Seeding the BOND/BNT Bancor Pool

Summary
Please find the Snapshot vote here: Snapshot
Description
Please use this forum thread for voicing any concerns you may have with the proposal as written.

3 Likes

This is a great idea to get liquidity into bancor.

Ultimately as long as pool2 rewards continue we are always going to be competing with our selves on liquidity.

The other thing that bancor values when voting on liquidity mining is volume though so if we want to keep rewards going we are going to have to encourage trading on bancor as well.

2 Likes

What is the rationale for directly seeding the Bancor pool vs offering BOND rewards to LPs (like Uniswap LPs)? This seems like it would be a very effective way to reward small fish who are active in the community.

I totally agree with this plan, This will increase the buying pressure on Bond and BNT and create more liquid market for BB’s,If a Bond/BNT flow mining reward is provided later,Does all of the BNT liquidity awarded go to BB or does only one half go to BB?

I think Uniswap is a little easier to do this with since you receive a LP token that can be staked; however, Bancor doesn’t do this which provides two key benefits in preventing IL for whitelisted tokens and is better from a tax perspective for users from USA.

@Ser_M where do we stand on being able to co-incentivize alongside Bancor? I would assume if this is possible, we might be able to do this by ourselves until the Bancor DAO approves LM rewards (bypassing the need for a LP token). This would further our case to get LM rewards as well. Not necessary for or against this, just curious if it is even on the table.

I am strongly in favor of this proposal, but I would like to discuss the 25k Bond number. Recognizing that would get us to about $2.4M in liquidity for the pool since it would be matched with BNT coming in which is above the $1M threshold mentioned in the Signal post, I would be in favor of more. You can play around with the trading parameters on Bancor by looking at comparable pools, but I was finding that trades of $25k and $50k would likely experience slippage of about 2% and 4%, respectively. I’m curious what people think about 50,000 BOND since that would make it more feasible for larger trades to happen on Bancor. Worst case scenario we could determine at the 100 day mark to pull back 25,000 if the pool has taken off sufficiently once LM rewards are introduced.

Slight clarification to the Signal post - I think the annualized rate of return was for staked BNT (which we could eventually do once we earn BNT), but I think it is worth noting that at first we would just be earning the trading fee APR paid in BOND which is usually around 1-10% depending on volume. Once LM rewards are introduced we would receive rewards on top of that which generally is around 5 - 20% paid in BNT.

5 Likes

Can someone from the dev team share more info on the technical limitations of why the DAO cannot hold the BNT? Is it because it cannot/doesn’t have any private keys in order to sign on proposals?

I’m in agreement that we should consider providing more than 25,000 BOND. As Max notes in the post, this BOND is sitting idly in the the Treasury. Let’s put this capital to work. Seems like a very simple and straightforward position to take. I’ve noted in other places that we should put forth a Treasury Management Team to construct a strategy and subsequent tactics. That being said, this ask is an easy ‘Yea’ from me.

The amount should start at a minimum of 50,000 BOND and we can modulate this total based on how the market starts to interact, or add, to this market.

3 Likes

Technically the DAO could hold the BNT tokens and community members could vote on its behalf. However, it’s not realistic because the BarnBridge DAO vote takes 12 days to be executed while the Bancor voting takes about 3 days.

1 Like

I have voted “Yes” on this proposal, and I also agree that the amount of BOND allocated should be increased to incentivize more liquidity.

1 Like

I fully support this proposal as well as increasing the supplied BOND to 50K+.

1 Like

In favor of the proposal and increasing the BOND supply too

I like this idea - I think it is worth its own governance forum post to formalize all of our thoughts around this.

I support the proposal and the increase in BOND allocated.

What is our long-term strategy for incentivizing liquidity protocols?

We will have UNI & Bancor.
I like the idea to add Bancor, which is unique AMM without IL. However are we aiming to add some other AMMs in the coming months/weeks.

While BOND liquidity is important, from a strategy perspective, this represents the first step to building out active secondary markets for junior tokens. One of the bigger deterrents for potential users of smart yield, for instance, is that they don’t have a seamless off-ramp guaranteed. So, by engaging with the Bancor community on this proposal and then earning BNT for the DAO going forward, we’d be in a position to reliably create secondary markets for junior tranches.

It would definitely be in the cards as a discussion we’d encourage the community to have. We have to remember that we’ll need BOND for incentivizing a whole host of future needs, namely Smart Alpha pools and L2/multichain deployments down the road, and so the marginal liquidity earned by allocating those BOND rewards early in the project’s life are debatable imo. But if that’s what the Bancor community signals as necessary, then it’s a discussion we need to have.

I think ideal scenario is BNT incentivized BOND/BNT pool + BOND incentivized junior pools whitelisted for BNT subsidization.

Totally agree. Whether 25k, 50k, or some number in between the end goal is creating sufficient liquidity such that people can trade BOND on Bancor without too much slippage thus creating higher trading volume and generating fees for Bancor. Trading fees + liquidity is the basis for our argument to be approved by the BNT community for LM rewards.

My only concern is that if we came in with just 25k BOND, there would still be 7 pools ahead of us with more liquidity that haven’t yet been approved for LM rewards which makes our pitch over there a little more difficult. That said, we do have a lower quorum threshold for this vote of just 20%. If we have a good feeling we can get LM passed with a pool commitment of just 25k BOND, let’s go for it. Alternatively, we could come with 50k and then pull 25k back to the treasury once we get LM and it’s more attractive for other BOND holders to provide liquidity on Bancor. I fully recognize the importance of using treasury assets for future needs, but we only would have to keep it over there for 100 days before we could bring some or all of it back home to the treasury.

We discussed it earlier today - was going to share with the conclusion of the Snapshot, but yes, we’re in agreement that 50k is a more appropriate figure. It’ll be allocated with the DAO vote to roll out pools for AAVE originators.

3 Likes