gonna say something that might be a difficult pill to swallow, but people hate bancor right now
no pumpenomics, ponzinomics or gimmicks are going to save the day here, you need strong positive sentiment to already exist for any/all of those tactics, which we don’t have
as there’s no “foundation bailout” then the ONLY options are those that work despite outright pervasive hatred in the wider community that isn’t going to go away any time soon
that means the only option is to tackle the fundamental problems from first principles in a trustless, mathematical way that can be programmed and executed successfully without any positive sentiment whatsoever - IMO the only sane thing to do is start from the position that “everyone” is waiting to dump at the first opportunity and work backwards from there to see what can be done to move forward
So the fundamental problem is this:
there are ZERO examples of an AMM outpacing aggregate IL with fees across the hundreds of AMMs that have been tried and analyzed, including those far bigger and more successful than bancor
that’s not FUD or hyperbole, bancor itself commissioned a report showing this, that there may be individual winners and losers but in aggregate every AMM on a constant product curve is evaporating value with every trade
@mbr specifically called this out on the last community call, that other protocols are billions in the hole, if they were to calculate their aggregate deficits
there are not enough trading fees in all of crypto to compensate for associated IL, more fees will NEVER imply safety from IL unless all we do is relegate trading to roughly equivalent tokens like stables
this is scary for the industry as a whole if you internalize and extrapolate the ramifications of that, but let’s focus on bancor only for the moment
the B3 design removes all individual gains and losses and replaces it with a single shared gain/loss that is the pool surplus/deficit model
This means that even if ILP is permanently disabled, value can still be bleeding from the protocol, widening deficits shared by every LP with no individual winners, only a community of shared losers
it is VERY simple now, compared to v2.1 and all other AMMS, instead of a complex shitcoin casino with individual winners and losers (where the MEV house always wins), we have a single equation:
profit = income - expenses
ALL problems we face right now stem from profit being a negative value which causes pool deficits to increase over time and lots of other bad things. Make profit positive and there will always be reasons to LP, reasons to trade, reasons to buy vBNT/BNT.
As long as profit is negative there are no reasons to participate in bancor at all, in any capacity, unless it is run as some kind of ponzi or similar scam (which will eventually implode).
As long as profit is negative then nobody will be “made whole” and no recovery plan will work, new participants will be fleeced to try to repent for past sins, eventually that approach too will need to be paid for.
If bancor breaks even (profit = 0) then it can still survive as a niche ecosystem, probably with cult followings within specific use cases like project treasuries etc. where it can act like a decentralized liquidity insurance product. This may also be fine if the alternative is protocol death, but may be an unsatisfying result for BNT holders.
I argue the market is NOT irrational right now, it sees the negative numbers and wants out. Unless a (quick) path to profitability is clearly shown both in theory and delivery, that’s completely rational.
The only solution to negative profits can be to increase income and/or reduce expenses.
We have several ideas to reduce expenses that sound great such as:
- Reduce trading liquidity during high volatility (aka TKN moons) to mitigate % IL
- Reduce ability for external parties (e.g. MEV) to extract value from protocol participants
- Limit deposit/withdrawals with a “turnstyle” to limit “bank run” style liabilities
- Third party IL protection paid for by TKN project treasuries etc.
- Removal of BNT minting
However almost none of these exist yet (even though some were already roadmapped for b3 phased rollout) and timelines on them existing has been described as “an unknown rabbit hole”.
We also have several unimplemented rabbit holes to improve income by taking “off curve” capital and applying it to:
- Native token staking
- Charging premiums for ILP-style protection/insurance
- Token launchpads
- Etc. etc. as outlined by OP
- Other defi ideas we can invent or copy that bring in additional revenue and are not “more trading”
The only mechanism/narrative b3 currently has to present a case for potential profit is:
1 unit of fees can mitigate more than 1 unit of IL when the protocol burns leveraged vBNT.
(If this is correct we should be shouting it from the rooftops to repair perception btw, not trying to kill it off…)
If 1 unit of fees burns 1 unit of BNT instead then unless i’m missing something (i might be, happy to be shown otherwise), it’s impossible to turn a profit ever without completing production rollout of one or more “rabbit holes” of unknown effectiveness.