Proposal: Extension of Liquidity Mining on WBTC, LINK and ETH pools
This proposal is expected to appear on Snapshot for voting on 2022-02-06T00:00:00Z. Make sure to stake your vBNT for voting before this date and time to participate in the DAO decision.
The LM rewards schedule for ETH, LINK, WBTC is due to end in less than 2 weeks. To maintain liquidity in the near term, and to sustain liquidity while Bancor prepares new products and upgrades, wherein it is proposed to extend the LM rewards program on these pools for a further 8 weeks with conditions to stop if the V3 is released.
- ETH, LINK, and WBTC will continue to receive emissions of 100-200K BNT per week, for an additional 8 weeks.
- Upon release of the V3, a new LM incentives program may be considered by the DAO. Therefore the current liquidity mining plan will be stopped to incentivise migration.
Discussion
- Around 75% of tokens have been restaked back into the pools; therefore, the LM rewards have increased the space for single-sided TKN deposits, resulting in growth of the network, rather than creating a sell pressure.
- The above 3 pools hold the majority of the protocol TVL, therefore curation of these pools is essential to maintain the position of the Bancor protocol on the market.
- The 3 mentioned above pools drive most of the volume on the ecosystem, and also present reasonable impermanent loss liability.
- The pools should be curated until the new V3 design is released so the funds are migrated without loss of significant TVL prior the protocol upgrade
Summary
- 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 releasing the V3 and supporting the smooth liquidity migration, LM extension will no longer be necessary, and the voting for LM extensions may be concluded.
- 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 4%, in order to achieve that, Bancor requires significant volume and Vortex to be applied.
- **Extension of LM rewards on ETH, WBTC and LINK for 8 weeks will provide 1,200,000 - 2,400,000 BNTs as rewards, (depends on the multiplier).
This proposal is very similar to the one here: Proposal: Extend Liquidity Mining for BTC/ETH/LINK and Proposal: Extend Liquidity Mining Rewards for WBTC, LINK and ETH pools. The arguments in favour of LM extension for the large caps pools then are still valid for a recent LM extension.