This proposal is expected to appear on Snapshot for voting on 2021-10-10T12:00:00Z . Make sure to stake your vBNT for voting before this date and time to participate in the DAO decision.
Proposal is very similar to the previous LM rewards extension.
To pass, this proposal needs 35% quorum and 66.7% supermajority.
TL;DR
- The LM rewards on stablecoin pools (DAI, USDC, USDT) are extended from the 28th October 2021 until 4th January 2022 (another 12 weeks), and can continue being extended by the DAO.
- The LM rewards are extended to maintain current stable pools protocol’s liquidity in anticipation of Bancor V3.
- To support the flawless migration, a new liquidity mining program will be released together with the Bancor V3 release.
Discussion
- 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.
- Bancor V3 will significantly reduce the pressure resulting from insurance on all the assets, and should increase the protocol revenue from trading fees.
- 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 2%, in order to achieve that, Bancor requires significant volume and Vortex to be applied.
Summary
- Bancor should not lose the momentum and cut out the LM rewards on stablecoins.
- The current LM rewards will be changed together with the release of Bancor V3.
- Current stable tokens liquidity is essential to stay in the ecosystem to maintain the protocol momentum and support the migration of liquidity from v2.1 to V3.
Volume and fees
Weekly volume and fees from the USDC, DAI and USDT pool from the week of the 28th of June (when LM rewards were last extended) has been consistent (Figure 1 and 2).
Figure 1 - Weekly Fees for DAI, USDC and USDT pools.
Figure 2 - Weekly volume for DAI, USDC and USDT pools.