Proposal: Deploy Bancor on the Polygon Blockchain

[beamish]

For this proposal to pass, it requires a 35% quorum and 66.7% supermajority.

TL;DR Polygon offers unparalleled liquidity utilization, single-staking, and native IDLE Finance – thereby allowing protocol’s BNT-staking to reach maximum efficiency. Native Polygon protocols that allow for different allocation strategies to be implemented on single-staking mechanisms, could maximize returns for both the Bancor protocol and LPs.

Introduction to Polygon

Polygon is a protocol that looks to build and connect Ethereum-compatible networks. We combine the best of Ethereum and sovereign blockchains into an end-to-end multi-chain system. Here’s our USP: we benefit from Ethereum’s network but we’re more secure, open, and powerful than our competitors. We’re scalable, and 2021 was a true testament to our ability to grow: we’ve expanded from 100 native protocols to over 7000, in less than 7 months. We offer both great user and developer experience, and we believe we’d be a great fit for the deployment of Bancor.

We would love the opportunity to have Bancor’s ‘Safe Staking’ mechanism native on the blockchain. We believe that our capital efficiency and native protocols can help take Bancor to new heights.

Liquidity Utilization

Polygon is proud to be the few blockchains to support Uniswap v3. The recent upgrade from Uniswap v2 to v3, with the addition of concentrated liquidity and price ranges, truly showcased the potential of the Polygon protocol. Across top liquidity pools, Polygon has the highest volume traded, and greatest liquidity utilization. This trend was seen through comparison of similar liquidity pools as well, where the volume-to-TVL percentage was significantly higher than competitors.

Link to research: Polygon's Success within UniSwap v3

What does this mean to Bancor? We understand the importance that BNT trading has for the ‘Safe Staking’ mechanism – and our volume and efficiency could definitely be of use. We have low gas fees, support over 65,000 transactions per second, and continue to maintain a steady growth in MAU – which in conjunction with our liquidity utilization statistics could be truly beneficial.

Single-Staking on Polygon

The implementation of single-sided liquidity to Bancor 2.1 is revolutionary, and Polygon has the systems in place to support the contract. We already have single-staking native protocols in place, and this could perhaps make cross-deployment, and any transfer of tokens, easier and more efficient.

In conjunction with protocols like IDLE Finance and Thetanuts, deployment on Polygon could also mean automated liquidity and options strategies thereby increasing returns for everybody on the Bancor protocol – including the protocol itself.

Here is previous discussion that also explores the advantages of the Polygon blockchain: Proposal: Deploy Bancor on the Polygon Blockchain

Summary

Polygon is a rapidly growing “internet of blockchains”, and one on which we hope Bancor could consider deployment. Our capital efficiency and single-staking mechanisms could bring tremendous value to improve an already revolutionary protocol in Bancor.

FOR – Deploy on Polygon blockchain

AGAINST – Deploy on another

[eldude]

Thank you for posting this. I’ll be honest.

I was very bullish on Polygon 5-6 months ago but now I suspect that they will be losing market share over time.

At the moment, the most impressive is Starkware IMHO. DyDx is doing incredible. Argent wallet seems to be going full ZK.

However, I don’t have nearly enough knowledge here.

I wonder if there would be any MATIC offered to Bancor users.

[glenn]

Hi @beamish,

Thanks for bringing up this proposal to our governance. I think at the moment, the team and community are focused on getting Bancor 3 out the door and then consider deploying to other L2s, sidechains, and other blockchains after (we have had this discussion a few times in the past). We can expect B3 to launch in Q1 of this year so I think we are getting there and consideration for deployments to other networks outside of Ethereum will be coming right after:

I would like to echo @eldude comments here and would also like to pose a similar question along the same lines:

What incentives do $BNT holders have for voting on polygon deployment vs. other blockchains that might offer native LM for protocols that move there (assuming all else equals)?

[eldude]

@glenn - I agree that this convo is likely a bit too early.

However, I cannot help but to think that if we launch on an L1 or L2 we are bringing immense value and should be rewarded.

If we launch on Arbitrum, Optimism or Starkware - there are no tokens yet, but everyone knows there will be.

