Extension of LM rewards plan
Stake vBNT for voting on this proposal before Wednesday 31st March, 2021 (UTC)
- The LM Rewards program will be extended on ETH, LINK, WBTC.
- The LM Rewards will be extended on USDC, DAI, USDT.
- The current award rates for each pool will be unaffected.
- Proposal has been made based on data available publicly via the Bancor Dune analytics page: Dune Analytics
The LM rewards schedule for ETH, INK, WBTC, USDC, DAI and USDT is due to end in less than 2 weeks. To maintain liquidity in the near term, and to sustain incentives for new LPs to become involved in the Bancor ecosystem while Bancor prepares new products and upgrades, herein it is proposed to extend the LM rewards program on these pools for a further 8 weeks.
- ETH, LINK, and WBTC will continue to receive emissions of 100-200K BNT per week, for an additional 8 weeks.
- USDC, DAI, and USDT will continue to receive 50-100K BNT per week, for an additional 8 weeks.
- The liquidity mining program for USDC, DAI, and USDT can be ended prior to the completion of the 8 week extension if the alternative shadow tokens pool redesign is deployed.
- Upon release of the shadow pools, a new LM incentives program may be considered by the DAO. It is a reasonable expectation that DAO will choose to incentivise these pools; however, it is under no obligation to do so.
- Around 79% of tokens have been restaked back into the pools; therefore, the LM rewards have increased the space for single-sided TKN deposits, resulting in growth of the network, rather than creating a sell pressure.
- LM brought a significant increase in the TVL bringing Bancor ecosystem size to above $1.5B, immediately prior to a market-wide correction.
- The 6 mentioned above pools drive most of the volume on the ecosystem, therefore constant curation of these pools is essential. Below chart presents the volume share of the 6 main pools.
- For comparison, the below chart presents overall network volume, as we can see, the majority of volume is driven by 6 big pools.
- Situation looks the same in regards to the network fees. Majority of fees are driven by these six pools as we can see on the chart below.
- For comparison, below chart with fees from all the active pools.
- Thanks to achieving the position of market leader for the LINK liquidity, Bancor currently has 40% of the daily volume of this token and continues to grow.
- Until the protocol achieves a similar penetration on pools such as ETH and WBTC and others, LM rewards should be considered to stay to maintain the momentum and protocol growth.
- At this stage, current protocol growth requires LM to maintain the momentum and stay competitive in the space (the DAO seems aware of this).
- After achieving the position of market leader in both TVL and volume, LM extension will no longer be necessary, and the voting for LM extensions may be concluded.
- The new shadow tokens pool design will significantly reduce the pressure resulting from insurance on stable assets, and should help to create a more sustainable system for long-term stablecoin liquidity.
- A large majority of the LM rewards are re-staked to the protocol, increasing the TVL and the space available for TKN deposits with single sided exposure. If this trend continues, the LM program is more of an asset than a liability, and can be managed more assertively.
- In the long term, Bancor is aiming towards sustainable annual inflation of 4%, in order to achieve that, Bancor requires significant volume and Vortex to be applied.
- Extension of LM rewards on ETH, WBTC and LINK for 8 weeks will provide 800,000 - 1,600,000 BNTs as rewards, (depends on the multiplier).
- Extension of LM rewards on USDT, USDC and DAI for 8 weeks will provide 400,000 - 800,000 BNTs as rewards, (depends on the multiplier).