I propose the Bancor protocol expanding its offering into collateralized lending with the “staking” of a whitelisted (or other agreed upon TKN). This would work very similar to another “very large Defi competitor” in that a customer can stake their coins and then based on an agreed upon loan to value % receive vBNT tokens. These tokens can then be used to swap into any coin they desire that is offered on Bancor. This pool would be created from vBNT holders staking into a separate pool segregated from LPs. This pool would be used to provide tokens in exchange for staked collateralized assets. The interest earned and liquidated assets would offer the APY to those vBNT stakers in the vBNT Collateralization Pool (VCP). These TKNs then must be swapped immediately into another coin of their choosing (This immediate swap will be tracked to ensure fees are earmarked to the VCP stakers). The loan is perpetual and must be paid back in vBNT (which will generate another swap fee) to unlock the collateralized assets.
The benefits to BNT holders (and Bancor DAO) would include:
Establishing another use case for vBNT offering a pathway to leverage which increases demand for BNT (and for BNT to be staked to receive vBNT, which would apply buying pressure to BNT tokens in the market).
Gives long term BNT investors an additional revenue stream in the form of interest income from loans , transaction fees, and liquidation fees. These revenue streams diversify BNT stakers and insulate them from being solely dependent on swaps and LM rewards
Establishes Bancor as a one stop shop for low fee swaps and collateralized loans which adds value to the BNT token.
Potential Challenges:
vBNT burn algorithm must be activated for this to make sense for stakers interested in the VCP. The vBNT/BNT exchange rate needs to be close to 1:1 for this to make sense considering the gas fees and potential delta risk if BNT TKN appreciates in value quickly.
This is a crude outline so far, but I think most should get the general idea.
What I’m proposing is that a customer can collateralize say 5 AAVE and take a loan out for say up to 250 vBNT that you could then swap for any token on the Bancor Network. Its still yours, its just locked on Bancor until you pay back the loan. Then you would need to pay it back to unlock your AAVE. Would that interest you if Bancor offered that?
Lending is difficult to do right and ripe for exploits but if the team was to do it i’d think it’d be a better idea on having the loans be in stables or tokens other than bnt/vbnt
Wouldn’t it better to have AAVE/etc do this kind of lending? I mean they are specialized in it. If vBNT can be use as collateral on other platforms… we also have access to all the assets on those platform already.
I think that would probably be a better option in this early stage. There are a lot of risks with lending/borrowing also. Might not be a good idea to be jack of all trade … master of none. imho.
That is true, This idea came to mind because the vBNT/BNT pool has been maxed out by a whale since day one. As a result there is a very large quantity of vBNT that is available that could be put to work in house without having to even leave Bancor…
And yes, it is true that other platforms offer similar services, but I believe Bancor could out compete those services, because vBNT is essentially a passive bonus given to BNT stakers. And as such even a 20-30% yield would be solid value add if you’ve already staked BNT anyway. Also, to your point I am unsure if you can stake vBNT or not on other platforms, so I’ll just assume you are correct. I doubt you’d be able to stake it and bring in any meaningful APY. The VCP if created would bring in transaction fees, liquidation fees, and swap fees (vBNT to other tokens) which could yield considerable APY if the lending segment catches on. Thanks for your opinion.
currently vBNT have no use outside of Bancor. If vBNT can be use as collateral on other platform, aave/cream/compound/etc … you can borrow other assets to play around with while maintaining your staking in Bancor. This will increase use case for vBNT as well as spread out the risk from Bancor.
Beside, sometime collaboration is a good thing. Don’t need to compete with everyone. You also have to look at risks, rewards, resource.
The “Two large DeFi lenders” don’t accept vBNT as collateral. I just checked. The use case for vBNT other than staking in the vBNT/BNT pool (which is always maxed out) or to vote is nill. We need to find a way to put vBNT to work for us BNT stakers. This proposal could be an option.
vBNT needs to mature a little. Maybe after burning and pool increase. Ideally by end of the year, you can use vBNT as collateral on multiple platforms outside of Bancor.
The community is drastically unaware of its own fully operational leveraged lending system that does not utilize the untold fortunes the developer is not yet fully aware of from a long time ago when the peg-usdb system was implimented and the katana pools were started which caused many new pools both USDB hub as well as BNT hub.
USDB being integrated back into the smart token pools so you can pair to a 50/50 BNT/USDB hub token would be optimum because then the risk is divested into multiple directions. USDB is currently overcollatoralized excessively due to the lack of integration but it has billions in liquidity depth.
I have discussed this with Yudi a bit but there’s ongoing talks in discord about this privately.
Are there any old USBD pool owners from Katana listening? We need to talk, I have a discord group for you to join, the USDB pool holders discord, where we can organize that work.
If traction is not gained with BNT Bancor DAO a new 2nd DAO will be created, with or without Yudi the core dev’s help depending on his willingness to partner with the USDB pool holders to regenerate the interfaces required for Bancor DAO to utilize the untold billions in existence that the protocol is currently blind to which is damaging oracle pricing on etherscan for USDB.
Anyone wishing to contact me please do about this, I want to gather then USDB pool owners from the katana pools era circa 2018-2020 and get them organized into a functional sub-dao within this one, or alternatively if this is not preferred by the DAO, a 2nd DAO to manage the USDB treasury and handle 50/50 partnerships with Bancor DAO instead.