When that time comes, Bancor users would likely be handsomely rewarded as heavy users of these networks and get the airdropped tokens at a later date.

[gabal]

Bancor should deploy on a L2 like Arbitrum where security is not a concern. Most major protocols are already deployed or are planning to.

[beamish]

Hi everyone,

Sorry for the delayed responses. The question, “What incentives do we give $BNT holders when other blockchains offer native LM?” was at an unfortunate time – we were adding our finishing touches to our sophisticated LM2.0 program, and were moving away from traditional LM. We couldn’t announce it at the time, but I’m proud to say that we have launched our $15 million dollar campaign to advance towards LM2.0!

LM2.0 is a program we’ve created where protocols, and their users, are rewarded by Polygon through the protocols’ KPI merits. For additional information, please refer to the two links below!

Announcement: DeFi For All Enters Final Phase With $15 Million for Polygon Native DApps — Polygon | Blog

Details: LM2.0 Campaign - Details - Announcements - Polygon Ecosystem DAO

[beamish]

Liquidity mining was initially done to bootstrap liquidity. Over time we realized LM is wasteful spending and we started investing time and resources to improve ecosystem overall. Mercenary capital will come and go but novel interesting use-cases will be built on money legos like AAVE, Uniswap, Compound (soon on Polygon), PoolTogether and soon Bancor v3.

Please look at our LM2.0 campaign for more information (commented below), but Bancor v3 would qualify for Tier 1 of our campaign. This would mean $1M USD spread over 6 months, rewarded across the protocol and to its users.

[beamish]

We look to implement zk-systems within Polygon as well! Our seed funding last month, coupled with our push for #DeFiForAll, will only push the Polygon Ecosystem towards explosive growth over the coming quarters. We’d love for Bancor v3 to be a part of this growth, and create value for its users as well.

Further, Optimism and Arbitrum are awesome L2s as well, there’s no denying it. But we ask that you foremost consider Polygon for deployment – high liquidity utilization, fast and near gasless transactions, and our LM2.0! We’d be a great platform to expand the Bancor v3 protocol!

[glenn]

Seeing that Uniswap V3 was able to get $15M for 12 months or roughly $1.25M per month is encouraging. On the other hand, seeing that Bancor B3 could potentially qualify for $1M for 5 months or roughly $200K per month is actually disappointing.

The difference in magnitude is almost 6x and it’s not like Uniswap V3 has attracted that much TVL either:

If it takes $100M in TVL to qualify for $200K in rewards per month then I would expect Uniswap to have roughly $600M in TVL for such an offer ($1.25M per month). So why is there such a large discrepancy between what was offered to Uniswap and what is being offered to Bancor?

To put this into perspective, Kyber was offered $3M AVAX over a 2 month period back in September of last year for launching on Avalanche:

Kyber Network Joins Avalanche Rush Program with $5M Allocation

This was when their TVL was at ~$250M:

I would expect Bancor to be offered the same if not a higher amount by the Avalanche foundation for deploying there. I also note that there is plenty of support from within the Bancor community to consider Avalanche as one of the first places to launch after B3 is released.

As it stands right now, I will be voting with my full $vBNT voting power against deploying on Polygon unless a more serious offer is made to the Bancor community.

[gera]

Is this supposed to be for Bancor V2 or V3? If it’s V3 then we should wait until after V3’s launch.

If it’s for V2 then it’s too late IMHO and we’re better off focusing on the V3 schedule.

[eldude]

I strongly agree with @glenn here. Whatever L1 or L2 the Bancor deploys on will be getting a unique feature set on their chain (not another fork of a fork of a fork).

To me, being offered a tiny fraction of what Uniswap’s deal is an indication that perhaps Bancor’s unique feature set (il protection, single sided staking) is either not well understood or not that interesting to the polygon team.

[JBsmood]

IMO, polygon is an excellent choice. @mbr has stated that it’s likely possible to deploy to several different blockchains within a short time frame. Maybe not simultaneously, but somewhat close.

Avalanche and Arbitrum are equally good choices. It all depends on which metric you’re looking for. At the end of the day, Bancor should deploy to several chains fairly quickly. Let the users decide where to pool n chill.