A Wager From the OCEAN LPs

A proposal from the OCEAN community to the BancorDAO

DUE TO THE DELAY IN IMPLEMENTING SNAPSHOT, THE DEADLINE ON THIS PROPOSAL HAS BEEN EXTENDED BY ONE MONTH; THE OVERALL AMBITION, AND TARGETS HAVE REMAIN UNCHANGED

TL;DR

  1. The OCEAN community acknowledges that the pool has fallen short of the Bancor community expectations, and wishes to rectify the situation.
  2. We propose a new kind of incentivised solution to liquidity mining rewards, and one which is potentially generalizable to other token communities.
  3. Herein, we wish to set a defined performance metric for the pool in terms of market volume share, whereupon the LM program for OCEAN is reactivated for a period of 4 weeks.
  4. Thus, the OCEAN liquidity providers become further incentivized to actively promote the Bancor DEX as the default home for OCEAN trading in DeFi.
  5. If the goal is not met, the BancorDAO has no obligation to renew the LM rewards.

Voting Instructions

To allow LM activation on the OCEAN pool following a boost in its productivity, vote FOR.

To deny LM activation on the OCEAN pool regardless of its performance, vote AGAINST.

The Case Against OCEAN

The Bancor Network has obtained an overwhelming majority of the OCEAN liquidity in DeFi.

Figure 1 | Per DEX share of OCEAN liquidity over time. Since inception, the Bancor OCEAN pool has been the most competitive in all of DeFi. Blue = Uniswap, Red = Sushiswap, Green = Bancor.

To the OCEAN community, the reasons for this are self-evident; freedom from impermanent loss and a generous contribution in BNT from the BancorDAO during a long (already extended once) liquidity mining program have made the platform a haven for OCEAN stakers. Bancor now has 82.7% of the total OCEAN liquidity. The pool is so deep, that DEX aggregators such as 1inch often route 100% of OCEAN trades through the Bancor pool, upto single-transaction values of $100,000.

Figure 2 | Bancor OCEAN performance. At the time of writing, 1inch routes trades below $75,000 exclusively through the Bancor pool.

From the perspective of the BancorDAO, their gambit to capture the lion’s share of OCEAN liquidity provision has been a success. However, there is a systemic problem within the OCEAN economy. Token traders appear either unaware, or unwilling to use the resource Bancor has created for its primary intended function - trading. All market forces considered, the Bancor OCEAN pool should be capturing a minimum of 80% of the total OCEAN traffic; however, it has only captured about half of that.

Figure 3 | DEX Share of USD Volume for OCEAN. Despite having the deepest pool, lowest slippage and best rates, the OCEAN token traders community is largely ignoring the Bancor pool. Blue = Uniswap, Red = Sushiswap, Green = Bancor.

The source of the discrepancy is demonstrably the OCEAN community itself. On-chain analysis reveals, as expected, that DEX aggregators direct the expected amount of OCEAN trades directly to Bancor.

Figure 4 | 1inch Exported Volume Share by DEX. Aggregators, which find the most cost-efficient trade routes, direct the overwhelming majority of OCEAN trade traffic to Bancor. Blue = Uniswap, Red = Sushiswap, Green = Bancor.

The volume on Uniswap paints an interesting picture. Because their pool is relatively poor, they receive only a minority of aggregator traffic, equal to approximately 4% of the total volume. Approximately half (51%) of the volume is from market makers (e.g. arbitrage), and the remainder (45%) is from regular OCEAN holders.

Figure 5 | Uniswap OCEAN Trading Volume by Source. Uniswap has a healthy balance of organic trader activity. Blue = aggregators, Red = market makers, Green = organic traders.

The situation at Bancor is dramatically different. Aggregators and market makers comprise 96% of all traffic; the OCEAN community accounts for only 4% of the volume on the Bancor pool.

Figure 6 | Bancor OCEAN Trading Volume by Source. Bancor has almost zero organic trader activity, and its entire volume share is essentially dominated by market makers and aggregators. Blue = aggregators, Red = market makers, Green = organic traders.

In summary, despite creating the best, most competitive pool for OCEAN traders in DeFi, the offering has not attracted any interest whatsoever from revenue-earning demographics. Despite significant LM investment from BancorDAO, OCEAN trading share performance has lagged behind other pools;; similar efforts spent on other pools, such as LINK, have borne fruit with a clear trend towards increased community adoption. This is due largely to the superb ability of LINK marines to communicate the utility of Bancor’s offering within their community, and build a stable LINK trading demographic to support their pool.

Figure 7 | DEX Share of USD Volume for LINK. As the LINK pool gains competitiveness, a clear trend towards increased traction with organic LINK traders is plainly apparent. Blue = Uniswap, Red = Sushiswap, Green = Bancor.

The OCEAN Community Reply

The OCEAN community recognizes that the arguments presented above make it fairly difficult to justify continued support of the pool, including and especially with liquidity mining incentives. However, having the scope of the issue presented to us, our resolve to contribute back to the Bancor platform and its community is only further galvanized. Therefore, we take it on ourselves to help bring awareness to our brothers and sisters in DeFi, and help bring the trading demographics that the OCEAN pool clearly deserves.

A Wager, Of Sorts

This proposal seeks to establish a basis on which the OCEAN pool may again qualify for extension of its liquidity mining program, as follows:

  1. We concede that the current LM rewards program will not be renewed.

  2. Our community will rally together to bring awareness to the OCEAN pool on Bancor, to drive the organic trade revenue over the coming month.

