Proposal to extend LM on AAVE for an additional 12 weeks

This proposal is due to appear on Snapshot on 19th April, 12:00 pm UTC. Make sure to stake your vBNT for voting before this date and time to participate in the DAO decision.

TL;DR

  • Extend LM rewards on the AAVE pool for a further 12 weeks.
  • Aave has attracted a liquidity pool of $41m at the time of Writing .

Voting Instructions

Discussion

Aave Currently has a $41 million Liquidity pool $20.5M of which is Aave tokens according to Dune analytics.

I propose continue the current LM rewards for another 12 weeks to keep liquidity on Bancor and attempt to encourage more deposits.

A risk at the moment is that matic are offering LM rewards on Aave via 0xpolygon currently offering 22% apy. I fear that if liquidity could part bancor for this if we do not renew LM.

For your reference the aave/matic announcement

https://medium.com/the-polygon-blog/defiforall-kicking-off-l2-defi-summer-with-40-million-usd-in-liquidity-mining-rewards-from-4937d7c6e287

6 Likes

Thank you for getting this together so quickly.

Nice proposal. I currently do not have any AAVE on Bancor. AAVE market size on Polygon is only $94,000 with 22% APY as of this morning. This APY will drop considerably as more volume heads to Polygon. If rewards are extended it would keep Bancor competitive. I would consider LP’ing AAVE on Bancor if approved. Thanks.

2 Likes

The Aave rewards APY on our end is at ~12.88% at the moment. If polygon is offering 22% APY for AAve depositors, am I wrong in thinking that LPs who wanted that higher APY would have unstaked their positions already? Or perhaps maybe the value proposition (Impermanent loss protection and single sided staking) of Bancor is strong?

1 Like

The 22% APY will drop over time as more liquidity pumps into AAVE on Polygon. Rewards are paid in MATIC. I would go to Bancor over AAVE if the APY is high enough. Once you add in the swap fees paid in AAVE on Bancor it can be quite competitive. Not sure on current LP’s, but I would think many would stay here if they want BNT/AAVE over MATIC. I’m bullish on all three, so I’m just hunting for best APY.

1 Like

I think the cost of unstaking and possible disruption of other 2x rewards would cause pause pause for reflection on removing liquidity. However if that 12% were to disappear that could be the straw that brakes the camels back so to speak and liquidity may get shifted over.

There is bound to be more people like Witter that could not see the point in adding to the aave pool with LM rewards expiring soon, who would now hopefully show more interest.

3 Likes

While I’m not a big AAVE holder, I do have some that need a home. I considered staking them to the LP, but decided not to since their LM is about to expire. I already stake ETH to the ETH LP and BNT to the MKR, so if the LP is renewed, I’d stake my AAVE with Bancor.

2 Likes

Absolutely crucial to extend LM on this pool IMO. It’s one of our best performing pools and trending towards higher volume every week. Voting FOR on this and hope the community does as well!

4 Likes

^ This.
I agree with the proposal, AAVE has a growing trading volume here and is quickly becoming one of our best performing pools.

2 Likes

I am not necessarily opposed to extending LM rewards for Aave but I don’t think the argument made here (matic rewards for Aave depositors in polygon would syphon liquidity from us) is a good one. Even with the current LM rewards ongoing on our end, the token amount in the Bancor pool peaked on the week of 3/22 with ~54799.91 Aave tokens:

and right now there are ~48461 Aave tokens on the contract. In dollar amounts, that’s roughly a peak value of ~24.7M on 3/22 to ~18.5M at the moment or roughly a ~6M drop in liquidity:

With that said, I looked at the current rewards offered to Aave depositors on 0xPolygon and it is currently at ~15.99% (has dropped from 22%) and as mentioned by others here, will continue to decrease as people move liquidity there. Our current LM rewards on the Aave side is ~13.61% (I think it has hovered around this range for a while) and that’s not counting the pool APR from fees which is also good:

What I would like to see this frame as is a way for the Bancor community to build synergies with Aave holders with the end goal to potentially have BNT onboarded on Aave (@mbr are we working on this?). Obviously, having the support of Aave community and their holders would be crucial in this endeavor.

3 Likes

Yes, we are working on it. We had a call with AAVE not long ago. We still need to prepare the proposal for their DAO. I’ll get around to this soon.

2 Likes