAI. I would expect GHST to drop aggressively, probably not to 0, when we exhaust the DAI.

I see buybacks and burns as a short-term strategy to increase the price of GHST. This will not give lasting value to the GHST token.

7 Likes
28
  • What does removing the curve and inviting massive speculation do to a governance token when we know Pixelcraft Studios will be making more DAO built titles in the future?

I think you’re confusing Pixelcraft equity with AavegotchiDAO & the purpose of $GHST here. $GHST is a governance token for the Aavegotchi protocol. Any subsequent game titles should use a separate gov token. I would imagine PC would follow this route in the future, hopefully.

  • Some people have been pointing out that it has been proven that funding is not an issue, so why tap into the curve’s assets to add to the funding?

I don’t think the main intention is to use all that $DAI for funding. The primary purposes of unlocking that $28mn DAI for the DAO would probably be to diversify the treasury, capture yield with interest, and more generally secure a large coffer. At SOME point it will make a lot of sense to stop the Curve; that’s a ton of DAI to put to work imo.

  • The future of NFTs and crypto in general, to succeed amongst government regulation and mass adoption, is stability to an extent. Remember, your wife doesn’t want you to speculate your life savings away and the Genzler wants to protect us.

I don’t think we should use the threat of regulation and fear of free markets dictate our decision, moot point here tbh.

  • I got involved with buying Aavegotchi NFT assets because of the stability in value. Knowing relatively how much my assets would be worth whether in a bull market or a bear market. Going to bed sleeping well knowing my assets won’t go to zero over typical market FUD.

I’d argue the curve hasn’t protected against downside risk as much as it is praised for. Sure it is EXCELLENT collateral, the curve really slows down price movement during volatile periods. But relatively speaking we are still down -55%, and aavegotchi NFTs have collapsed in listing and underlying prices with it. Causal or not, there isn’t enough evidence for me to say that the Curve is protecting NFT prices.

Regarding alchemica, yea I can level with that. That’s where the primary speculation will be on and rightfully so, you’d be betting on the main inputs that make up a successful game. It will be good for the game-investor type, but not for someone who maybe just wants to take passive options that still support the ecosystem.

2 Likes
29

I think it is probable, that with our 5 new trading-pairs we are in the process of creating something that – a few years down the line - can be viable as (first an addition, then) a substitution to the curve.
you moon the GHST? Allright, I sell it to buy Alch to build.
You dump my beloved GHST? Allright, I buy it with my Alch to buy even more assets.
When the Alchemica-economy will have matured, it might very well be, that we ourselves will become the bonding-curve.

The millions of DAI will be – gradually - transformed into Alchemica/GHST-LPs. Alchemica pools on the GAX will be holding many millions.
GHST will have not one peg, but four of them: four „ethereal commodities“ as fluid-dynamic pillars of stability flowing through a plethora of Dapps and Games of which the Gotchiverse is one.

Is it unimaginable that by this mechanism GHST will become even more stable?
That the „GHST is a stable-coin“-meme becomes reality?
A radically new stability-system and matchless USP and thus alluring attractor for investors.

In relation to GLTR though, GHST will always be a „stable-coin“. I view GLTR/GHST as a volatility-index.
When GLTR will become the most prominent aavegotchi-economy-token on exchanges, its highly dynamic movements will be enough of a flashing advertisement.

Only Diamonds(Gotchis) and GHST(s) are forever.

5 Likes
30

yea this is something I would be wary of. Having a finite supply means that running a burn program would probably be unsustainable, but who says we have to spend the capital?

I know currently PC is buying about 50k? worth of GHST off the market every month with bonding curve proceeds. We probably wouldn’t be able to match that amount with interest fully on an annual basis, but we could easily park 15mn $DAI into AAVE, capture 1% interest a year, and use that 150k to do buy-backs and w/o a curve it could have a similar market impact, despite a lesser rate?

Just thinking out loud here. It’s not like all that capital would just be washed down the drain for unsustainable buy-backs.

1 Like
31

Good points fren.

I definitely agree that with time we will get to that point where arb opportunities between alchemica & ghst will create healthy trade-offs to make the whole lot more sustainable in a way. The only thing missing is the people for that puzzle piece to be solved.

Bullish that game development will get us there with time, but I think this conversation boils down to this:

Whats the best way to get new investors, players, and ecosystem participants in the game?

Do we need to make the ecosystem more attractive with our small-mid cap token by removing the curve and opening it up to speculation? Or do we just hang tight and bet on alchemica tokens drawing in the herd. What’s a good mix of all this for degens, conservative investors, and web3 game players alike?

