ICCP - Trading Blackout Enhancements

[halcyon barn]

Sponsor:
@halcyon barn

Full Proposal:
https://docs.google.com/document/d/1bh48wnyD0B4snVZBCHdhjmxc-LEGqfkQgQBSuBaR6d4/edit?usp=sharing

Simple Summary

This ICCP presents a series of enhancements to the Illuvium Improvement Proposal (IIP-33 Trading Blackout) concerning trading blackout periods for council members. The proposed changes have the objective of promoting fairness, transparency, and preventing market manipulation within the Illuvium ecosystem. Additionally, these improvements seek to enable council members to actively engage in gameplay during blackout periods without significant limitations or indications to the community that such periods are occurring.

The proposed changes will be open for community feedback and discussion. Illuvium community members will have the opportunity to provide input, suggest improvements, and express their opinions on the implementation of the enhanced trading blackout framework.

[final socket]

I fully support the 2 first points but the 500$ limit feels wrong to me.

If i understand correctly, just taking the first 2 points scenarios as examples, i cant delist my items as per point 1 but i can for under 500$ according to point 3, is that correct?

If something is under a blackout period for me, point 2 says that when the info becomes public the blackout period would only be lifted 30mins afterwards. But now i could take advantage of it still as long as its not surpassing 500$?

Not only it feels wrong in this sense to me but i dont think $ amount is the way to frame this. Some single illuvials might be worth more than the given limit and that would be wrong and then trading 100s NFT and making profit from the information is now ok as long as its under the limit.

Gaming Sub-Council originally proposed that no given $ amount is set for that reason but that any activity taking advantage of info under a blackout period is wrong. If any suspicion or proof the IMC could then evaluate the case while taking into account the normal market activity of that person.

[halcyon barn]

If i understand correctly, just taking the first 2 points scenarios as examples, i cant delist my items as per point 1 but i can for under 500$ according to point 3, is that correct?

In its current state, all listings would need to remain active. The $500 limit is in place to enable interaction with the game without inadvertently revealing information to the community regarding the blackout asset outside of listings prior to the blackout period.

If something is under a blackout period for me, point 2 says that when the info becomes public the blackout period would only be lifted 30mins afterwards. But now i could take advantage of it still as long as its not surpassing 500$?

The intent is not to exploit the system based on a monetary threshold; rather, it aims to enable council members to engage in normal gameplay. Restricting council members from playing normally could lead to community awareness of a blackout (likely identifying the blackout asset) and could also expand the pool of potential council candidates. They would no longer be concerned about inadvertently trading a few assets while playing the game or facing exclusion from gameplay entirely.

Not only it feels wrong in this sense to me but i dont think $ amount is the way to frame this. Some single illuvials might be worth more than the given limit and that would be wrong and then trading 100s NFT and making profit from the information is now ok as long as its under the limit.

As I mentioned in the previous response, the objective is to enable council members to play the game without drawing attention to the blackout and not to facilitate insider trading within the $500 price limit. Engaging in insider trading, regardless of the amount, constitutes acting in bad faith for personal gain, and as such, would still warrant a VONC regardless.

Gaming Sub-Council originally proposed that no given $ amount is set for that reason but that any activity taking advantage of info under a blackout period is wrong. If any suspicion or proof the IMC could then evaluate the case while taking into account the normal market activity of that person.

This is true, but it is still VERY easy to distinguish between someone moving thousands of dollars or more in assets and someone who is within the limit.

[final socket]

I totally understand and support the intent. What im saying is that imo a $ value is not effective to limit this and that it should be case dependant.

Everyone still free and not limited on his normal in-game / market activity while any attempt to profit from the information under a blackout period can have consequences.

Any $ amount is as bad imo and should all be worth a VONC if proven.

[cedar vine]

$500 gives council a fair ballpark, and creates an incentive to have shorter blackout periods (it serves to mandate communication around anything that could impact prices, thus ending the blackout period).