  3. Our target was developed with the assistance of the Bancor team:

  4. The OCEAN pool must achieve a reasonable level of traction with its target demographic.

  5. Traction is measured as a function of the liquidity and volume share on the OCEAN pool, as follows:

  1. The quotient of the total DEX volume share and the total DEX liquidity share for OCEAN on Bancor bust be at least 70%.

  2. This goal must have been sustained for a minimum of 24 hours, and remain true on midnight (GMT+0) 3rd May, 2021.

  3. For example, if Bancor owns 82.7% of the OCEAN liquidity at that time, our wager is to increase its volume share to at least 57.9% (57.9/82.7=70%). As demonstrated above, this is achievable entirely through educating our fellow OCEAN token holders as to the advantages of buying OCEAN directly on Bancor, as opposed to other DEXes, or centralized exchanges.

  4. If we achieve this goal, the liquidity mining program is extended on the OCEAN pool for a further 4 weeks.

  5. If the target is not met, we concede the LM program.

12 Likes

Amazing idea that will help both projects to succeed long term!

7 Likes

Want to start by saying that the OCEAN community have been great friends of Bancor since v2.1 started to gather momentum late last year.

I see no reason why we can’t meet the targets set out to keep this pool profitable and keep liquidity mining rewards rolling in for liquidity providers in the OCEAN/BNT pool in the future. Taking the example of LINK LPs on Bancor, who’ve been highly active on Twitter raising Bancor’s profile as both a trading platform and liquidity provider-friendly AMM, I’m confident that Bancor will soon be in a position to reinstate liquidity mining rewards as people’s awareness of the fact that Bancor is the cheapest place to trade OCEAN, continues to increase. I’m confident that even without aggregators, Bancor can soon drive the most organic volume for OCEAN trades, with the efforts of the OCEAN community in raising awareness of this platform.

I will be voting in favour of the proposal, and look forward to working with the OCEAN community in ensuring we meet this target.

9 Likes

This gives the Ocean community the opportunity to show Bancor users how strong they are. Social media plans are made at the moment and will be deployed to create more awareness on Bancor within the Ocean community. Bancor must become the nr 1 Exchange in their mind.

5 Likes

The precedent behind this is just as important as the proposal itself.

Introducing LM KPI’s for extensions is an absolute no brainer, and completely necessary to get full value from our LM drives.

Fully in support of this proposal.

10 Likes

Interesting. That would be nice!

3 Likes

100% support this. This is a win for both Bancor and Ocean.

3 Likes

I really like this approach of this LM extension approach. As many allready wrote, i see it as a win-win if this will suceed.
Welll done.

So what am i doing as an indivduall doing to act accordingly to the proposal? Well within the community we have a huge solidarity and creativity. We have several people wich act as social media “leaders” and many small people in the navy wich produce great content.

The direction of the next infographics will focus on: “Why Bancor should be your DeFi place to buy OCEAN” or even more straight forward why it should be your number one place to buy Ocean in every circumstances.

The heavy promotion of Bancor as a great staking option for Ocean was great, but also a bit of a hindrance now. Many forget that it’s a fantastic DEX. I will put a lot of effort into this to make this fact even more popular and we will spread the word.

Excited how this will turn out. Bancor x Ocean is a great fit after all. Disruptive power, innovative leaders and a powerfull, loyal community

5 Likes

The DEX space is evolving. With an IL solution implemented and an L2 integration around the corner, more LPs are choosing to stake in @Bancor

As such, @Bancor is now the cheapest place in DeFi to trade $OCEAN, with 12X the liquidity of @Uniswap and a 0.2% trading fee

I will Vote in favour of the proposal :muscle:
The fact is that this is the cheapest OCEAN pool.
Well done. :clap:

3 Likes

I will be supporting this proposal as it creates a good set of guidelines for any future pools that might also end up in a similar situation. This is a good framework that can be adapted to other pools as they also come up for renewal. Thanks for putting this together.

2 Likes

absolutely love this, send it. This model could be great to interact with other closely related projects like Ocean. Also, really love the community at ocean, glad to have you guys here, i might have to buy some… through bancor ofcourse…

2 Likes

A little belated, but an honest acknowledgement on Ocean’s side. I wish they could have acted earlier.
As both an Ocean and BNT holder, I admire and love both communities… for their visionary, innovative approaches.
I believe, better days are yet to arrive.

2 Likes

I would 100% support this !

1 Like

I also support this for sure! We can do this team! 100%

2 Likes

I will support this proposal with 2000 vbnt

1 Like

Full support here. As an aside, I think being able to approve a token to trade perpetually instead of just for 24 hours would help bridge the gap between volume coming from aggregators and volume coming from regular trades.

1 Like

The idea of having KPI’s to meet makes total sense.

BTW, Ocean’s volume has been quite impressive lately.

So, when can we expect this vote to take place?
Rewards have ended at the moment.

4 Likes

I echo Masta’s question of 5 days ago: When can we expect this vote to take place?
Thank you.

1 Like

I will re-vamp the proposal shortly, and update the data and deadline. We have been working with snapshot to create a customized environment for Bancor. Thank you for your patience while we get our ducks in a row - but I assure you, this will be among the first proposals on your new system.

2 Likes

Hey OCEAN!

I have updated the proposal with a new end date: 3rd May.

I left the original data, because Dune is taking its sweet time with queries right now. I will update this board regularly with new data every couple of days during April. That way you can come back here to monitor your progress.

1 Like