I just want out and I know a bunch of us do. It’s a bad look to make people take a 20% haircut because the protocol they invested/locked liquidity for went belly up but that looks like what it needs to be based on the voting so far. Can we please just do 20% and let us all pull our liquidity before VST basically becomes valueless. THANKS
Summary
Implement Curve VST/FRAX Gauge ragequit function with a 20% fee.
Background and Motivation
In recent weeks, our community has actively engaged in discussions and voting regarding implementing a ragequit function for the VST/FRAX pool’s FXS Gauge on Arbitrum. Two previous proposals, featuring a 0% fee and a 7% fee respectively, were put forward but did not align with the community’s expectations and precedents set in similar scenarios. Recognizing this, several community members have approached the Frax core team, advocating for a new proposal that aligns with the routine fee structure observed in comparable cases. This has led to the suggestion of implementing a 20% ragequit fee, a rate that mirrors the standard fee applied in analogous situations within our ecosystem (e.g. Saddle L2D4 Gauge).
Implement Curve VST/FRAX Gauge ragequit function with a 20% fee.
Background and Motivation
In recent weeks, our community has actively engaged in discussions and voting regarding implementing a ragequit function for the VST/FRAX pool’s FXS Gauge on Arbitrum. Two previous proposals, featuring a 0% fee and a 7% fee respectively, were put forward but did not align with the community’s expectations and precedents set in similar scenarios. Recognizing this, several community members have approached the Frax core team, advocating for a new proposal that aligns with the routine fee structure observed in comparable cases. This has led to the suggestion of implementing a 20% ragequit fee, a rate that mirrors the standard fee applied in analogous situations within our ecosystem (e.g. Saddle L2D4 Gauge).
The protocol is unwinding because of a dispute between founders and I guess because it was having trouble finding a PMF. VST is minted by people borrowing against collateral assets which has already ceased.
If you read the sunsetting plan linked above which has already gone into action (as of Oct 17th 2023 i believe) anyone will be able to liquidate any remaining positions still open starting in july 2024 with the liquidator taking a 2% fee… From there in July this jumps to a 5% fee and then 10% for any remaining positions in September.
So you could argue maybe that VST does not become useless until that 10% penalty takes place but in reality there will probably be almost no need for VST once the 2 or 5% liquidations start taking place and letting LP’s out while there is definitely still value to VST would be the “right” thing to do.
I think in short if you really read the sunsetting proposal with an unbiased mind you can see that VST is ceasing to have any reason to exist and at this point anyone voting against letting the liquidity leave is just holding LP’s (that expected a decent APR for their long multi year lockup provided by Tetranodes FXS voting weight) hostage.
In any case, we aren’t even asking for any special treatment anymore so please just let us out. The long term vision oriented move would have been to let us go for less of a penalty given the circumstances but that didn’t happen so I doubt any of us will end up locking into another frax LP given the experience we’re going through right now. So be it.
This is an extra layer of disappointing for myself personally because I hold a significant investement in FXS and believe in the project but the way this particular issue is being handled is abusive to the locked LP’s involved.
Hence, enjoy the 20% haircut we are giving up because the project we supported failed and lets take this to a vote already while VST does still have some value.
The fact is that VST will become valueless at some point in the next year… We could argue all day about exactly when that point is but the fact is a bunch of us are locked for well beyond next year and we need to get out at some point before VST looses all value
I hope we can all agree a stablecoin that is collateralized by literally nothing is valueless…
Links me to a proposal that says 10% fee on the remaining balance after repayment (aka not the total debt amount) and then again tells me vst is worthless.
If there’s VST left in the pool then it can be used as liquidity for frax as someone can swap to vst and redeem from a vault.
Look, I’m already voted on snapshot to do this 20% fee. But it feels like you think all these positions will be closed magically and a bunch of worthless vst will be left over. This is not the case as you NEED vst to close a position/redeem .
Thus if ALL positions are redeemed then the pool will have 0 vst left in it and there will be 0 vst supply thus the LP tokens will be comprised completely of FRAX. Thus you are not left with worthless tokens as they wouldn’t exist. And if you do have vst left over it means there’s still some collateral left over which you can redeem
So you’re right, it would probably end up a purely Frax pool by the end of the year as people liquidate the vaults. In the end this would result in Frax liquidity that is sitting around not helping anyone because eventually VST is pointless. Either way it’s a raw deal for the LP’s that locked expecting a halfway decent APR for providing liquidity, not for the project to shut down and the APR to plumet.