It also creates leeway for someone to play the games and continue trading without coming under fire for, as an example, $100 of trading.

If there isn't a threshold set, any trading that ends up being profitable (even incidentally)will be regarded negatively, and that's a bit of a nightmare if someone just wants to buy like, a few T2's to round out a deck.

One of the other enhancements is allowing for council members with a history of DCA (ILV/sILV2) to continue their behavior. Currently, someone engaging in DCA would have to stop trading, providing a signal that a blackout was in effect.

[final socket]

Its a fair ballpark i agree but having a number implies anything under it is ok and im not comfortable with that. I believe we can simply have no number and still not limit people from normal activity.

If I learn today that fire doka gets a huge buff and i go buy 200$ of them to then sell them tommorow when the patch is released are we ok with that?

If you can see that i have some trading activity and something even over 500$ realistically falls within it and its a one time occurence it could perfectly be normal.

I think its pretty easy to see if someone takes advantage of the system. I believe that when suspicion is raised and IMC examine the situation, regardless of the $ threshold per instance(s) the IMC is capable to prove if it was abused or not.

[cedar vine]

You can't have any trading activity under the current rules, malicious or not.

"During this period, any person or group from the DAO council members and Labs team members who may have access to information not available to the public will be prohibited from engaging in any trading activities related to the DAO's assets which include, but are not limited to, $ILV token or any Illuvium NFTs such as Illuvials, Land, Illuvitars, etc."

It's true that review will make it pretty obvious if someone is explicitly trading around the patch notes, and it remains true that manipulating the market based off inside information will not be acceptable.

By setting a threshold, we allow council members to make minor trades during a blackout period, including DCAing (given a prior history of DCA from the wallet). A $500 threshold should allow a council member to pick up any "odds and ends" type assets during a blackout so as to not make blackouts a complete nuisance. In particular, we wanted to create a bit of flexibility for Game SC members to continue to interact with our suite of games during blackouts, so long as that trading isn't malicious.

There's also some ambiguity in the current paradigm that needs clearing up. Existing, listed assets aren't sufficiently accounted for. To really follow the letter of the current proposal (IIP-33), someone would have to de-list all their assets when a blackout goes into effect. This not only makes it very apparent that there's a blackout for something, but serves as a pretty major disincentive to serve on the council and engage in normal trading. This proposal suggests a reasonable alternative - No delisting of assets during a blackout.

[halcyon barn]

Depending on the type of asset it could be blatantly obvious as well. If a council member is forced to delist multiple of a specific illuvial they were selling on the marketplace that isn't doing well in PvP then it's immediately obvious to everyone that this Illuvial is getting a buff in the next patch and vice versa. This would ruin the gameplay experience and the market of that specific asset.

[maiden dew]

Can't people just use a different unknown MM and do the insider trading there? I don't see how that can be stopped

Sorry if it's not my place to type here, was just curious

[small fog]

Of course this cannot be stopped... but having something in place is key to ensure recourse if ever discovered to be linked to a council or team member (part of the reason and discussions around the original IIP)

[wintry cape]

I have my own strategy similar to a DCA strat for accumulating sILV2. Basically I buy when I see a big sudden drop in price, but more specifically a sudden drop in the sILV2/ILV ratio.

If this occurs during a blackout period do I have to miss out on the dip? Or am I required to buy the dip because of my history of doing so?

[wintry cape]

This was the main reason I was opposed to the original IIP.
I fully support the idea behind it, but it’s very difficult to enforce.
Someone can be called out for making a normal transaction while participating in the ecosystem with no ill intentions while another can actively be an insider trader using an anonymous account.

[halcyon barn]

With this ICCP, the way it works is continuing the DCA process during recurring timeframes such as daily, monthly, or weekly.

[wintry cape]

So as a council member I’d have to miss out on a dip buying opportunity even if it has nothing to do with insider information and history showing I buy sILV2 on big dips.

Can this be perceived as participating in the ecosystem and okay under the 500$ limit if my plan is to spend it on in-game purchases rather than trade for profit?

