Bancors Update V3+

Community Chatroom (DISCUSSION)
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I just listened to the recent call and heard from Mark about the updates that the contributors have been working on.

Does this idea not seem somewhat similar to Uniswap v3? I’m sure there are some differences, and perhaps there are things which I misunderstood, but from what I gathered, similar to uniswap v3, the LP is able to decide between a price range that they want their position to participate within.

Am I missing something here? or what did I get wrong?

Also, I was really hoping that within Marks discussion, the contributors would have come up with some new features for the BNT token so that it would become more desirable and result in a boost of organic growth. When the BNT token outperforms TKN, IL & the deficit reduces. So shouldn’t this issue be given some focus from the contributors?

The work being performed, is good for the bancor protocol itself in the long run, and those that are defi savvy will be able to benefit from what Mark discussed, however, the average Joe who sets and forgets probably wont gain much from what Mark discussed, nor will it increase the demand for the BNT token from new users and investors.

Bancor is in deficit because a large amount of BNT was released from ILP and sold onto the market. The high APY % was removed from the BNT token removing any reason for individuals to buy the BNT token. Should we not try to figure out a way to increase demand for the token ? I do not understand why this issue is not at the forefront of work being discussed and worked on.

Furthermore, the DAO has chosen to temporarily disable ILP. Not permanently remove it. Should the team not be working on solving this issue and find a way so that ILP can be restored?

I really don’t want to complain, and I’ve been biting my tongue…fingers… for quite some time now. I’m not the brightest person here, but I do understand the problem that we went though, and I see and hear the ideas being worked on, and I cant help but feel that the contributors aren’t trying to fix the problem we went through, nor repairing the deficit, but rather, just improving the protocol, so that one day, the protocol will work well and hopefully by then, providing that the BNT keeps pace with the market, that everyone will be made whole one day. Yes improving the protocol will help repair the deficit over the long run, but why are the main causes of this deficit being ignored and brushed under the rug?

The BNT token IS the problem. Mass supply increase. No demand. No reason for anyone to buy it.

When BTC goes parabolic, of course the BNT token will increase in price, but will it keep pace? If not then the only thing mooning will be the deficit and our impermanent loss. @mbr what are you doing about the BNT token?

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Hey Jindo. Reposting my Telegram message in response to your comment about the new product being similar to Uni v3…

Docs and info are in the works and almost there, so definitely stayed tuned.

In the meantime though, to answer your question… Until now, all previous AMMs - Uni v3 included - have created on-chain liquidity where a single bonding curve governs each pool. The same curve does the buying and selling, and executed trades are reversible (i.e., tokens sold by a liquidity pool can be repurchased at the same exchange rate). This undermines trader flexibility and control, especially when trying to perform automated, “asymmetric” trades - e.g., limit orders, range trading or ‘buy low, sell high’ strategies. For example, when trying to perform a ‘buy low, sell high’ strategy in existing concentrated liquidity pools, each range in the trade requires a separate liquidity position, or traders must perform costly transactions to unstake and re-stake a position into their desired price ranges as markets move.

Bancor’s new AMM inherits the concentrated liquidity design, but flips the above on its head. Instead of users choosing a single curve and range in which to place their liquidity, they can provide capital to multiple adjustable curves with a single, re-usable liquidity position. In essence, this gives users the ability to create automated trading strategies composed of multiple on-chain limit or range trading orders, with each order represented by a unique bonding curve, and where each curve executes trades that are irreversible. You could, for example, deploy an automated strategy where one curve buys ETH between 1200 and 1300 USDC and the other curve sells ETH between 1500 and 1600 USDC.

All this provides traders with greater efficiency, flexibility and precision by allowing on-chain orders to be linked together, adjustable on the fly, irreversible on execution, and protected from the most common MEV attacks.

And as Nate mentioned in Telegram…
“How BNT is utilized in the new product is ultimately up to the DAO. Once additional details on the product are published, the DAO can weigh different options. I’m confident if we as a community deliver an innovative protocol addressing the needs of users, a byproduct is it will fuel recovery of v2.1/v3 reserves.”

