Match the Remaining Bancor BOND Coinvestment

Summary
The Bancor community has set aside 1M BNT tokens to match deposits into the BOND/BNT pool. The DAO currently has 50,000 BOND deposited; it has room for another 110,000 BOND at current prices.

Description
The BarnBridge DAO previously voted to supply 50,000 BOND to the BOND/BNT pool. This allows the DAO to earn transaction fees as well as any future liquidity mining rewards that may be provisioned for that pool. Moreover, Bancor precludes the risk of impermanent loss for depositors who remain for over 100 days, meaning that the DAO does not need to sacrifice BOND upside in order to earn this yield.

Motivation
The DAO currently sits on 31% of BOND supply, which is effectively inert. Matching the rest of the Bancor coinvestment will make for productive, risk-adjusted use of this capital. In discussions with members of the Bancor community, they have indicated that they would be willing to support liquidity mining rewards for BOND/BNT should the DAO make this additional commitment. The BNT earned by the DAO in such a scenario would ensure that it has a say in Bancor governance moving forward, which could prove vital as more BarnBridge products go live. Moreover, Bancor v3 will allow for idle yield generation on top of fee revenues and liquidity mining rewards.

Technical details
A 4-of-7 multisig was established for these types of cross-protocol deployments of DAO funds with the initial 50,000 BOND deposit. Further funds would be directed to this multisig which would then deposit into the BOND/BNT pool.

Useful Links

Argumentation

FOR: Turns treasury BOND into a productive asset, increases liquidity

AGAINST: Opportunity cost, counterparty platform risk

DAO Vote
A Snapshot vote will go up for this proposal on Friday the 11th. Please make your case in the thread below, especially if your preference is for a sum in between 0 and 110,000 BOND.

6 Likes

We understand how this benefits the BarnBridge DAO (transaction fees, Bancor governance etc.), but how does this benefit Bancor (or BNT Holders) directly? Let’s understand the win-win scenarios for both parties involved.

1 Like

The more liquid the BOND/BNT pool is, the more fees the Bancor protocol would be expected to earn. Plus, as a DAO, we would not look to dump liquidity mining rewards but rather carve out governance power.

4 Likes

I support this, the full 110K Bond amount, and also think it is worth discussing leveraging the available Nexus Mutual capacity in their Bancor protocol coverage offering to offset the counter-party risk (which to me seems the primary argument against this proposal). This can be done for 2.6% per year, a small price to pay for this assurance when compared to the profits generated. As for opportunity cost, I think if we make it understood that this liquidity could be removed in the future should the DAO find a better place to put it and successfully vote upon this, the opportunity cost approaches zero. With these things in consideration, overall I think this is a much better use of the BOND the DAO owns than just having it sitting idle.

4 Likes

Some additional benefits to Bancor is we have essentially pioneered an approach they can double down on and leverage going forward, potentially as a requirement for other DAOs who seek co-investment / LM.

It also gives us skin in the game and an incentive to do future business with Bancor, so we are more locked in relative to passive investors who may have less long term aligned goals.

1 Like

Covering the insurance premium would make for a great use of DAO fees.

1 Like

Great idea @Ser_Speculor on insuring the allocation. Full support on maximizing the Bancor co-investment.

Looks like a great use for the currently idle BOND in the treasury. More liquidity, more cooperation with the Bancor community, more demand for BOND if liquidity mining can get passed → incentivizing more TVL and use of products at Barnbridge.

Support this idea, but hope to sow when the bond price is high

I really like it! I also support the insurance idea! Let’s do it! I’m fan of treasury investments.

Even more reason to position ourselves to shoot our best shot.

Bancor just updated quorum rules. Liquidity mining now requires a 35% quorum, quorum for LM used to be 20% prior to this change

Others have touched on the most important points; so I will limit the reiteration as much as possible.

In short, it is in Bancor’s interests to have a fairly deep source of liquidity for tokens that the community truly believes in. We have found that annexing liquidity on up-and-coming tokens can be of critical importance. If the deepest source of BOND liquidity is on our DEX, then we can drive the majority of volume through our platform, which elevates the profile of Bancor to new communities, and helps to establish a new user base.

Excellent case studies are WOO and wNXM. In the latter case, controlling a commanding share of the market for a particular token has proven valuable in setting a pool fee that makes liquidity provision highly lucrative; traders really don’t seem too affected by pool fees of 0.5-1% if the slippage compensates for the commission. In such a situation, deep pools become highly performant for both makers and takers, thus satisfying the needs of both halves of the shared platform business model.

Moreover, TVL is a metric that shouldn’t be taken lightly. The more capital that exists on the Bancor platform, the more attention it receives. Of course, TVL is secondary to volume and turnover numbers in terms of the true performance of the protocol; however, TVL does speak to engagement and general health.

Speaking only from my own impressions, and not necessarily on behalf of the DAO or passive community members - I have seen this proposal received with enthusiasm on Twitter, and within our telegram channels. I was heavily involved with garnering support for the BOND whitelist status and preparing the community for its decision. I felt then, as I do now, that there is a lot of potential collaboration between our projects. As the Barnbridge platform matures, I expect products such as the jTokens to find a warm welcome inside the Bancor community.

5 Likes

Hard to be the post to follow after all of the great points made above, but I did want to voice my full support for this proposal from my perspective as a member of both DAOs. I’ll also volunteer to help initiate the LM discussion over on Bancor when the time is right. I think that our promise to not auto-dump our BNT rewards, but rather remain an active participant / voter will be almost as meaningful as the TVL, volume, and fees this investment will bring.

I’m also very excited about Bancor V3 (expected by the time our first round of LM would expire), but am curious if this would impact the BarnBridge investment on V2 in a meaningful way? I don’t expect that V3 would be anything but positive, but recognizing we are approaching a version upgrade I just wanted to mention it since it’s an unknown and this is going to be a good sized investment.

2 Likes

I totally agree that we should match the remaining capacity. It makes sense for both BarnBridge and Bancor and could surely help regarding Bancor governance in the future.

2 Likes

This maybe something the multisig may want to consider. Could be a way to aggregate more voting power from $BOND holders who also hold vBNT:

How to delegate voting power in Bancor :point_down:

https://blog.bancor.network/how-to-delegate-voting-power-in-the-bancordao-b82df46be416

Two simple but great benefits for both parties. Thanks for throwing more light on this.

This definitely puts things in perspective for me. Truly a great win-win relationship here. Thanks for the indepth explanation.

You’re right! Forming a “deep bond” with Bancor relative to passive investors is a great win for the BarnBridge DAO! And if Bancor adopts this approach as a requirement for other DAOs seeking co-investment/LM, it positions BarnBridge as a leader and pioneer in the space which could lead to other future partnerships!