Atom Wars: an alternative take

Context The purpose of this post is to follow up on the idea of Atom Wars introduced by Thyborg here . Due to its length, I thought it would be better to post this on a separate blog. The post explores the risks and limitations of the original iteration proposed and suggests a few adjustments that could improve the value proposition of Atom Wars. Disclaimer: To be clear, these are merely observations and some of them could be inaccurate/ incomplete so please take everything you read with a grain of salt and feel free to point out any statements which are incorrect. Structure: I. Risks and limitations • Stride’s stATOM instead of LSM shares • Loss of funds • Allocation duration • Purpose for the loan II. Proposed adjustments III. Conclusion Risks and limitations • Stride’s stATOM instead of LSM shares: The original post proposes selecting stATOM, Stride’s LST for $ATOM, as the only collateral to mint vATOM in order to acquire voting power and participate in ATOM Wars. Thyborg’s reasoning behind the choice is both technically and financially driven: • It allows for shipping a quicker version of ATOM Wars: LSM shares are more difficult to…

Excerpt (1195 of 14082 characters). Read the whole post on the forum ↗

@JohnMontagu Great write-up. I agree with some of your points. @jBQ is currently collating a lot of the good feedbacks we receive after publishing the original post, and we’ll get back to you after we settle on the updates. Thanks!

Thanks for this @JohnMontagu - mostly aligned with these propositions. Even if it makes everything a bit more complex to implement, I believe they should seriously be considered as they would be beneficial for ATOM and ATOM holders. JohnMontagu: However, it’s worth pointing out that this increased demand on stATOM hinges on the success of Atom Wars and one could argue that sidelining other LSTs to favour stATOM gets in the way of that success, considering that LSD providers represent the majority of the demand side ( bidders) of Atom Wars. I think this is a very good observation. JohnMontagu: → A period of 2 months might be more suitable as it allows projects to benefit from borrowed capital and gives them enough time to un-bond. I agree on this and would even dare to go further saying that the duration could be part of the proposal. For some things, even 2 months might not make a lot of sense. Renting liquidity for a year for example should be possible. Always keeping in mind it’s better to play long-term games with long term people. JohnMontagu: When protocols make their bid, they should offer up a portion of their revenue in…

Excerpt (1196 of 1465 characters). Read the whole post on the forum ↗

@JohnMontagu , many thanks for your comments and suggestions! JohnMontagu: Loss of funds: I find very intersting your mitigation schemes to reduce the risk if loss funds. They make a lot of sense. JohnMontagu: Allocation duration Yeah, we were talking about how long the allocation should last. We decided on 1 month because we think it should be longer than 21 days. But we agree that this is something we should talk about with the community. The duration of the allocation has pros and cons. Longer allocations are more valuable, but if we want to have ATOM Wars more often, we might need to shorten the duration. Two months seems like a good option to consider. JohnMontagu: Adjustment 1: Revenue sharing bids This is another good option. It simplifies things for projects, but it could complicate matters for voters because it adds uncertainty/noise to the value of the bid. In other words, many voters might struggle to determine if they’ll earn more from project A or project B. The upside is that since this is an evolving process, over time, this uncertainty may decrease. JohnMontagu: Weighed distribution instead of a…

Excerpt (1199 of 2125 characters). Read the whole post on the forum ↗

Thanks for feedback @jBQ ! A few comments: jBQ: Yeah, we were talking about how long the allocation should last. We decided on 1 month because we think it should be longer than 21 days. But we agree that this is something we should talk about with the community. The duration of the allocation has pros and cons. Longer allocations are more valuable, but if we want to have ATOM Wars more often, we might need to shorten the duration. Two months seems like a good option to consider. Agreed. Shorter allocation periods are more beneficial for Atom Wars. And when factoring in the un-bonding period a duration of 2 months seems like a good start. jBQ: This is another good option. It simplifies things for projects, but it could complicate matters for voters because it adds uncertainty/noise to the value of the bid. In other words, many voters might struggle to determine if they’ll earn more from project A or project B. The upside is that since this is an evolving process, over time, this uncertainty may decrease. That’s an interesting point to bring up. Personally, I see this ‘struggle’ as a positive thing for the following reason: While it is normal…

Excerpt (1197 of 3244 characters). Read the whole post on the forum ↗

JohnMontagu: • Loss of funds: The proposal refers to the risk of the loss of funds, which could happen when a winning project doesn’t return the borrowed capital in time/ at all, as minimal. While the loss of funds is an unlikely scenario for Tranche 1 and Tranche 2 as most projects bidding for $ATOM loans have skin in the game, it could still happen in Tranche 3. In which case, the loss is significantly reduced ( currently only 50k $ATOM which represents 5% of the proposed liquidity bucket). We are particularly aligned with the concerns you raised here. That’s the main topic we wanted to discuss with @Thyborg as this pose a critical asymmetry in the risk/reward balance. This is probably the only critic we have regarding the proposed design. The identified issue essentially mirrors an uncollateralized loan offering, where the borrower pays a modest upfront fee, yet the capital itself faces substantial financial risk contingent on the deployment. In navigating this challenge, we perceive limited maneuvering space. It boils down to either accepting that private rewards can coexist with public risk (privatized reward alongside socialized risk), or they cannot.…

Excerpt (1195 of 3236 characters). Read the whole post on the forum ↗