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If the BNT token is at the core of the problem that we’re facing, should the team not devote some time towards solving this issue, rather than resting this decision on the shoulders of the DAO ?

The new update sounds great. There will be a HUGE learning curve that will come along with it. The team is basically developing these tools while expecting defi users to be good traders. I for one dont have the best track record with trading, which is why I simply opted in for 3-6% apy on my wbtc… and I wanted the ILP security.

Now, rather than the team trying to right THEIR wrongs by developing something that they said wouldnt break, while being so confident as to not devise a backup plan should the ONE potential flaw - the death spiral event occur, the team of contributors have decide to sweep solving these issues under the rug, pass all reliability onto the DAO, & resolve themselves from any problem solving… and simply create a new tool for users… which will benefit the users who know how to optimize their positions… and leave every other user ( the majority ) in the dust, left to deal with and solve the problem that the core contributors are … too high, mighty and proud to tackle?

To quote Will Farrel … “I feel like im taking crazy pills”

I am excited for the new update … but I was also expecting the developers to tackle the problem head on. Once again, due to ILP, we got smoked with a ton of BNT. Everything else still works. Yes the AMM model can improve… But Since v2.1, every bancor user signed up for ILP… but now, once shit hit the fan, the developers who worked on v2.1-v3 have decided that its more important that they create a model that will help users optimize their own positions rather than getting us out from this mess.

And while every user is forced to submit basically all of their defi earnings from their positions to the vortex, while bancor essentially has a free loan from every single user to bail out the problem that the contributors didnt care to prepare for, the main efforts are not geared towards helping our situation, but rather geared towards improving the protocol so that users who are probably not good traders can maybe? better optimize their positions?

I’m trying to be positive and think the best in everyone’s intentions, but actions speak louder than words. @mbr will create a new AMM design, but wont tackle the mess that he and the team either helped to create, or weren’t prepared for when they knew in advance of the potential scenario. Keep in mind… there is a cool down period when celcius withdrew… the facts were all on the blockchain… but no one was paying attention. Obviously if they withdrew and were given a ton of BNT from ILP … theyd sell.

@mbr although bancor has no leader, everyone looks to you as one. Since this all unraveled, with each community call and update, I feel more and more neglected as a user/Dao member. After youre done creating a new AMM design… can you then afterwards help us?

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Hey Jindo,

I think you are making an assumption that if the new model is a success that it would not help the V3 deficit.

I’m not sure why you are making assumption.

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I didnt mean to make it seem that way. If the new model is a success, and it onboards new users, which in turn will create more volume and trading fees, then this will help the deficit. Absolutely it will.

But the main beneficiaries of this update is targeted towards the individuals who will know how to properly optimize their positions, and maintain the optimized position throughout the volatility that crypto is generally exposed to.

I understand that passive lp’ing is a thing of the past, and that we all shouldn’t remain stuck in the past. But I think its fair to assume, that if a person incorrectly optimizes their position, there’s a good chance when playing around with the new update, incorrectly doing so could potentially even lead to a higher degree of IL.

So the new update is good for bancor as a whole, and if successfully implemented should onboard new users and the increase in fees generated will help to reduce the deficit. But the majority of current users will have no idea how to correctly optimize their positions while also having to constantly update them as the market moves up and down.

I’ve ranted in the telegram room and heard from a few of the contributors. What the team is solely focused on are ways of increasing the amount of fees that the protocol is generating. I don’t disagree that this is important. But there is an equally, or almost equally, important aspect that is being ignored, and they’ve stated that they are giving 0 thought to it. its entirely not on any of their agenda, and in fact, I have been told that for this specific issue, they would like the DAO to figure it out.

This issue is the BNT token itself. We were flooded with BNT tokens from ILP and we were left with a BNT token that has lost any form of desirability. There is no reason for anyone to purchase this token. APY is basically 0. No benefits. TONS of risk.

