Proposal: Whitelist BBS with External IL Protection
- BBS is a new project/token I’ve been working on for a while (“a decentralized reddit”).
- I am asking for the Bancor community to consider BBS for whitelist status.
- All BBS liquidity incentives from our end will be exclusive to Bancor.
- BBS tokens from the initial supply will be allocated for the specific purpose of covering its own impermanent loss. This contract will be called the “Impermanent Loss Pool (ILP)”.
- When a BBS token liquidity removal experiences IL during unstaking, instead of the Bancor protocol shouldering the liability, BBS tokens from the ILP would be used to compensate the liquidity provider.
- Only when the ILP is depleted (in the distant future), the standard Bancor IL insurance would kick-in for BBS token positions.
- BBS will open-source this external IL protection solution for the benefit of any project wishing to integrate with Bancor, opening a generic solution to whitelisting that may help to on-board new projects.
Token Contract: Will be updated before this proposal gets pushed to Snapshot
Project link: https://www.bbsnetwork.io/
BBS is a new project and a token that I’ve been working on over the last year, while working with Yudi and the team on the Bancor v2.1 design, which continues to propel the Bancor Network into new realms of innovation around liquidity provision for the growing token economy.
BBS can be described as a “Decentralized Reddit where each post is a revenue-generating NFT”.
Like many new projects in the space, BBS will be offering staking rewards and liquidity mining. However, in the same spirit of innovation and thanks to our deep experience in how liquidity unfolds in modern AMMs, we wish to suggest a better model, together with the Bancor community.
The main issue, with today’s liquidity mining programs, as I see it, is that a new project is asking its devout early supporters-- the token holders – to bet against the success of the project in the near term (as reflected by the token price). The reason is that if the token’s price rises dramatically, all the mining rewards and collected fees would not suffice to cover the accrued impermanent loss - an issue that is dear to our hearts at Bancor and in DeFi at large.
Understandably, the Bancor Network is in no rush to provide impermanent loss insurance to a brand new project, as the token’s price volatility could be drastic - a heavy cost for the protocol to absorb. However, I believe there is a solution for this and that the Bancor Network could be the first to adopt it, as it has been the first to steward many industry leading innovations to date.
The idea is that BBS would allocate a percentage of their token supply for an “Impermanent Loss Pool (ILP)” - meaning that every time BBS is unstaked from Bancor, and impermanent loss insurance is due to the LP - the insurance amount will be taken from the ILP and not from Bancor. The Bancor Community would need to whitelist the BBS token and maintain a limit on the BBS pool that is a percentage of the BBS fully diluted supply - for example, 5%. This allows the Bancor Community to benefit from attracting new tokens to the network, while allowing LPs to benefit from Bancor’s novel impermanent loss protection, without raising costs on the network.
At some point in the future, as LPs enter and exit the BBS pool, the ILP could be depleted; however, by that point in time the BBS project may be significantly more mature, allowing it to reasonably vie for regular impermanent loss protection from the Bancor Community, just like other tokens currently listed on Bancor that have been whitelisted for this advanced feature. In this way, incentives are more correctly aligned among the various stakeholders throughout their life cycles, asking projects to bear the cost of protecting their most avid supporters at first, and then possibly shifting this risk to the network once the potential value of doing so is more clear.
The advantage for a project like BBS is that it would be able to offer, for the first time in DeFi, early holders to lock their tokens for liquidity mining, without risking their long positions on the project they are trying to support. This configuration has the additional benefit of making it rather simple to allow the new token project LPs to use their locked positions to participate in the governance of their new network - something that is more complicated in the existing network design.
The advantage to the Bancor Network of testing such an innovation is that, if effective, it could quickly become a new token launch best practice. Attracting the wave of new token projects to list and stake with Bancor will establish a network effect that will benefit all, existing token holders, LPs and new project stakeholders alike. This is the essence of the decentralized liquidity network design that kicked off, and continues to propel Bancor, and the greater token economy forward.
The BBS token contract is a standard ERC20 token from the OpenZeppelin library)
The token will soon be launched and we will seek Etherscan verification before pushing this proposal to snapshot.
BBS token is used as the native currency of the BBS network, flowing between BBSs, NFT Owners, Operators and Developers. BBS tokens enable the holder to participate in network governance via voting.
- Advertisers can use BBS tokens to buy ad space on different BBSs.
- BBS can be used to purchase posts all across the network
- Royalties from revenues are paid to developers, operators and BBS owners in BBS tokens.
- BBS holders can vote on governance proposals concerning:
- Beneficiaries of newly issued BBS as well as BBS burning policies
- Network upgrades and project funding
- BBS interoperability standards and integrations - enabling all BBSs to function as a single network
- BBS holders can choose to lock their tokens for up to multiple years in order to:
- Boost their DAO voting power (given their commitment to hold BBS tokens for the long term)
- Earn fees from trades on the BBS-BNT liquidity pool (with no impermanent loss)
- Earn staking rewards, also boosted by longer lockup periods
Live Product: https://bbs.market
As noted above, there are many benefits to Bancor:
- We will open source the contract that allows 3rd party IL insurance
- We will open source the front end UI allowing users to do this
- We plan to have Bancor as the main destination for our users to LP and swap.
- Expand Bancor’s ability to enable to LPs to stake with no IL