A Targeted Liquidity Mining Incentive: Wrapped NXM (wNXM)

A Good Reason to Activate Liquidity Mining on wNXM

  1. The Bancor Foundation is participating in the Nexus Mutual “Shield Mining” program which aims to create more affordable smart contract cover for Bancor liquidity providers.
  2. Smart contract cover protects Bancor liquidity providers against smart contract bugs and direct attacks on the network.
  3. Starting February 8th, NXM holders who stake their tokens on Nexus to provide smart contract cover for Bancor LPs will be rewarded with BNT on a weekly basis.
  4. By activating BNT liquidity mining on the wNXM pool on Bancor, NXM shield miners will have additional incentive to HODL their BNT shield mining rewards and stake them in the NXM pool.
  5. Both the NXM and BNT communities share an affinity for insurance and risk management - Nexus as a provider of smart contract cover and Bancor as a provider of insurance against impermanent loss in AMM liquidity pools.
  6. The synergy afforded by both shield and liquidity mining rewards creates an opportunity to capture more attention on Bancor from the Nexus community and risk-conscious LPs, as well as to make the wNXM pool on Bancor the largest source of NXM liquidity – which could generate significant revenue for the Bancor protocol.

Voting Instructions:

To activate liquidity mining rewards on the wNXM pool, vote FOR.

To forestall liquidity mining rewards on the wNXM pool, vote AGAINST.

About the Shield Mining Program

Risk assessors deposit NXM and stake on contracts which, to their judgement, is secure and unlikely to be subject to deliberate attacks, or exploits/failures resulting from persistent bugs in the code. As Bancor is growing its TVL, the Foundation has elected to provide NXM stakers with an additional incentive to cover the Bancor contracts, in the form of BNT shield mining rewards. These incentives are designed to attract the attention of risk assessors, who may then decide to stake NXM against the platform. High amounts of assessor NXM staking on a contract results in reduced Nexus Mutual insurance premiums for Bancor liquidity providers. Our ambition is to create a near-stressless environment for liquidity providers, free from risk of impermanent loss, and with access to affordable insurance on the deposited capital.

Suitability for Liquidity Mining

The NXM community is laden with fiduciaries and other finance professionals; they are not the garden variety “wen moon” cryptocurrency users. More to the point, the NXM community understands risk, and how to assess it. For this reason alone, NXM holders should be considered a valuable resource in the future direction of the BancorDAO, proposal vetting (including whitelisting), and assessing and managing the health of the ecosystem. Further, the exchange of information between our core teams, and between communities via our telegram groups, has been extremely pleasant. Assuming the insurance premiums come down, there is good reason to be confident that wNXM holders will be able to grow the pool to a reasonable level. Lastly, incentivizing shield miners to contribute the BNT back to the pool is probably among the most compelling arguments the DAO has heard for an LM proposal.

A Prelude to a New Whitelist Conversation

NXM exists in its own ecosystem; the contract doesn’t allow it to be transferred to non-KYC addresses. The Ethereum wrapped version of the asset is the predominant market presence. Two tokens related to the Nexus Mutual ecosystem may soon be considered by the community for whitelist approval. arNXM and ARMOR are issued by an insurance broker project built on top of NXM, and allow for DeFi participants to purchase cover, and make claims, free from KYC (“know your customer”) restrictions. While separate projects and teams, both share essentially the same community. During the organization of the shield mining, several prominent community members from NXM raised the question as to whether the DAO was likely to consider arNXM and ARMOR for protected status. It is likely that these will appear in whitelist BIPs in the imminent future.

Further Reading

  1. Bancor FAQs
  2. Bancor v2.1 Protocol Health Report
  3. How to Stake Single-Sided & Earn in Bancor v2.1
  4. How to Re-Stake BNT Rewards & Compound Yield

That’s great, as a member of both communities and a hodler of BNT & NXM - I’m very happy to hear about more ways to optimize yield of two of my favorite projects. I also think it’ll be important to include arNXM in the LM program, as I suspect that a lot of wNXM will be converted to arNXM and with both pools active (and incentivized) on Bancor - it’ll be much easier to swap between the two, generating even better yield to LP’s.


Any information regarding the amount of BNT that will be contributed to the shield mining campaign on Nexus Mutual?

25k BNT - this is not inflationary though; this comes from the foundation’s funds.