- This proposal seeks to increase the Co-investment limit to 1M BNT in the AXS pool.
- It will open up space for LPs on the TKN side (AXS) and potentially increase the depth of the pool as LPs add liquidity
- A larger AXS pool will attract more trades from aggregators and professional market makers to Bancor which ultimately leads to more fees for our platform.
There is currently 284.2K BNT and 241.9K AXS tokens in the BNT-AXS pool. This has resulted in a pool that has roughly 3.9M in liquidity. At the moment, LPs on the TKN side (AXS) can’t provide single sided liquidity since there is no capacity. This proposal is seeking to increase single-sided capacity in the AXS pool by increasing the Co-investment limit to 1M BNT (currently it is at 250K).
If we want to attract more AXS LPs to Bancor, we need to open up space in the pool so that they can provide single sided liquidity. This would allow us to grow the liquidity in the pool and attract larger trades towards our platform which ultimately results in higher fees for Bancor. The AXS pool went live recently due to the DAO passing Proposal to Whitelist Axie Infinity (AXS) with a co-investment limit of 250K BNT.
Since inception, the AXS-BNT pool data shows that is filled up completely by the third week:
Note the 275K ceiling on 4/5/21. This suggest to me that there is demand for LPs on the AXS side to provide liquidity and we should open up space from our side.
The top pools for AXS are on Uniswap/Sushiswap and are paired with ETH. Cumulative liquidity is roughly 6M on other DEXes and we should be able to make the Bancor pool deeper for larger trades.
Currently, this pool is filled completely on Bancor and LPs can’t provide single sided liquidity on the TKN side (AXS). I am proposing a 1M Co-investment limit for the AXS pool which should open up roughly 7M in single sided liquidity (assuming BNT price at $7.00). This is an increased of 750K (from 250K) or roughly 5.2M (BNT price at $7.00). If this pools fills up completely, we would have a pool that’s roughly ~14M in depth.
Note that this community has faced substantial IL (see original whitelisting proposal) and onboarding these new users over should result in a net positive for our platform. New users typically don’t understand the strengths of IL protection and single sided liquidity until they LP for the first time on Bancor.
- A larger co-investment limit on the pool will let LPs provided single sided liquidity and will lead to an increase in pool depth
- More liquidity in the AXS-BNT pool should lead to larger volume from DEX aggregators and professional market makers sent in our direction
- More volume for Bancor leads to more fees for our platform and BNT holders
- We should not increase the limit on the pool.