The deficit, our IL on each of our positions, is directly tied to the price of BNT relative to TKNS… I wont discuss the price beyond this point as then the team can no longer comment. If BNT was given an incentive to own it, perhaps this could; bring in new users? bring in new investors or hodlers? and if this happened, then this could help to soak up some of the supply, which would help our current situation.

Attaching some new attractive aspect to the BNT token would not take nearly a portion of the time needed to completely make an entire new AMM design. Its a faster route and can be done succinctly with the new AMM design.

Additionally, I find it difficult to believe that protocol generated fees will be enough, completely on its own, to repair the damage done, prior to any bull market. A boost in organic growth will be a good thing. not a bad thing. and this notion is being entirely ignored and put aside. 100% of efforts have been placed into protocol generated fees. 0% into anything that would make any average joe or jane think… hey… maybe I should buy some of those bnt tokens

Sorry for the rant

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I echo your sentiments here. Unfortunately I don’t think there are other ways to boost bnt token desirability. Think about it, every amm out there would have tried it otherwise.

They are trying the carbon curves hoping it would stick, but you are right bancors audience has always been people looking for passive income, they seem to want to attract a new set of users who are risk takers/day traders. I have my doubts looking at trading volumes and the dwindling number of arbitrage, but wish them the best.

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You raise a lot of interesting points and I understand your confusion about Carbon (its a very complicated thing), but this commentary is a problem:

I think this small quote demonstrates that you don’t really understand Bancor as a protocol. Since the disabling of ILP there has been no increase in supply - saying there is a mass supply increase is incorrect.

The vortex is buying MILLIONS of BNT and burning them to reduce the deficit - saying there is no demand is strictly false.

And saying there is no reason for anyone to buy it is just exaggeration beyond the point useful discussion. People buy BNT to get a token that is numeraire of hundreds of assets and therefore makes money on all the trades. People buy BNT to vote on what the protocol does. People buy BNT for speculative reasons related to the vortex.

And when Carbon is released I will be pushing for the DAO to take all (or nearly all) of the earning and send it to the V3 or V2 vortex (more demand of BNT as the direct result of Carbon’s success).

I get that it has been a rough 6 months for Bancor and DeFi in general, but Carbon is not vaporware it is being made presently, the arb bots are going to be next, and then after that probably a loan platform the sees the vortex as the only liquidator.

You say:

But Carbon, the Arb bot, the lending platform, and the liquidation bots are ALL things that DIRECTLY address the BNT value prop.

You say you don’t understand what Bancor is doing to help the situation - but I’m in the opposite boat. I see the Devs obviously working towards a real solution and I don’t understand how people don’t get that.

None of this is criticism of you personally - you are asking good questions and that is why I am taking the time to answer in such detail.

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Hey Zeno, first off, I appreciate what you do for this community. Your videos are super helpful, keep up the good work.

What I was referring to here, was prior to ILP being disabled, bancor was hit with a mass increase in supply, not after, and to my point, bancor did suffer from a MAJOR increase in bnt supply.

The vortex is buying millions of BNT, but so far this has not been effective. You should only give credit, when credit is due, and thus far, my position, and everyone elses, has remained in the gutter, so, it is only right to give credit, when we see some form of improvement. Even a slight improvement. This has not happened yet after half a year. Additionally, we, ALL the users, are paying out from our own pockets ( the fees that should be going to us from our positions ) to bail the protocol out with the fees that SHOULD be going to us.

