Co-investment Limit Increase on ETH
This proposal is expected to appear on Snapshot for voting on 2021-06-28T12:00:00Z
TL;DR
- Create extra space for ETH deposits.
- Enable a limit change from 30 million BNT, up to 50 million BNT minting limits on ETHBNT pool
- The limit can only be increased by 2M BMI, only if there is no space to stake ETH
- There has to be at least 5 days break between each limit increase
Vote “for” to enable this change, or vote “against” not to enable it.
Background
With the acceptance of BIP5 by Governance and the recent contract upgrade, the DAO can now set hard limits for BNT co-investments by the protocol on a per-pool basis.
This proposal seeks to exercise this new feature by significantly increasing the co-investment limits on ETH from 30,000,000 BNT, to a maximum of 50,000,000 BNT.
The co-investment will be increased gradually with 2M BNT tranches. Effect on the network of the underlying limits increase will be tightly monitored.
The anticipated positive effects are:
- An immediate increase in TVL.
Increased co-investment limits allow for additional single-sided token staking by both ETH holders. ETH pool currently has a limited capacity to attract ETH in big chunks. We witnessed a higher than usual demand and requested from big market players to stake ETH with Bancor.
- An increase in the Bancor Vortex burn rate.
The ETH pool proved a minimal insurance liability during the initial phase of V2.1. Trade revenue on ETH pool is one of the main contributors to Bancor Vortex burning protocol. Increasing the co-investment limit will increase trading volume and Bancor Vortex burns activity.
- Passive staking of ETH.
More and more ETH of big players is looking for a safe harbor to part their ETH for an upcoming bear market. Bancor, so far Bancor is one of the safest places with attractive ETH denominated yield. There are other places such as Lido, but this lock ETH until the 2.0 release. Therefore we have seen increased demand for ETH staking
Summary:
ETH pool is one of the most important pools on BNT. It has been proven a low IL liability with high upside for the network, not only because of accommodating a lion share of TVL but also because of producing relevant revenue and causing significant Bancor Vortex Burn.
The careful limit increase will allow luring capital from big and long term players on the market that will support not only protocol TVL but likely to back Bancor on the media.