[cedar vine]

That is currently the case, yes. As soon as there's a blackout, you cannot trade any Illuvium assets. This is laid out pretty clearly in IIP-33, and this proposal intends to alter some of those systems to make blackouts less awkward. If there's a blackout active, you cannot buy dips.

The specific exemption being added is DCA behavior. If you have a provable history of DCA on the wallet in question, you can continue that behavior during a blackout.

The wording might need clarification, and correct me if I'm wrong @halcyon barn , but the $500 limit is intended for in-game assets, not for sILV2 or ILV. That's in line with the intent being to remove some of the barrier to normal gameplay during a blackout.

In particular, this sentence could lay this out more explicitly either way.

"During the blackout period, council members will have a maximum total value limit of $500 when buying or selling blackout-related assets. For instance, council members can buy $350 worth and sell $150 worth of a specific in-game asset."

It could specify "...buying or selling blackout-related in-game assets.".

[halcyon barn]

Yes, I should probably update that to make it clearer. The intent of the ICCP is not to permit insider trading within a $500 buy/sell limit, the primary goal is to ensure the uninterrupted flow of gameplay, whether or not a blackout is in effect.

[astral chasm]

My only on-going concern in this proposal is this:

Trading limitations during the blackout:
During the blackout period, council members will have a maximum total value limit of $500 when buying or selling blackout-related assets. For instance, council members can buy $350 worth and sell $150 worth of a specific in-game asset. Once the limit is reached, they will be restricted from further market interactions with that asset. This approach enables council members to actively engage in the game while preventing them from leveraging unfair market advantages.

In most insider trading cases, the issue was not that someone traded small amounts but traded huge quantities of stock. So if we apply the current limit to a cheap illuvial on the market that is worth .01 cents (penny stocks). You can still buy massive quantities of that illuvial and if its value multiplied by x100 after trading blackout is lifted, your 500 usd would net you 5m usd. In this proposal's current form, that makes it okay.

This should be change from amount limit to quantity instead. And if the intention is for in-game assets, then a quantity as low as 10 or even less should be considered.

[halcyon barn]

I have two points to make about this take. First, items in MMOs almost NEVER increase in value by 100x or even 10x unless a massive update is made to an incredibly unbalanced item or unit unexpectedly. Secondly, you encounter the issue of NFTs where you may need far more than 10 of them. For instance, setting a quantity limit of 10 allows you to buy the rhamphyre you need, but now you can't upgrade your jetpack or mag boots. This is just one example out of potentially hundreds that we may not even be aware of yet. If we were to set a quantity limit that varies per item, it could potentially work. However, it would also introduce a significant level of complexity and FAR MORE confusion to the blackout process as a whole.

[astral chasm]

I have two points to make about this take. First, items in MMOs almost NEVER increase in value by 100x or even 10x unless a massive update is made to an incredibly unbalanced item or unit unexpectedly. Secondly, you encounter the issue of NFTs where you may need far more than 10 of them.

I acknowledge this and I what I shared is an extreme situation to emphasize a gap.

For instance, setting a quantity limit of 10 allows you to buy the rhamphyre you need, but now you can't upgrade your jetpack or mag boots. This is just one example out of potentially hundreds that we may not even be aware of yet. If we were to set a quantity limit that varies per item, it could potentially work. However, it would also introduce a significant level of complexity and FAR MORE confusion to the blackout process as a whole.

I also acknowledge theres nuance with quantity and amount. I always look at insider trading as a whole not just in one isolated activity. The actions speaks volumes as to the intention. Malicious and suspicious activities are identified usually not in one incident but as a pattern. Buying a few illuvials and fusing them wouldnt be considered as financially profiting from it. But buying illuvials in bulk during the lockout period and eventually selling them will most likely be considered insider trading as an example.

[alpine harness]

anyone front running PvP announcement?

[zenith epoch]

Upvoted 👍🏻