5 Likes
32

I don’t think having speculative traders really matters one way or the other, apart from likely making more noise and being more annoying in discord… but if that chat can be shuffled to an appropriate area then it’s not really that much of a problem. Also, ‘speculative traders’ can also be builders, gamers and grow to have an interest in the project itself. It’s not always an either/or type thing.

1 Like
33

I think some issues with that are :

  1. We allready have the most complicated ecosystems around, adding another asset would make it more complicated.
  2. People allready see GHST = Aavegotchi. When they scroll through Coingecko it’s Aavegotchi (GHST) , that’s very tough to change.

As far as hoping the other tokens (e.g. GLTR) have volatility to attract attention and speculation… it’s possible, but they have such small mkt caps, and again, it’s confusing enough for new entrants they might just put it in the too hard basket and find something else to speculate on.

4 Likes
34

choices in this scenario:

  1. have one more complication on top of our ecosystem (of the 200 already existing ones)
  2. expose gotchi asset holders to bigger risk of volatility and therefore create a less safer investment environment

not that hard of a decision imo. seems like rationality would go for 2

Reply to: @aaron555

4 Likes
35

Should the GHST Bonding Curve be removed?

  • Yes
  • No

0 voters

1 Like
36

Thoughts on keeping the bonding curve but swapping the DAI for ETH and redenominating the mint and burn price in wei?

2 Likes
37

Interesting thought. If we are to keep the Curve I’d like it to stay with $DAI, but that’s a good point for treasury diversification, like do we really want all DAI in our stockpiles alongside GHST?

I am a proponent of using DAO funds to spin up an Ethereum validator or validator(s) for example. It’s less risk averse but could serve a good function in the gotchiverse/part of our treasury. I think that the fees that would accumulate with time could be put to good use in the gotchiverse, like awarding ppl with some ETH for completing tough quests, very rare/hard-to-find drops, etc.

38

Maybe we should put out the call for an in depth analysis of stable coins and balancing technologies. We should educate ourselves on this topic to the max, before engaging in this discussion seriously.

3 Likes
39

Thanks @Moon for opening discussion. I support turning off the bonding curve for a myriad of reasons if we have a very solid, data driven plan and the DAO infrastructure to manage the funds. My bullet point reasons for turning the curve off revolve around aligning incentives, capital efficiency and allowing for our protocol to more efficiently generate revenue:

  • Align incentives- The Aavegotchi ecosystem boasts 7+ different asset classes (GHST, gotchis, wearables, land, installations, alchemica, GLTR, labor economy) which often results in a fragmented community. The community is not unified around GHST which is problematic given Pixelcraft’s significant exposure to the token and that it is our core fungible asset.
    • Rarity Farmers are paid in GHST. If GHST is valuable, they get paid more in USD. This makes gotchis and wearables more valuable, will drive demand, and will afford discussions about additional haunts and wearables. Assuming FRENS are eliminated, further haunts and wearables can be performed in GHST auctions which drive revenue into the ecosystem through the GHST token which is paid to rarity farmers. We must align incentives to drive revenue in NFT sales which the DAO is needed to permit
    • Alchemica price will be supported by a strong GHST token as all pairs are in GHST. The same will be true for GLTR. This virtuous cycle will hopefully further incentivize GHST-alchemica and GLTR liquidity pools, further driving scarcity of the GHST token and supporting all fungible Aavegotchi tokens. Strong alchemica means strong land prices which will hopefully mean demand for land and additional sales of land which are required to generate revenue.
  • Capital efficiency – We currently use $28M in capital to reduce token volatility. While it certainly has value, it’s an extraordinarily high expense for a new project. The Bonding Curve achieved an incredible feat by raising ~30M in capital in a decentralized manner. Let’s use those funds to support Pixelcraft, solidify tokenomics, and develop the infrastructure we need for parabolic growth in users.
  • Game development- Pixelcraft has significant exposure to the GHST token. While the Aavegotchi protocol will hopefully not be 100% dependent on Pixelcraft’s Gotchiverse, it is certainly the flagship product. By rallying the economy around GHST and allowing for token upside, we significantly increase Pixelcraft’s funding options. The token will be more attractive to VCs, will have the opportunity for parabolic price movement, and will solidify PC’s position as the largest GHST holder.
  • DAI is potentially problematic for a variety of reasons outside this lengthy post. Moving away from the bonding curve will allow us to use other tokens (GHO) or at least spread out risk.

