Proposal: Bancor 3 Liquidity Mining Rewards in the USDC Pool

DAO Archive (SUBMITTED)
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Proposal: Bancor 3 Liquidity Mining Rewards in the USDC Pool

This proposal is expected to appear on Snapshot for voting on May 8, 2022. Make sure to stake your vBNT for voting before this date and time to participate in the DAO decision.

To pass, this proposal needs 35% quorum and 80% supermajority.

TL;DR

  • As stated in the previous USDC Liquidity Mining Extension proposal, the rewards in the USDC pool on Bancor v2.1 shall end with the full launch of Bancor 3.
  • To bootstrap USDC liquidity and incentivise migration to Bancor 3, this proposal details a Liquidity Mining program with decaying emissions for the USDC pool which will last for 6 months.
  • Bancor V3 has proposed a total budget of 10,000,000 BNT to be used to incentivize stakers on the token side.
  • This total budget reflects the importance of transition away from large amounts of BNT emissions.
  • This proposal seeks to use 124,000 of those to incentive USDC in the months following the launch.

Discussion

  1. USDC is the 4th deepest pool on Bancor with $24,965,852 in liquidity (3% of Bancor v2.1’s TVL).
  2. Sustaining liquidity in the USDC pool is essential to maintain the position of the Bancor protocol on the market.
  3. The USDC pool daily APR from fees (without BNT rewards) in the last month is shown in Figure 3.
  4. The BancorDAO approved BIP18 which details the Bancor 3 Liquidity Mining Program with a budget of 10m BNT for Liquidity Mining Rewards on TKN pools for the lifetime of Bancor 3.
  5. The Dual Liquidity Mining Program aims to incentivise migration and bootstrap liquidity on Bancor 3. Multiple projects have shown interest in the program, and several DAOs have passed and ongoing proposals to participate in the program by committing DAO TKN funds, such as the Wootrade, Paraswap, 88MPH, and APWine DAOs.
  6. Given points 3 and 4 and with the sustainability of BNT emissions in mind, this proposal seeks to create a LM program with decaying BNT emissions in the USDC pool.
  7. The proposed budget for the LM rewards on the ETH, wBTC, LINK, USDC, USDT and DAI pools for the first 6 months of Bancor 3 is 10% of the LM budget, 1m BNT.
  8. The BNT rewards allocation schedule for the USDC pool is detailed in Table 1.
  9. USDC pool’s weekly volume and fees are shown below in Figures 1 and 2.
  10. Bancor 3 will introduce additional use cases for the liquidity in the pools, with flashloans being the first one, in order to generate additional yield for LPs. Other internal strategies to utilize the liquidity in the pools will be introduced in the next phases of Bancor 3.

Table 1 - Proposed Liquidity Mining Rewards in the USDC pool (BNT)

Token Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Total
USDC 35000 25000 20000 18000 16000 10000 124000

1521Ă—475 136 KB

Figure 1 - Weekly USDC fees since the beginning of July.

1527Ă—468 128 KB

Figure 2 - Weekly USDC volume since the beginning of July.

717Ă—417 58.1 KB

Figure 3 - Daily APR in the USDC pool since the beginning of April 2022.

Summary

  1. The Liquidity Mining Rewards in the ETH, wBTC, LINK, USDT, USDC, and DAI pools will end with the full launch of Bancor 3.
  2. With the sustainability of BNT rewards in mind and considering the approved LM budget within BIP18 as well as the Dual LM program’s potential expenditure, a BNT LM rewards emission of 1m BNT over 6 months for the 6 pools mentioned above is proposed, with decaying emissions each month.
  3. New USDC LM programs, as well as modifications and extensions to the Liquidity Mining program described herein can be proposed to the DAO in the future.

Voting Instructions

FOR

Start LM rewards on the USDC pool, at the rate described in Table 1, after the full launch of Bancor 3.

AGAINST

Do not approve this LM program. The Bancor v2.1 LM program will end once Bancor 3 is fully launched.

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