Hey @OverAnalyser
I shared most of this on DM with you, but thought I’d re-post here for visibility.
Firstly thank you for thinking through all this, and here are my my two cents. I do not think Bancor v3 is viable after the economic vulnerability rendered ILP untenable. ILP was the main offering in Bancor v3 and from my perspective it is unfixable, so I see little reason for new LPs to deposit into v2.1/v3. The main goal for B3 in my opinion should be to repair the remaining deficit via Carbon fees, and then let it sunset.
Currently I see all the energy and innovation pouring into Carbon, and I believe Carbon is the most effective way for the Bancor community to recover and thrive.
I guess sometimes you have to let everything burn to the ground and use the lessons of your failures to hit restart. What was discovered in the depths of recovering the protocol (particularly research on a dynamic fee) ultimately led to Carbon and could prove to be a better way of driving sustainable on-chain liquidity and offering users a truly valuable service.
And I don’t think Carbon’s service is only valuable for “pro traders”. Personally I wouldn’t classify myself as a “pro trader” (and I’m of course biased), but Carbon is looking very interesting for me because while I tend to passively hold tokens for the mid/long term, I do like to plan my entry and exit targets, and capitalize on my intuitions about the range in which a given token might trade. That is effectively what Carbon offers - an automated buy low, sell high “swing trading” machine, which could also be a more effective and less risky way to drive on-chain liquidity, as opposed to liquidity being wholly dependent on LPs who are exposed to IL. LPs in Carbon are motivated to provide liquidity in order to execute trades at specific prices, and don’t care about IL/fees.
Sharing some links below for more background on Carbon & Bancor. Excited to get your feedback as it evolves and the beta goes online.
Governance:
- Introducing Carbon: An update to the Bancor DAO: Introducing Carbon: An update to the Bancor DAO and Community
- Approved vote to use 100% of Carbon protocol fees to buy and burn BNT in order to help eliminate the remaining deficit in B3/2.1: https://gov.bancor.network/t/proposal-100-of-all-fees-earned-from-carbon-to-repair-bancor-deficit
- Fast Lane POC - both B3 and Carbon will start arb’ing themselves against other AMMs and use the proceeds to buy and burn BNT - Proposal: Improved Value Capture and Fast Lane POC
More on Carbon:
- Carbon vs. other AMMs: Comparing Carbon to Existing Concentrated Liquidity AMMs | by Nate Hindman | CarbonDeFi | Dec, 2022 | Medium
- Carbon Whitepaper high-level summary: Carbon Whitepaper: A High-Level Summary | by Nate Hindman | CarbonDeFi | Dec, 2022 | Medium
- Whitepaper: https://resources.carbondefi.xyz/pages/whitepaper.pdf
- Video explainer: Orderbooks, Automated Market Makers, and Carbon #defi #cryptocurrency - YouTube
- Trading simulator: Introducing the Carbon Simulator. Carbon Simulator on… | by Stefan Loesch | CarbonDeFi | Feb, 2023 | Medium