Submission Date: 11.11.2022
RFC: Blacklist FTT from EUL gauges
With the ongoing problems facing FTX and the extreme volatility and uncertainty around the FTT token, it would be prudent to blacklist FTT from the Euler Gauges and ideally block current epoch emissions.
The FTT token is for all intents and purposes a dead coin. It poses more risks than benefits to Euler. FTX international is currently discussing options with entities regarding funding and potential bankruptcy. They are under investigation by the SEC. Euler is currently rewarding EUL tokens to users who borrow FTT. This is dangerous and could potentially lead to bad debt as liquidity will continue to disappear.
-Blacklist FTT from the gauge system, blocking it from receiving EUL tokens in the next epoch and thereafter.
-Block current emissions to the FTT market.
Ultimately I don’t believe Euler DAO should reward users to borrow the FTT asset. I would like to put this to vote as quickly as possible.
FTX has filed for chapter 11 bankruptcy
- YES - Implement the changes above
- NO - Do not implement the changes above
Link to voting here
I’m in favor of this. There’s no practical reason to continue to drive emissions toward FTT.
For what it’s worth, it might disincentivise the legions coming to Euler to short FTT when there are (to the best of my knowledge) no other money markets that enable this. Having said that, given the crisis I’d say they’d come and short FTT regardless of if they’re getting EUL or not, so I support this proposal.
The possibility of bad debt though is extremely small: FTT is an isolated asset. The risk it poses to the rest of the protocol is minimal.
I think to your point, people who want to short FTT don’t need additional incentives to do so. I’m also not worried about the bad debt - I just want to see incentives reallocated to somewhere more productive/pragmatic.
Full support to the proposal. As I have indicated in Discord I would also shorten the voting period for 2-3 days.
One minor thing, since the FTX can still be bailed out, I would add the word “temporarily” to
Blacklist FTT and a clause under which FTT should be taken out of the blacklist once/if the situation is solved and FTX continues its operations in accordance under the relevant regulation. I mean the idea here is to urgently address risks to the Euler protocol not to ban a particular asset.
PS. I do not know how much time is needed for this proposal to be implemented (in case it is approved ofc), so just in case I would like to ask the EulerLabs team to start preparation for execution before the vote is closed so not to spend additional time once/if it is approved.
Summary of discussion from discord so far:
Julian | Swivel#6740
Protocol is working as intended, why blacklist when it’s no different to any other asset
“ One argument I think people might find more interesting is that existing votes on FTT from, presumably alameda or FTX themselves, are probably locked there forever now. So it’s not real votes any more.”
There is no way to confirm this but it’s very important to take into consideration.
Due to the exceptional circumstances, this vote will as be expedited and start at 21:00 UTC tomorrow, 13th November and run for three days.
those violent delights have violent ends