This by all means is not an exaggeration. The amount of people who buy bnt simply to vote is minuscule, as is the number of people who buy bnt for speculative reasons

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I am NOT posting this chart to discuss prices, but I am posting this chart to prove my point. With every major increase in the BNT price against btc, these rallies were fueled by organic growth due to speculation by investors. Individuals were given some sort of reason to buy the bnt token during these times, and as you can see here, 95%+ of the time, the price of BNT decreased against btc, therefor, speculating on BNT in its past has been a losing game AND the vortex’s purchasing power is not enough to maintain bnt’s peg against most assets. Speaking from my personal position, its my understanding that I may require BNT to outperform WBTC in order to close my IL gap. Given the history shown above, this only happend for 35/283 weeks… and people buying the bnt token caused those rallies, not the vortex

After the recent calls, I am excited for Carbon. I will be a user and I think that the idea is fantastic, however, if everyone here is being sold the idea that fees alone will change bancors entire history, and will propel BNT forward against all other pairs and remove the deficit, is turning a blind eye to the facts. Numbers dont lie and they are all there present on the chart posted above.

I do believe that an increase in fees generated will most definitely help, but at the same time, it is ignorant to think that generating fees alone without the aid of new investors/buyers/whatever we want to call them, is enough.

With the release of Carbon, there will be no need for anyone new to purchase the BNT token.

I want people to have a reason to buy the BNT token, aside from whatever is currently present. Do you think that this is not a good idea to give people a new reason to hold the BNT token? If you don’t think so, then, why?

Carbon is definetly not vaporware, and I am SUPER excited for it. But, I stand by my points, for the most part… 99% of people lost the majority of their reasons for wanting to buy BNT. We lost the high APY (even though high inflation also was to the detriment to the BNT tokens price) , and Bancor lost its major sticking point, Impermanent loss protection.

What then is Bancor left with? Simply put, just another AMM, which quite frankly, gives me less desirable rates on trades vs its competitors ( based on my trading experience (( I’m a relatively heavy defi user )) )

I do appreciate the work being done on Carbon and the hard work that the devs are putting in. I also acknowledge that the fees generated from carbon will help the situation, if the launch is successful. But when this is all said and done, Carbon will be fantastic, and the Bancor AMM ?? will be as is… which in its current state, seems very … blah… meh… and the BNT token? sure it has a new tool to try to prop it up… but… I dont think that this alone will make people want to buy it. Perhaps I’m wrong, and I’m definitely open to that idea… but if the BNT token were given… some new purpose… I dont think that would be a bad thing

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Sir, respectfully…if Carbon is released tomorrow and starts generating large amounts of fees (say 2m a month or 24m a year) then the losses across pools will naturally close themselves relatively quickly. Just playing around with 1inch and different trade sizes will tell you how much impact these buys can have. I can guarantee you that you and every other American out there will want to buy BNT knowing that it has a burn mechanism that is decreasing its supply as more fees are generated.

This isn’t even counting other things that are being worked on and might see the light of day. Perhaps, that launchpad thing they recently discussed last week? This will also bring in extra revenue. Also, I don’t really understand why you think that Carbon does nothing for BNT? I read the following from the introductory article

Additionally, functionality may be implemented which makes BNT-based operations in the system free of charge. This means that any strategies that involve BNT would not have a fulfillment fee when the order is filled. Additionally, any other strategy-related fees (creation, closing, updating, adding or withdrawing) may be eliminated for BNT-TKN pairs.

If Carbon is a one of its kind AMM that does not exist yet and attracts a large user base then this means that some people will want to create strategies with BNT to bypass paying fees. This leads to them having to buy BNT directly in order to qualify for such a discount if I am reading this correctly. Sounds like a good incentive to buy BNT in my opinion. What do you say?

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I agree with you that IF the launch is successful and IF the greater community sees the value in using carbon and IF the community can also overlook the errors of bancors past and current reputation, then the fees generated will definitely help to close the deficit. However, the burn mechanism may give a boost to organic growth, it is most certainly NOT a guarantee. Take eth for example, it moved to POS, fees have been burnt consistently, but this alone has not caused eth to vastly outpace bitcoin. Burn mechanisms are quite common across the board of various dapps, and whilst it IS a good thing, I would not comfortably rely on this factor alone to solve all the problems.

I am grateful that other things are being worked on that will onboard new users, more volume and fees to the bancor protocol ( or carbon ).

