[Signal Request] Increase the `bump` / `ttl` parameters of FLAP auctions

Hi Everyone,

bump

Now that the protocol is bringing in over 250k DAI per day I wanted to open discussion/action on whether we should increase the lots (bump) of FLAP auctions. Once the surplus buffer threshold is reached, we would have a new FLAP auction more than every hour at current rates (not to mention what incomes may be in 2 months). This means that the FLAP auctions would likely be less efficient due to gas costs and slippage.

Pros

  • Less auctions allows for more competitive auctions as there are less to participate in.
  • Less gas wasted on numerous auctions

Cons

  • Increased lots will price out smaller MKR holders
  • Increased risk/losses if no one bids or bids too low.

What should the `bump` parameter be set to for FLAP auctions?

Please vote for all options you would accept.
  • 10k (No Change)
  • 20k (+10k)
  • 30k (+20k)
  • 50k (+40k)
  • 100k (+90k)
  • Abstain

0 voters

Next Steps
This signal request will run until 2021-03-18T04:00:00Z. If a result other than “No Change” gains a majority I will create an on-chain poll to vote on March 22nd, 2021.

ttl

With increased risk of losses in larger lots, should we also increase the ttl of FLAP auctions for more time to participate? Would love to hear from @Risk on whether this is advisable. I will create a poll for this below but it would also be great to get a recommendation from mandated actors.

Pros

  • More time for auction participants to accrue funds to participate

Cons

  • Chance of less efficient auctions due to uncertainty of MKR price for auction participants

What should the `ttl` for FLAP auctions be?

  • 60 minutes (No Change)
  • 90 minutes
  • 120 minutes
  • 180 minutes
  • Abstain

0 voters

Next Steps

This signal request will run until 2021-03-18T04:00:00Z. If a result other than “No Change” gains a majority I will create an on-chain poll to vote on March 22nd, 2021.

6 Likes

voted for 20k on the bump - with the current gas prices it makes sense to make the piece of the cake a bit bigger.

wouldn’t touch ttl as it also increasing the time the keeper has to commit. if this is longer, price fluctuations are going to hit the keeper harder

3 Likes

Hey guys, sorry I redid the polls and added a bit more granularity before too many people voted. Please redo if you can. Thanks!

@SebVentures @prose11 @hexonaut @ultraschuppi

3 Likes

My personal 2 cents on this is that an increase of the bump to 20k or maybe even 30k would cause no problems at all and in fact would be a very good idea. There are only a handful of regular flap keepers and all of them currently have enough MKR to do 2 or 3 auctions simultaneously. Yet as you say - it would greatly reduce gas wastage, saving between 3 and 5 transactions per auction depending on the keeper and their exact strategy. This slippage was one of the factors behind the original 2% beg being an insufficient incentive and kicked off our recent discussions around raising it to 4%.
I definitely wouldn’t go as high as 50k, however, because a) at that point capital DOES start to become a constraint for some and b) pools such as MKR-ETH on Uniswap (which is where most keepers currently hedge) are just not that liquid yet, and if you tried to trade that sort of size there currently you would end up giving back MORE slippage through market impact than you saved from the reduced gas costs.

4 Likes

Raising the ttl on the other hand, I personally would say is very inadvisable. At 60 mins it’s already a bit too high given the recent volatility and disincentivises keepers from taking on asymmetric risk for that long - knowing that if the mkt goes a few % against them they lose money, but if it goes a few % the other way they will likely simply get dimed by another bot who did not have to deal with the costs of kicking the auction. Clearly this is not ideal given that the whole rationale behind raising the beg recently was to increase keeper participation and reduce the risk of the 0 bids we had increasingly been seeing. But for sure there is a tradeoff here, which is what doopson and I have been wrestling back and forth over - namely that if the ttl is TOO short then that too is counterproductive as it gives the 0 bids a BETTER chance of winning again before anyone spots them. So in the end we kind of agreed that the current combination of 60 mins and 4% was probably the optimal way of balancing these 2 risks. In my opinion though any further increase to the ttl would also require a corresponding increase of the beg to keep the attractiveness to keepers unchanged.

4 Likes

This signal request will be closing tomorrow and an increase of 10k to 20k is currently in the lead with no change to ttl.

3 Likes

These polls have now closed with “20k (+10k)” and “No Change” winning the majority. Therefore an on-chain poll will go live on Monday to increase the bump by 10k to 20k. Thank you all for participating and hope to see you on-chain!

1 Like