Below, I’ve laid out a brief outline of the many factors which need to be addressed to continue discussion:

  • Pixelcraft and game development – How to secure funding for Pixelcraft. We should probably set aside Bonding Curve DAI for PC or offer to buy more GHST with DAI to lengthen the development runway and, hopefully, promote efficient game development.
  • Asset holders
    • Rarity farming for gotchi/wearable owners – How to fund further RF seasons
    • Liquidity and gotchiverse incentives for land owners- Define liquidity goals and monitor ecosystem expenses (incurred by impermanent loss by LPing and through LM reward)
  • Liquidity
    • LM incentives – Losing the curve means losing the biggest source of liquidity. We will need to ensure adequate incentivization of liquidity prior and after any changes
  • Exchanges and decentralized protocol relationships
    • Binance, Kraken, Aave – Communications with those orgs/protocols about the change
  • DAO GHST and Full balance sheet – Should be fully updated and publicized to inform further discussion
  • GHST Token Support
    • Buybacks- How would GHST buybacks work? Can this be trustless? Over what time period? How much?
    • Volatility- Beyond scheduled buybacks, is there any appetite for further support of downside price action?
  • DAO Infrastructure
    • Multi-sig- What account is going to manage the ~28M DAI, the buyback contracts, etc?
    • Legal entity – Does this need to be formed first? By whom and when?
    • Pixelcraft legal feedback- 28M is a big number and we should ensure Pixelcraft’s legal safety and work within their advised legal parameters
  • Timeline- It’s a long timeline given the amount of work that needs to be done

Roy Dalio posits economies only need two things to be successful:

  • Its participants to treat each other nicely
  • Revenues to be greater than expenses

Let’s solidify our community as the frenliest in crypto by aligning incentives and let’s set ourselves up to increase revenue through optimizing GHST, our tokenomics, and our bonding curve war chest.

9 Likes
40

Call me a purist but I will say it even if I am amazed that I have to say it first: The curve is forevaaar!

When I joined this project I thought it was the best invention since sliced bread and I still consider the curve as one of the technological pillars of aavegotchi innovation. We have the author of the diamond standard as a founder and I like to think even our token is next-gen (not to mention vitalik-approved). To me it is part of the lore of aavegotchi and I wouldn’t change it. I know this is not a financial argument relative to the actual discussion and I know that I am not as knowledgeable in tokenomics as some members of this community, but I think this project is part of the NFT world and that poetic esthetic do have its value in addition to the defi aspect.

We just added five new unbounded tokens to our ecosystem that speculatooors can pump and dump all they want and I hope some of them moon since it’s also part of the fun, but to me GHST is a defi stablecoin and I bought into it knowing it was bounded by a curve.

GHST market cap is still low compared to its competitors, it could easily 10x even with the curve but for that we’d need new users. GHST growth should come from adoption more than speculation, this is why the gotchiverse has to be a success otherwise I feel it will just be a bubble anyway and leave assets holders holding the bag

15 Likes
41

There’s a lot to unpack in this post (and the proposal in general), so I’ll start by asking some follow-up questions:

If GHST went to $10 after turning off the curve, would the Rarity Farming prize pool be adjusted to maintain the original USD value (roughly 1.5-2M USD), or would it continue to be valued in GHST? (Meaning now it’s 15M USD worth of prizes)

How does a strong GHST price support Alchemica prices? Just because they’re paired with GHST doesn’t mean that the Alchemica would follow GHST as it goes up/down. It just means that IL would be larger if GHST is going up and Alchemica is going down (or vice versa). Remember when QUICK mooned from $1 to $1500? Those LPing GHST-QUICK got rekt in QUICK terms (although they gained in USD terms).

The main purpose of the lower volatility is to help make GHST a unit of account for the entire ecosystem and its assets, so we don’t have to rely on stablecoins, ETH, or BTC. It’s hard to make something a unit of account when it’s very volatile.

What would replace the unit of account for our ecosystem if GHST became very volatile?

One consideration is that NFT asset holders will likely see the GHST-denominated value of their assets go down significantly if GHST suddenly went up due to the curve being turned off. It’s possible (and maybe likely) that NFT assets would retain their value initially in GHST terms due to excitement and new money coming in, but hard to say if that would last. I think it’s more likely that in GHST terms, the NFT assets would go down. Is that a problem? Not sure. But definitely a consideration.

This would be great, although it’s worth noting that higher realized capital gains for GHST means that we would need to pay higher taxes, and thus would have to sell some GHST to pay taxes in fiat terms, potentially dampening price action to the upside. There are of course ways to avoid that, such as doing OTC deals, but it is again worth noting.

This I do agree with somewhat. DAI has a great track record, but things do change quickly in crypto, and it’s worth discussing as a community what we would do if DAI were exposed more heavily to sanctions, and for some (unlikely) reason the bonding curve contract got blacklisted, making all of our DAI useless.

All in all, we should proceed carefully, and definitely not view things too optimistically, as $28M may seem like a lot to us, but in reality isn’t a huge amount for a crypto ecosystem. It’s Justin Sun’s poker money :sweat_smile:

20 Likes