Proposal: Increase Co-investment Limit to 300k on the FRM pool

DAO Archive (SUBMITTED)
1

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.

To pass, this proposal requires 35% quorum and 66.7% supermajority.

TLDR

  • This proposal seeks to increase the Co-investment limit from 100k BNT to 300k BNT for the FRM/BNT pool.
  • A larger FRM/BNT pool will reduce price impact and therefore attract more trades from retail users, aggregators and professional market makers to Bancor.
  • Bancor is Ferrum Network’s official Ethereum buyback platform, and both Ferrum and Bancor would benefit from increasing the depth of the pool to reduce price impact and become the most favourable option perform the FRM buybacks.

Rationale

  • The Ferrum team performs token buybacks on their preferred partners, Bancor (Ethereum), Dfyn (Polygon) and Apeswap (BSC) [1].
  • The FRM DEX pools with the deepest liquidity are Uniswap v2 ETH/FRM with $1,717,371 [2], ApeSwap FRM/WBNB with $924,113 [3] and DFyn ETH/FRM with $285,179 [4].
  • Current co-investment is 100k BNT which, at 1 BNT = $4.03, allows for a pool liquidity of $806k.
  • A 300k BNT co-investment would allow for $2.4m liquidity to be added to the pool. The FRM/BNT pool would then become the DEX market leader by depth and it would be in Ferrum Network’s best interest to use it more often to perform their token buybacks.
  • The extrapolated yearly APRs based in the past 24hr volume in the Uniswap v2 ETH/FRM, ApeSwap FRM/WBNB and DFyn ETH/FRM pools are 22.91%, 1.74% and 3.97%, respectively.
  • The space in the pool isn’t full yet but incentivising it is definitely worth it. If needed, LM rewards can be considered at a later stage. For now, it is essential to increase the space in the pool to allow for more liquidity in and consequentially drive more FRM volume to Bancor.

For

Increase pool co-investment from 100k BNT to 300k BNT.

Against

Keep the pool co-investment at 100k BNT.

[1] https://twitter.com/FerrumNetwork/status/1443984842300039187
[2] Uniswap Info
[3] ApeSwap Info
[4] DFYN Info

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