This proposal is expected to appear on Snapshot for voting on Monday 19, April 2021 at 12:00 pm UTC.
TL;DR
- Proposal to activate liquidity mining on NDX
- Proposal to coinvest on the NDX pool 250,000 BNT
Justification
Our first proposal on Bancor to whitelist NDX received unanimous support from vBNT holders that helped us reach the required quorum in a short period of time. Our other indices got approved as well but due to an upgradability pattern they don’t meet Bancor’s security standards at this point (we’re working on it).
In the meantime, we want to focus on deepening the liquidity for the NDX pool on Bancor and make it the premier place to buy NDX.
From what we gathered by talking to our community, there is a strong alignment in values and desire to work more closely together. Some of our community members were already $BNT holders, others heard about the IL-protection for the first time and were thrilled by the opportunity to provide liquidity.
As a matter of fact, the $NDX space that was available in the pool was filled up within minutes after the pool was deployed.
We now want to bootstrap the pool and bring it to a level on par with Uniswap to kickstart the sophisticated tokenomic flywheel created by Bancor. Right now the liquidity on Uniswap is 4x the liquidity on Bancor, so Bancor is not the default place to buy NDX and liquidity providers miss out on fees.
With a larger co-investment and liquidity mining there is no rationale why several liquidity providers on Uniswap would not migrate to Bancor. I, myself am a large liquidity provider in the NDX pool on Uniswap (and on Bancor) and would certainly move my liquidity to Bancor.
We are aware that the Bancor community who incentivizes key pools for strategic reasons with co-investments and LM rewards, is concerned about it leading to farming-and-dumping of BNT rewards and creating useless inflationary emissions.
I can say from my own experience of being a Bancor LP that I don’t see this as a possibility. This co-investment would roughly open-up $1,917,000 in NDX single-sided liquidity, totaling close to $4m in total depth. This would make the Bancor pool the deepest NDX pool overnight and with the liquidity mining rewards being re-staked, the liquidity would continue to grow over time.
According to the recent data, LPs on Bancor restake 80% of the rewards. There is no reason this should be different with the NDX community looking for a capital-efficient solution. Moreover, having the deepest liquidity, the pool would also receive more volume than the Uniswap pool, creating a sustainable revenue stream of income for LPs if the LM rewards were to stop at some point.
I love to see the rapprochement of the Bancor community and Molly M&A (Hegic, MPH and NDX) project and see this as the next step.
Documentation and Materials: https://docs.indexed.finance/
Q2 Roadmap: https://ndxfi.medium.com/q1-retrospective-and-whats-ahead-for-q2-43f4667e648
A comparison of Index projects: https://cryptotesters.com/review/comparing-defi-index-projects
Interview with Dillon Kellar: https://defiprime.com/indexed-finance
