Proposal: Whitelist ICHI on Bancor v3

TL;DR

  • Proposal to whitelist ICHI’s new token contract to go up for vote Sunday June 12, 2022
  • ICHI raised money, formed the ICHI Foundation, and passed a proposal in December (Snapshot) to phase in an updated token contract
  • ICHI has to implement Bancor v3 liquidity as the first use-case for new ICHI token contract
  • Trading liquidity limit of 800,000 BNT (less than half of legacy ICHI in order to ease into v3)
  • ICHI will stake and provide 50,000 BNT worth of ICHI tokens for Dual Liquidity Rewards
  • ICHI to provide 150,000 BNT worth of External IL Protection to Bancor
  • Upon Bancor DAO approval, ICHI will be launched on Bancor v3 with other pools
  • The ICHI pool will be set at a 0.3% fee tier

ICHI token address:
0x111111517e4929D3dcbdfa7CCe55d30d4B6BC4d6
($4.01 | ICHI (ICHI) Token Tracker | Etherscan)

Background & Rationale

Since the most recent Bancor vote, ICHI launched its new token contract, had a renewed launch of its Angel and HODL Vaults with new partners locking in over $10M in TVL in the first week, and built new strategies for partner vaults. Some of the ICHI vault partners include Nexus Mutual, Qredo, and Celsius. Learn more on about the token upgrade and protocol revamp.

ICHI plans to work with the Bancor DAO to partner and build a Vault for the Bancor community for users to earn yield.

Token Liquidity

ICHI’s main liquidity markets are on Uniswap v3 at the moment and are looking to build a strong liquidity market as before on Bancor v3.

Benefits for Bancor

  1. Bancor will be the first Liquidity program for ICHI getting rewards for deposits (and the main place ICHI will send users holding ICHI to provide liquidity).
  2. ICHI to provide 100,000 BNT worth of External IL Protection to the Bancor community.
  3. Bancor will have privileged access to HODL Vault creation on the new ICHI platform including access to IRR enhancements of up to 10k ICHI per week in the first 6 months.

External IL Protection

The ICHI DAO proposes a schedule where after 1 year, 75% of all ICHI not used for External IL protection is returned to the ICHI DAO multisig.

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Hey @dhtal - Couple questions:

  1. Why is there a new token? What happened to the old one?
  2. When users migrate, they essentially realize all the IL in the old ICHI pool, right?

The IL is scary with this one…

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Would it be possible to add more tokens for External IL protection? Maybe 500k BNT-worth? I believe that would make this proposal extremely appealing to everyone.

(I have no problem with the clause reclaiming 75% after 1 year)

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You can find some of your answers here: https://medium.com/ichifarm/ichi-stronger-crypto-economies-through-sustainable-liquidity-9b138887e523

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May also want to disable deposits on the previous pool before whitelist.

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El dude and Lesigh both bring up great points - would still very much like to see ICHI here but If we could bump the IL protection up a bit or remove the clause either one would make me feel much better about it.

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I’d like to see data on if this is a viable amount to cover the IL on the initial run up using previous token as a reference.
That data would ideally come from ICHI team as they should be budgeting for IL payouts in the Ext ILP pool, but would accept Bancor providing the data as this should have been tracked last time as well.

This is my biggest issue. The price has not tanked relative to what it was baslining at before. Why start a new token? This seems very suspect at this point.

Thanks for all the great questions all - the new token vote happened in December (before the Rari Fuse Pool liquidations happened which is what you see on the price chart above) and is unrelated to ICHI price changes but rather to the future outlook of the ICHI DAO. This vote and approval for a phased approach happened as we looked to raise investor funds to help us reach our multichain goals described in the medium article here: ICHI’s Roadmap to $1B in Community Governed Value | by Bryan Gross | ICHI | Medium) and approved by DAO members here: Snapshot

Surrounding the uptick and downward cycle in price - that was all due to a Rari Fuse pool which has since been suspended and will never be used again. Please learn more about that in our post-mortem here: Postmortem of Pool #136. The events that occurred yesterday were… | by ICHI | ICHI | Apr, 2022 | Medium

Hey please check out the post above to understand a bit more about the new token, how it works, tokenomics, and the thought process behind it :slight_smile:

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Just to add to dhtal’s answer. The new ICHI and legacy ICHI will remain pegged to each other. New ICHI contract literally has functions that convert legacy ICHI to new ICHI and back with 1:1 ratio. So it’s not a new independent token - it’s an upgrade of the old one that was planned, discussed and approved back in Nov/Dec 2021.

