This proposal is expected to appear on Snapshot for voting on 2022-01-09T00:00:00Z. Make sure to stake your vBNT for voting before this date and time to participate in the DAO decision.
This proposal seeks to increase the trading liquidity to 1M $BNT for the $CEL pool from 250K $BNT.
It will open up space for LPs on the TKN side ( $CEL ) and increase the depth of the pool as LPs add liquidity
A larger $CEL pool will attract more trades from aggregators and professional market makers to Bancor which ultimately leads to more fees for our platform.
An increase in $BNT trading liquidity will let LPs stake single-sided and lead to an increase in pool depth
More liquidity in the CEL-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 trading liquidity limit on the pool or lower its fees
There are currently ~294K $BNT and ~254K $CEL tokens in the BNT-CEL pool. This has resulted in a pool that has roughly ~2M in liquidity. This proposal seeks to increase the $CEL pool’s single-sided capacity by increasing the trading liquidity to 1M $BNT from the current 250K $BNT.
If we want to attract more CEL 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 pool for CEL is on Uniswap V3 and it is paired with ETH. Pool depth is roughly 6.36M and we should try to be as deep as this pool if not deeper:
The current trading liquidity is set at 250,000 BNT. This proposal is asking to 4× that.
In general, I am a big supporter of growing our pools. The recent wNXM proposal, for example, is very attractive.
Where possible, we should try to think in logarithmic terms. Although the wNXM proposal is asking for 1M additional BNT, and this one is only asking for an additional 750k, the relative change on the wNXM pool is 2× (still high, but that pool is a superstar), whereas this proposal is asking for double that. While not unprecedented, we should still take pause and consider if this is justified.
As @eldude has already pointed out, Celsius executives Roni Cohen-Pavon and Yaron Shalem, the CRO and CFO, respectively, have been named in a money-laundering investigation, and are known associates of the criminal Moshe Hogeg. Yaron Shalem has already been arrested. If you would like to look into the matters further, the articles by CoinDesk (here, here, and here) are a good place to start.
Thanks, Mark. I don’t think this proposal has to go up this weekend on snapshot and can probably wait until next year (maybe late January or early February). I had originally removed the trading liquidity increase from the original proposal since in my opinion, it is sensible for us to wait until things settle down with Celsius.
I don’t think that the ~50M that they lost in the badger hack will cause any issues for them in their daily operations (given how much money they raised in their latest round) and the legal troubles faced by some of their executives seem unrelated to the operations at Celsius.
With that said, I recreated this proposal as a clean trading liquidity increase since we have two members from our community that asked for such a proposal (separately from celsius LPs).
I guess I’m more suspicious of Celsius than the other people in this thread.
Beyond the riskiness of their business model and the counterparty risk from all the other defi protocols they have funds in, I don’t trust the CEL token itself or how important the CEL token is to Celsius’s balance sheet.
There are strange movements of CEL tokens between Celsius wallets and exchanges.
If this is wash trading, then we don’t know what the true value of the CEL token is. Worse, this possibly artificially priced token makes up a large chunk of Celsius’s balance sheet.
In situations like the BadgerDAO Hack, Celsius’s vast holdings of CEL are providing them with a lot of cushion to absorb losses. Effectively, that CEL is acting as insurance.
If something catastrophic happens and this CEL has to be sold to cover losses, the BNT in this pool will be arbitraged out to buy more CEL as the pool maintains balance.
Which means that basically Bancor is acting as Celsius’s reinsurer, and this BNT co-investment is providing stop-loss insurance.
I should note here that this proposal was pushed forward since Celsius recently deposited $100m in $ETH onto Bancor.
It has certainly caught the attention of a large number of community members and outsiders (some people asked via DMs) and I think it lends legitimacy to our protocol knowing that we have LPs willing to park large amounts of funds here.
It’s very possible that Celsius is providing Bancor with more value (from the liquidity it provides, and the PR benefits of big stakes) than the potential loss of 1M BNT.
There are aspects of risk with CEL that I didn’t see discussed in the thread, and really needed to be brought up.
A closer relationship with Celsius is fine, but I’m cautious about CEL. The benefit needs to be weighed against the potential cost, and we’re still (even if this proposal passes) likely on the benefit side of that equation.
But if a quid pro quo develops between Celsius putting assets into Bancor and Bancor expanding it’s exposure to CEL, that could become detrimental to Bancor at some point.
I agree with your observations and would like to thank you for bringing them forward. The $CEL token has been around for a while now:
1371 days 13 hrs ago (Apr-09-2018 11:40:16 AM +UTC)
at least close to 4 years now and through bear and bull crypto markets. I think their business model has been around long enough to be proven at this point time and risk is on the lesser side.
This is a risk with every token that we list on our platform since most DeFi protocols hold a significant amount of their own governance token as part of their treasuries (some of them have trusted us enough to park a portion of their treasuries on Bancor). It will be the same scenario for those projects and protocol should something happen on their end and they decide to arbitrage out the BNT from their pool. To note is that most BNT liquidity is actually on our exchange so ultimately a lot of that BNT will end up coming back to us anyway.
I think so as well from the liquidity that they are providing and the potential to also park some of their other tokens here for passive yields (we have plenty of pools and they have plenty of token deposits from CeFi users). Ultimately, we split fees evenly so this benefits the protocol and $BNT token holders since some of those fees also go towards the vortex. As a side effect, some celsius users might also realize that Celsius is taking a large cut of earnings when they visit the Bancor app and look at the returns on our pools. They might actually convert to staking directly in our platform and forgo CeFi altogether (this is a large win for us since the number of users we are acquiring goes up ).
I think the goal is for us to be the deepest pool so that we can get more trades sent in our direction. At some point, having a bunch of trading liquidity that is not utilized is probably not beneficial. We will have to see what the performance on this pool is like as we get more liquidity and whether volume picks up. I have asked our resident data scientist to keep an eye on this pool since we recently lowered its fees as well to be more in line with other CEL pools on other DEXes.