If the idea behind Carbon fulfills its promises of creating a new revolutionary AMM, I will be hopeful that what you are saying comes true… and im rooting for that… my family depends on it… you have no idea how much % of my net worth is at stake… so much that you would call me absolutely insane.

But the point that, for some reason, I can’t get people to agree on, is that for bancors entire life cycle, as shown from the chart above, BNT has for 98% of its lifetime underperformed BTC. The times where BNT outperformed BTC was when new investors came in and bought up BNT. These rallies were not done via fees generated. Personally, I need BNT to outperform WBTC in order for my position to recover, and given its history, these events rarely occur.

From your example above, with the BNT-TKN strategy, sure traders may find a use case for BNT and will set up a trade strategy utilizing BNT to reduce fees. BUT … this is a strong BUT … 1) these traders must see that the fees saved from trades ( which are minimal anyways ) will outperform the risk of holding BNT tokens ( BIG risk in 90% of the cryptoverse atm ) and 2) what if these traders use BNT-TKN to constantly short the shit out of BNT? Dont you think that this can also create further heavy price ceilings on the BNT tkn?

All im saying is that there are many uncertainties… BUT… if we give people a good reason to own the BNT tkn that not currently on the table… then this is also likely to help the situation.

I am merely being a realist while being hopeful. I want the best for my own personal invested funds, and this also means whats best for bancor to a certain degree. But what all the Bancor fanbois don’t understand, is that for now until who knows when, our funds in the protocol are essentially held captive. Sure, we are free to leave at the cost of losing limbs. But until then, we (our funds), will continue to work for the protocol and not us. The bancor “team” will continue to do whats best for bancor, and this may or may not be whats best for bancors current community.

The problem at hand may have a faster route at being solved, but why take that route when you’ve been given a free loan of the entirety of funds locked in the protocol?

The fast route = creating some way to make BNT desired and wanted
The slow route = create new things around the bancor ecosystem, which after sucessful, will then generate fees to solve the problems.
The smart route ( from the protocols perspective ) = the slow route whilst being given a free $79 million dollar loan at the time of writing. ( our funds )

I want both the fast and slow route to be worked on. But for some reason, why do you not want the fast route to also be worked on?

Also, as Mark has eluded to many times, we have time on our hands… but eventually time runs out… and what happens when TKNS/BTC start rallying and outpacing the growth generated by fees? This would be a disaster that not any big brains thats part of this team or any other could handle.

If perhaps, at this time, people are given a reason to buy the BNT token, then maybe BNT will be able to keep pace with the market.

( Do not fool yourself with the $ of BNT but rather the chart between BNT - TKN )

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The times where BNT outperformed BTC was when new investors came in and bought up BNT. These rallies were not done via fees generated.

I don’t disagree here but also we were paying LPs fees in the past as opposed to burning the vast majority. With Carbon, my understanding is that liquidity providers will not get paid any fees as it is a tool for them to create a strategy that will execute at some price or range of their choosing. This is similar to a conventional centralize exchange and an orderbook where the traders pay fees to the exchange and not the other way around.

Assuming that the deflationary mechanism for BNT is substantially large, I see no reason for why it wouldn’t be a desirable asset to hold.

I don’t disagree in the current state of the protocol that there is a high risk for holding BNT (the protocol was on the brink of death some months ago). I do think that holding BNT will be less riskier over time assuming that the folks can deliver successful products that generate fees for the network. I don’t think carbon is a platform that lets you use some collateral to borrow BNT for shorting or let’s you take leverage in some form of another. You can sell BNT in carbon but that’s possible in v2.1, v3, etc… so not much change there unless I am missing something?

