Proposal for 350k coinvestment / LM rewards on 0Chain (ZCN)
This proposal is expected to appear on Snapshot for voting on Monday May 24th
2021-05-24T15:00:00Z
TL;DR
- Proposal to activate liquidity mining on ZCN
- Proposal to coinvest 350,000 BNT on the ZCN pool
Justification
Our first proposal on Bancor was to whitelist ZCN. This proposal received the overwhelming support of vBNT holders emanating from both the ZCN and the Bancor communities. Together, these voters surpassed the 40% quorum requirement and enabled 0Chain to join the exclusive family of single-sided liquidity pairs on Bancor.
It’s no easy feat to achieve the level of voter participation necessary to pass such a proposal. We at 0Chain appreciate all individuals who took the time to examine our proposal, evaluate our project, and participate in the Bancor governance process by casting their vote.
To demonstrate our appreciation, we will be depositing 100 ZCN* into every address that casts a vote on this upcoming proposal, a deposit that will go to both ‘For’ and ‘Against’ addresses.
*The 100 ZCN deposit will be valid for all vBNT holders staked in the Governance Contract as of blockheight 12457449 (Tuesday May 18, 2021), and will exclude the xBNT contract.
0Chain believes that the Whitelist achievement is a key milestone that represents a rich beginning in the Bancor/0Chain relationship. Not only do we see the Bancor network becoming ZCN’s frontier decentralized exchange and liquidity resource, but we also see an exciting future in which we synergize our technologies; one where the combination of cutting edge liquidity and cloud storage solutions forges new ideas and introduces important innovations out into the world.
Image 1 shows 97K BNT in the ZCN/BNT Pool. 77K BNT above the initial 20K co-investment (4x the initial Co-Investment).
Over the span of only a few weeks, this new relationship has gotten off to an impressive start. Image 1 above shows that the 20k BNT co-investment was met with open arms by our community. The maximum ZCN deposit limit has been hit on each “open space” opportunity. Additionally, we have nearly 5X’d the total BNT in the pool from 20,000 BNT to 97,576 BNT — showing that at least 77,000 BNT out there belongs to long-term believers in both 0Chain and Bancor.
With the help of our new proposal, 0Chain will continue to build on this progress and ensure that the Bancor Network remains the number one ZCN exchange as we charge forward into our mainnet launch. We believe this proposal will yield the following impacts:
- TVL Increase. A 350k coinvestment in combination with liquidity mining rewards would create a major incentive to quickly migrate the remaining Uniswap Liquidity (~$1m) to the current ZCN pool on Bancor ($1m). As of today, this coinvestment will support ~$3m in ZCN single-sided availability, and ~$6m in total liquidity. LM rewards will expand the total single-sided exposure as the BNT from LM rewards are re-staked. Altogether, this TVL increase will ensure that the ZCN Bancor pool grows (and remains) larger than the ZCN Uniswap pool.
Image 2 shows the APR of ZCN pools compared to that of pools of similar liquidity size (ordered chronologically by liquidity), . The more liquidity that the ZCN pool gets, the more volume it should pull away from Uniswap
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Bancor Revenue Increase. Image 2 demonstrates that ZCN is providing stronger APRs and Fees than pools that have substantially more co-investment and over twice the liquidity. This fee inflow correlates directly to Bancor revenue. Growing the depth of the ZCN pool will only strengthen the ROI for Bancor LPs and the network as whole. The APR of the ZCN pool also demonstrates that the inflow of fees should not dissipate even if the LM rewards were to run out at some point.
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Positive Impact on BNT Price. As shown in Image 1, the core 0Chain community believes strongly in BNT’s future and holds a position in the BNT token. The DAO’s sponsorship of ZCN continues to have a positive impact on BNT price: the 20K BNT co-investment in 0Chain led to an additional 80K BNT locked out of circulation. This shows that 0Chain is not an inflationary risk to the DAO, rather, it’s the opposite – the BNT inflation resulting from ZCN’s co-investment has been considerably outpaced by new demand for BNT. We’d like to see this trend continue with our new proposal. It’s in the best interest of all parties involved that the BNT rewards earned are re-invested back into the pools for the purpose of liquidity expansion. This reinvestment will keep BNT rewards off the open market and contained within the Bancor Network Vortex. Historical data has shown that LPs restake 80% of all LP rewards. There is no reason this should be different with the 0Chain community, given that the core contributors are also long on the BNT token. Altogether, this ensures that 0Chain, with its new co-investment and associated LM reward, continues to provide a positive impact on the token price of BNT.
We’d like to continue our rapid growth on Bancor and, for the reasons mentioned above, we believe that passing this proposal will facilitate new growth on our Bancor liquidity pool (and our Bancor revenues) and incentivize mass liquidity migration from Uniswap to Bancor. If we achieve these two milestones it will make Bancor the mainstay DeFi option for ZCN.
Thanks for reading.
Disclaimer: I’m the Director of Operations for 0Chain and I own some $ZCN.
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