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Thanks for posting @dhtal !!!

Should this inherit the 1% fee passed on the other ICHI pool?

Hey team,

After discussions with multiple community and core Bancor team members we have decided to make a few updates that will align the ICHI-Bancor partnership and enable us to move forward with this proposal for vote.

  1. ICHI will start at a lower cap than originally suggested moving down to 800,000 BNT worth of ICHI.
  2. ICHI will increase the External IL Protection ICHI plans to provide up by 50% to 150,000 BNT worth of ICHI
  3. ICHI will launch a HODL Vault in support of the Bancor community in the next 6 weeks to enable single sided Bancor deposits on ICHI - learn more in our docs here: https://docs.ichi.org/ichi-docs-v3/ichi-vaults/overview
  4. The pool will be set to a 0.3% trading fee.

All of these updates have been made in the original proposal above. Thanks for the great community input!

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Additionally - more rewards to the dual rewards contract are possible in the future pending ICHI governance vote.

I wanted to put some numbers here for the community to get a clear picture. With $BNT at a current price of .85:

  1. 800K in $BNT trading liquidity is roughly $680K or roughly a $1.36m deep pool if it fills up completely.
  2. 150K in $BNT for external IL protection is roughly $127K or 19.5K $ICHI tokens assuming a price of $6.5 per $ICHI
  3. External IL being contributed will roughly be 150K $BNT/ 800K $BNT = 18.75%

The above, I think generally seems like a good starting point and we can reassess any future increments in trading liquidity based on how much IL the pool has suffered and the remaining amount of tokens in the external IL protection vault.

I think @eldude brings up a good point about the trading fee for this proposal:

which I think should inherit from the v2.1 pool (1%). Perhaps @NIX can run a report on the v2.1 ICHI pool for us to get an idea of the profitability of the 1% fee? Note that the fee was changed as part of Proposal: Change the fee in the ICHI pool from 0.3% to 1%

On the following:

I don’t think this shows long-term commitment to the Bancor community. These tokens are going to ICHI LPs to cover them for IL and not to BNT token holders.

Thanks @glenn I appreciate it! These are helpful to look at explicitly and was what we understood the Bancor team/community felt confident in. The vote seems to say otherwise which is why I want to get some more feedback/input from the Bancor community to understand their reservations.

I am hoping to get a Twitter spaces going about this proposal either later today or tomorrow so that we can discuss more of the community’s thoughts.

On the fee - I was unable to see @eldude’s comments to understand his reasoning for a change. I am happy to discuss that idea, I will just say that the fee has gone back and forth between 0.3% to 1% with the change to 1% seemingly making this an arbitrage synch and not really driving end users to trading through the pool. If the data proves otherwise then I am happy to make the change to 1%!

Started at 1%: Snapshot

Changed to 0.3%: Snapshot

Back to 1%: Snapshot

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Hey everyone - we are having a Twitter Spaces later today to discuss this proposal and how we can best update it to align incentives with you all! Please join and feel free to invite others :slight_smile: https://twitter.com/ichifoundation/status/1537081399374659586?s=20&t=fOk-U8lW-vOD1Yj7CdIn-g

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I would personally support this proposal with the following caveats:

  1. 1% fee
  2. $ICHI to provide matching 800K worth of $BNT External IL Protection to the Bancor community
  3. After 1 year, we have our data analyst run a report of the current IL liability in the pool:

3a. If IL liability in the pool is greater than the amount of ICHI in the external IL contract, Bancor DAO will not return any ICHI tokens in the external IL contract. Potentially, the Bancor DAO may adjust trading liquidity as needed to reduce any risks.

3b. If IL liability in the pool is less than the amount of ICHI in the external IL contract, the Bancor DAO will subtract the current IL liability and of the remaining ICHI will keep 25% (75% to be returned to ICHI DAO) for external IL protection.

I think a lot of the folks in the community saw the last price run for ICHI and the potential IL that this pool incurred, hence they are worried about this potentially happening in the future again due to the way that angel vaults work.

2 Likes