This proposal is due to appear on Snapshot on Monday April 12th (2021-04-12), 1:00PM UTC. Make sure to stake your vBNT for voting before this date and time to participate in the DAO decision.
TLDR
- This proposal seeks to increase the Co-investment limit to 2M BNT in the MKR pool.
- It will open up space for LPs on the TKN side (MKR) and potentially increase the depth of the pool as LPs add liquidity
- A larger MKR pool will attract more trades from aggregators and professional market makers to Bancor which ultimately leads to more fees for our platform.
Abstract
There is currently 78.6K BNT and 256.8 MKR tokens in the BNT-MKR pool. This has resulted in a pool that has roughly 1.2M in liquidity. At the moment, LPs on the TKN side (MKR) can’t provide single sided liquidity since there is no capacity. This proposal is seeking to increase single-sided capacity in the MKR pool by increasing the Co-investment limit to 2M BNT.
Motivation
If we want to attract more MKR 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.
The top 4 pools cumulative liquidity for MKR-ETH pairs in other platforms (Uniswap/Sushiswap/Balancer) roughly totals 84.12M.
Currently, this pool is filled completely on Bancor and LPs can’t provide single sided liquidity on the TKN side (MKR). I am proposing a 2M Co-investment limit for the MKR 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 ~30M in depth and potentially make us the largest DEX for MKR (if we move LPs from other platforms over).
The MKR-BNT pool data shows that it has been filled completely since last year (notice the 200 MKR token threshold):
This suggest to me that there is demand for LPs on the MKR side to provide liquidity since it hits its threshold when 2.1 launched back in October and has stay at these levels since then (~200 MKR tokens).
For
- 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 MKR-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
Against
- We should not increase the limit on the pool.