If anyone wants to sell BNT for some other TKN via carbon, I think it is better for it to be on chain so that the protocol has enough BNT liquidity to perform its buys and get a better price (as opposed to the liquidity living mostly on CEX for example and then arbitrage bots taking value due to price mismatch)

Can you provide an example of an action that was good for the protocol and not the best for the bancor community? Perhaps, I am out of my mind but everything that I have heard from contributors being invested in the protocol as TKN LPs, BNT token holders, leads me to conclude that what is good for the Bancor protocol is good for Bancor LPs. Mind you, that even stopping BNT printing saved the value of LP tokens that would have otherwise gone to zero.

I don’t think there is any silver bullet that will miraculously solve our problems over night. I also don’t think that printing more BNT is the answer as part of that got us into this mess in the first place. Advocating for more LM will probably lead to more selling pressure and the continue degradation of the BNT token. Ultimately, nothing is free and if the community ever wants to do BNT rewards in the future, they should be bought from the market via fees and not printed out of thin air. I also think that doing any sort of incentives on v3 is a waste (even if targeted to BNT holders) and would much better like for this to be done in new products that need bootstrapping instead.

AFAIK, Carbon is making BNT desirable and I think that bringing new services that generate more fees for more BNT burning is a positive.

We will have to wait and see what happens when the market picks up again. I think if we are in a strong position with good products that are producing fees and buying BNT that there should be zero reason for BNT to also not keep pace. In the last cycle, BNT (and other DeFi tokens) rallied with the rest of the market and only recently did the token crater due to the massive printing.

It has only been like a month since the v2.1 to v3 migrations have stopped and I think that the deficit percentage has been relatively steady. To me this is a positive.

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youre right, this isnt possible. what I meant to say was not shorting but simply setting up a trading system on carbon where it would continually sell BNT for TKN then rebuy BNT for a lower price. I should not have previously written shorting. If using BNT within trades on carbon come with no fee’s then perhaps traders might use my previous example and simply create strategies where it does this, and this could cause a heavy price ceiling on BNT against its respective pairs. With these trades, because there are no fees, carbon wouldn’t collect fees, and therefor all BNT-TKN trading strategies would not really help to generate fees or reduce the deficit.

Working on the long game without any shorter term plans. Developing an entirely new AMM without making any slight improvements to a protocol that recently cracked.

The benefits of using the Bancor AMM were removed, no ILP, and the benefits of holding onto BNT ( high apy ) were also removed.

I am not advocating for LM. No where did I state this. I am simply saying that the world works with give and take. These benefits were stripped. Nothing was given, leaving the protocol less desirable to use and the BNT token less desirable to hold.

I want BNT to have some additional utility given to it that will make people want to own it. ( other than carbon generating fees, where these fees, if voted on, will go towards buying and burning BNT ) I do not know what utility this is yet. Ive started threads on it, and I’d like to continue discussions on it. Thats the main take away. Thats the short term plan, which should be worked on simultaneously with Carbon and other new products.

I know the contributors are also invested in the protocol, and I know long term they do want whats best for the protocol. But while they implement their goals, they are 1) being paid from the foundation , many with heft salaries, and 2) our funds, roughly $80Million TVL at the time of writing, is being loaned to the protocol to fix the damage the contributors overlooked and were ill prepared for, despite the warning signs smacking them in the face with a cooldown period to prepare for.

and for the HIGHLY paid contributors ? I’m sure playing the long game is in their best interests given how much theyre being paid. If I were one, I would not want the foundation to consider a bail out, eat into my salary funds and repair the deficit with my piggy bank. Long game + fee community loan = WIN WIN

I digress

If the contributors can give additional utility to BNT and make it more desirable. This will be a good thing. and if you are to reply, please comment on why you think making the BNT token more desirable isnt worthy of the developers time.

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Just to clarify on this, there are two types of fees that can be implemented on Carbon just like on a centralized exchange:

  1. Maker Fees: Fees for when your limit order is filled. I think at some point
  2. Taker Fees: Fees for trading on spot i.e. without creating a limit order in the system

The taker fees will always be in the system regardless of which token is being traded. The Maker fees is what has been previously mentioned as something that can be waived as a benefit to makers creating BNT-TKN orders in Carbon.