Proposal: Increase Co-investment Limit to 750K BNT on RSR (Reserve Rights Token) Pool

DAO Archive (SUBMITTED)
1

TLDR

  • This proposal seeks to increase the Co-investment limit to 750K BNT in the RSR pool.
  • It will open up space for LPs on the TKN side (RSR) and potentially lead to an increase in the depth of the pool as LPs add liquidity
  • A larger RSR 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 ~85.6K BNT and ~6.5M RSR tokens in the BNT-RSR pool. This has resulted in a pool that has roughly ~1.1M in liquidity. At the moment, LPs on the TKN side (RSR) can’t provide single sided liquidity since there is no capacity. This proposal is seeking to increase single-sided capacity in the RSR pool by increasing the Co-investment limit to 750K BNT.

Motivation

If we want to attract more RSR 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 RSR-BNT pool data shows that it was roughly filled up completely from December-January with a slow draw down in liquidity towards the latter half of January and beginning of February. It has since remained relatively stable for the past few weeks but it hasn’t grown as there hasn’t been space to provide single sided deposits:

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This suggest to me that there is demand for LPs on the RSR side to provide liquidity and we should open up space from our side.

The top pool for RSR is on Uniswap (not much on other DEXes) and it is paired with ETH. We should strive to make the Bancor pool deeper to support larger trades (equates to lower slippage).

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Currently, this pool is filled completely on Bancor and LPs can’t provide single sided liquidity on the TKN side (RSR). I am proposing a 750K Co-investment limit for the RSR pool which should open up roughly 5.2M in single sided liquidity (assuming BNT price at $7.00). If this pools fills up completely, we would have a pool that’s roughly ~10.5M in depth. Our pool will also be competing with CEXes that also have large amounts of RSR

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If we attract RSR LPs and grow the pool to its full capacity, we will roughly have ~58.9M in RSR tokens (assuming price of $0.089 for RSR) which would put us in the ~3th place among CEXes.

For

  1. A larger co-investment limit on the pool will let LPs provided single sided liquidity and will lead to an increase in pool depth
  2. More liquidity in the RSR-BNT pool should lead to larger volume from DEX aggregators and professional market makers sent in our direction
  3. More volume for Bancor leads to more fees for our platform and BNT holders

Against

  1. We should not increase the limit on the pool
  2. We do not need extra liquidity in our platform to support larger trades
  3. We do not need to generate fees for our platform or BNT holders
4 Likes
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Thanks for all the hard work, Glenn!

Looks good. I didn’t even realize there was no space in the pool.