LM rewards for Uniswap

OLD GOV (LEGACY)
1

Proposal for small-caps LM rewards for UNI token.

TLDR:

  • Uniswap is one of the largest DeFi assets
  • Liquidity Mining for Uniswap will bring significant exposure of Bancor technology to the Uniswap community
  • Encouraging Uniswap token holders to stake in Bancor will be the most profitable single asset exposure staking opportunity for UNI tokens available on the market.
  • Uniswap has significant capital and institutional backers, and getting their attention is a key to push Bancor development further

Token contract address:

0x1f9840a85d5af5bf1d1762f925bdaddc4201f984

Project website:

https://info.uniswap.org/home

Whitepaper:

Discussion:

Uniswap is a decentralized exchange built on Ethereum that utilizes an automated market making system rather than a traditional order-book. Instead of matching individual buy and sell orders, users can pool together two assets that are then traded against, with the price determined based on the ratio between the two.

Uniswap has copied the Bancor swapping formula and excluded connector token (BNT) from the requirement to set up a pool.

Staking Opportunity

Currently Uniswap does not support any type of staking mechanism. The only way to utilize the token is by providing liquidity to protocols such as AAVE (0.02% APY), Compound(1.16% APY) or Cream (0.02% APY).

Therefore, staking Uniswap on Bancor protocol should be the most attractive venue for UNI token holders.

Tokenomics & Token Metrics

Token utility

UNI holders are responsible for governing the protocol. Their primary concern revolves around voting a set of protocol delegates that can help steer the future direction of Uniswap v2. UNI holders can also vote specific token pools for which can collect fees.

Other responsibilities include:

  • Managing the funds held in the UNI community treasury
  • Determine the tokens that belong on the Uniswap default token list (tokens.uniswap.eth)
  • Ownership of the Uniswap ENS domain name

Nowadays token has no real utility, even voting is considered highly centralized.
Leveraging the above information, might convince Uniswap tokens holders to move their assets to Bancor ecosystem and swap they UNI for BNT to participate in a truly decentralized organization.

Token distribution schedule

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Uniswap is also a highly inflationary token, therefore, after implementation of Bancor Vortex fees, BNT will become a significantly more attractive asset to hold in regards to dilution.

Community and Communication

https://twitter.com/Uniswap 223K followers

https://www.reddit.com/r/UniSwap/ 25K members

Uniswap 37K members

Uniswap has a significant growing community, acquisition of a portion of this will significantly grow Bancor ecosystem participants and gini coefficient.

Available Audits

Audit performed by Consensys

Market and Trading Data

Uniswap trading volume on both centralized and decentralized exchanges is equal to around 3,8B USD where the majority of trading is going on CEX.

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As we can see below, Uniswap UNI/ETH pair is the main market for UNI on DEXes, wich average daily volume of around 52M USD.
Becoming the deepest liquidity pool for UNI token might be hard, but aiming towards the second deepest pool is in our reach.

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The main reason behind LM rewards on UNI token is to bring more visibility to UNI maximalists about the Bancor network.

We can see a recent spike in the number of active addresses. A portion of these users who are new holders of Uniswap tokens will be easiest to convince to use and swap their UNI tokens for BNT tokens.

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References

https://twitter.com/Uniswap

https://studio.glassnode.com/metrics?a=UNI&m=addresses.ActiveCount&s=1609446857&u=1613865600&zoom=

6 Likes
2

Awesome research, This would definitely help us in more exposure, after using bancor they would understand that we are the best Amm exist in the industry.

1 Like
3

YES, great marketing opportunity and there is not a lot of yield that UNI holders get from holding. The IL on their pool is probably bonkers so we should definitely vote this in. Thanks for the write up Michael!

3 Likes
4

I’ll move my pool over from Uniswap, hard to get good yield on it!, the UNI token is much less functional than BNT but with this current bull will appreciate!

1 Like
5

‘Uniswap has significant capital and institutional backers, and getting their attention is a key to push Bancor development further’

Development in what sense? Institutional investments? Institutions surely know exactly what Bancor is. Before I allow my BNT to be subject to more inflation, I would expect more detailed logic than some vague statements.

7

The goal is to get Uniswap holders and users to interact with Bancor and understand why it’s the best AMM in the market. The UNI token is also highly traded so, in theory, should benefit the protocol long term through swap fee profits besides the obvious marketing benefits listing it would bring.

8

You would be surprised how big is information asymmetry in the investors’ space. I personally do data science for one if VC fund and they knowledge on Bancor was inacurate untill I explained it to them. But I agree that this is just one case. Most of the smaller funds follow what big guys are doing, and big guys are mostly in Uniswap.

I do not have access to portfolios of investors that hold UNI and do not hold BNT but I am sure that might be some.

I understand your concerns tho. Unfortunately cannot help here.

10

What Tyler says, makes sense (UNI is highly traded, thus a listing would bring fees). You sure have a strong point there, Tyler.

And Michal, what kind of ‘development’ are you talking about? The technology would improve? You think the team will work harder? Are they short on cash? (The last question is rhetorical as the project has very healthy cash reserves).

11

What “development” are you referring to?

12

The one in your initial post:

  • Uniswap has significant capital and institutional backers, and getting their attention is a key to push Bancor development further.
14

I think Bancor has a good LM program. I don’t see the point of adding more pools. You run the risk of inflation getting out of hand.

I think the LM progam should be capped. No new coins. Extend rewards on existing pools for a while longer to keep current liquidity in. Give it a few weeks to grow.

15

I disagree with adding UNI to the LM reward program. I’m of the opinion that hosting a pool for a “competitor” token would be harmful to our protocol. As you’ve mentioned, UNI holders have no staking option and the tokens have little utility value. The only way they earn is by contributing to traditional dual-sided pools. Opening a gateway for them to single-sidedly ‘stake’ their coin and earn our token is detrimental to Bancor:

  • Alice stakes her UNI, earning BNT reward in the process, releasing more inflationary supply into market
  • Bob grows tire of his UNI and swaps all into BNT, increasing UNI side of the pool, taking out potentially partial elastic supply BNT – over time, the pool is skewed to more UNI
  • (dare I say) UNI is eventually unfavored and loses value comparatively
  • Bancor now “stuck with” a bunch of UNI in the pool

I hear the argument that BP should attract Uni users based on its current market share, but that’s an impulsive move in the long-run.

Having BNT/UNI be a simple white-list is probably more okay in this sense. The eventual bullish bet on BNT over UNI is somewhat mitigated by the immediate attention from UNI holders to stake on Bancor, as well as a cheaper trade route for UNI to BNT / other coins, which incentivizes investor converts.

2 Likes
16

I don’t think it’s about BNT vs UNI. This proposal ask for a small cap LM rewards (so maybe 5k bnt per week). Think of it as advertisement if you want.

In return, you get more awareness from potential users as well as arbing potential. 60% of volume on bancor are from arbing anyway. I think this will benefit Bancor more than the 5k BNT/week inflation.

I do hope that Bancor have a more user friendly UI if this proposal pass though. The current UI is not very new-user friendly.