This proposal is expected to appear on Snapshot for voting on Monday 19, April 2021 at 12:00 pm UTC.
- This proposal seeks to increase the Co-investment limit to 2M BNT in the BAT pool.
- It will open up space for LPs on the TKN side (BAT) and potentially lead to an increase in the depth of the pool as LPs add liquidity
- A larger BAT pool will attract more trades from aggregators and professional market makers to Bancor which ultimately leads to more fees for our platform.
There is currently 120.1K BNT and 567.8K BAT tokens in the BNT-BAT pool. This has resulted in a pool that has roughly 1.7M in liquidity. At the moment, LPs on the TKN side (BAT) can’t provide single sided liquidity since there is no capacity. This proposal is seeking to increase single-sided capacity in the BAT pool by increasing the Co-investment limit to 2M BNT.
If we want to attract more BAT LPs to Bancor, we need to open up space in the pool so that they can provide single sided liquidity. This would allow us to grow the liquidity in the pool and attract larger trades towards our platform which ultimately results in higher fees for Bancor.
Since inception, the BAT-BNT pool data shows that is filled up completely by the seventh week (2020-11-23):
This suggest to me that there is demand for LPs on the BAT side to provide liquidity and we should open up space from our side.
The top pools for BAT are on Uniswap/Balancer and are paired with ETH. Cumulative liquidity is roughly 14.75M on other DEXes and we should strive to make the Bancor pool deeper to support larger trades (equates to lower slippage).
Currently, this pool is filled completely on Bancor and LPs can’t provide single sided liquidity on the TKN side (BAT). I am proposing a 2M Co-investment limit for the BAT pool which should open up roughly 14M in single sided liquidity (assuming BNT price at $7.00). If this pools fills up completely, we would have a pool that’s roughly ~28M in depth. Our pool will also be competing with CEXes that also have large amounts of BAT
If we attract BAT LPs and grow the pool to its full capacity, we will roughly have ~9M in BAT tokens which would put us in the 9th place among CEXes.
- A larger co-investment limit on the pool will let LPs provided single sided liquidity and will lead to an increase in pool depth
- More liquidity in the BAT-BNT pool should lead to larger volume from DEX aggregators and professional market makers sent in our direction
- More volume for Bancor leads to more fees for our platform and BNT holders
- We should not increase the limit on the pool
- We do not need extra liquidity in our platform to support larger trades
- We do not need to generate fees for our platform or BNT holders