Rules for extension of LM rewards + LINK, WBTC, ETH, Ocean, renBTC extension
TL;DR
After an initial 12-week LM period, each pool can have its LM program renewed for an additional 4 weeks, a maximum of 7 times.
The LM program has been immensely successful, and the DAO sentiment is highly congruent with a sustained continuation of the LM program.
The Bancor Vortex will allow for an additional deflationary mechanism to be implemented that can offset nearly the entirety of the LM emissions, and bring the token supply within reasonable inflation levels EOY, assuming trade volume targets are met.
Extension of Liquidity Mining on Current Pools
TheBancor Liquidity Mining Plan has had a substantial impact on network growth and adoption. Moreover, the DAO sentiment is that the LM rewards are critical to maintaining the current market momentum. However, LM has an economic cost and must be wielded with care and skill. Therefore, the following proposal has been created that allows for the continuation of the LM program on all major pools, with a view to tapering the emissions and moving towards a sustainable supply management strategy in the immediate future.
The liquidity mining program will continue on any pool, so long as the community votes to extend it:
The voting for the pool/pools to extend LM rewards will take place every 4 weeks.
The voting will start at least 1 week before cessation of the LM rewards on any pool or pools.
Community members will vote to extend the LM for a further 4 weeks.
The Extension Proposal will indicate the pools for which the LM rewards are being considered for extension.
Each Extension Proposal may include single, or multiple pools.
Any pool on the network cannot be extended more than 7 times (overall, LM cannot be longer than 1 year per pool).
The proposal also includes 4 weeks extension of the liquidity mining rewards on:
Big caps pools:
LINK
ETH
WBTC
Small caps pools:
renBTC
Ocean
Discussion
Around 78% of tokens have been restaked back into the pools; therefore, the LM rewards have increased the space for single-sided TKN deposits, resulting in growth of the network, rather than creating a sell pressure.
LM brought a significant increase in the TVL bringing Bancor ecosystem size to above $1B, immediately prior to a market-wide correction.
The current momentum, fuelled in part by a successful LM program, has bolstered capital growth.
The synergy of LM restaking behavior exhibited by our community members has also established Bancor as the single largest source of LINK liquidity, taking not just a significant share of trading volume from Uniswap and Sushiswap - but took the majority of all LINK trades from the market aggregator, 1inch.
Until protocol achieves a similar penetration on pools such as ETH and WBTC and others, LM rewards should be considered to stay to maintain the momentum and protocol growth.
Cumulative fees on all of the pools are growing exponentially, therefore the potential short term inflation in the long term will be offset by the fees collected by the network, and Bancor Vortex (following the fee burner release).
Bacor Vortex fees upgrade is behind the corner, but to achieve significant burn on the vortex fees, the volume of the protocol also has to be increased further.
If Protocol achieves 1B in daily volume, we can anticipate around 18% of annual deflation caused by the Bancor Vortex.
Aiming towards around 4% annual inflation, in the long term, the protocol can afford minting around 10,000,000 BNT after the growth stage (benchmarking to initial 70M supply, excluding token co-invested by the protocol)
Thanks to the Bancor Vortex burning mechanism, the Bancor Network can afford a more aggressive approach to LM.
Summary
Current protocol growth stage requires LM to maintain the momentum and stay competitive in the space (the DAO seems all too aware of this).
After achieving the position of market leader in both TVL and volume, LM extension will no longer be necessary, and the voting for LM extensions will be concluded.
A commanding majority of the LM rewards are restaked, increasing the TVL and space of TKNs single asset exposure. If this trend continues, the LM program is more of an asset than a liability, and can be managed more assertively.
In the long term, Bancor is aiming towards sustainable annual inflation of 4%, in order to achieve that, Bancor requires significant volume.
I agree with almost all points, however, I don’t agree with extending either Ocean or the RenBtc pool in this vote.
Both aren’t really performing all that well while costing us quite some BNT.
I think if either of these wants an extension, the community of these coins should propose a vote themselves. That way we can gauge their interest and have them put more effort into routing people towards Bancor.
Why Ocean and renBTC? These have been getting rewards for 16 weeks already. Unless there is something I am missing, these 2 should not be getting mid-cap LM. Maybe reduce it to smal-cap reward or remove the reward all together.
It is still under development, Bancor core team has hands full of work, therefore they needed to push the deployment or even announcement of details a little forward, that is the reason for another extension.
What I CAN assure you, that this is happening, what I CANNOT assure you is the date of delivery.
The solution is complex and innovative, requires testing and auditing. I think postponing is better than being exploited.
I think maybe @mbr can share some more details on the ETA
I agree with you, it is better to launch when everything is ready, tested and audited.
Just wanted to make sure that this is still in the works, and I fully understand and appreciate your answer. Don’t worry about an ETA @mbr it is ready when is ready.
I 100% support eth/wbtc/link (I actually think these should be “permanent” somehow in the long run).
Ocean/renBTC on the other hand … unless there is some “special” cooporation that benefit Bancor in the work. I do not see enough justification to keep incentivizing 2 pools for 16weeks that barely pull in any trade volume at all. Since the volume in the Ocean/renBTC pools are so low, even if TVL drop to 0 for these 2 pools, we lost a total of 1m daily volume. not a big deal.
Use the LM that was in OCEAN/renBTC to incetivize other pools that give better rate of return. I know OCEAN has been with us from the start and they should get a little special treatment… but they already got 16 weeks of reward while not deliveling the trade volume. Ocean/renBTC should be voted separately from the LINK/WBTC/ETH proposal … seriously… don’t do a 5500 page stimulus deal that add excess fat to the package.
Rewards for Ocean and renBTC could use further discussion and perhaps should be left out of this proposal (open another one just for them).
I agree TVL is an important metric, but also is volume and we need to have much more of it. How will we increase volume? APY needs to be more organic and not just based on emissions / LM rewards.
What about stablecoins? I guess LM rewards for USDC/USDT/DAI pairs will end in 10 days and will not be extended right? Any strategy for them, which produce decent liquidity and volume?
Part of the problem I suspect is that the Ocean pool has been full for so long that it is difficult to promote Bancor withing the Ocean community-I have tried and tried! Naturally I would be upset if it was not renewed - as it was what got me into Bancor to start with - and now have added liquidity in BNT to WNXM, and LINK pools as well as OCEAN - and WNXM itself- so please don’t just look at the Ocean pool in isolation.
I can understand your worries about the TVL having some sort of bank run on these pools. Can I understand correctly that them being drained would cause IL to skyrocket, thus costing us more than extending LM?
If that is the case, we should be really looking at the core system, as this would essentially mean having low volume pools with IL protection / LM Rewards holding us hostage.
Why I’m really against extending these pools in this vote, is that it wouldn’t improve them.
It will just be a cycle of them lifting on the high volume pools’ success. We have currently 4 pools waiting for LM rewards that are being voted on, with many more to come probably.
That’s why I say, have the community of both coins proposing a vote.
It will be a sign of good faith towards the rest of the Bancor Community that they’re are working their very best to improve the future of the pool!
Would be very sad if you cut the LM rewards for Ocean and renBTC. I am not in the Ocean pool, but I am in the renBTC pool with half my btc. And still waiting for IL protection to kick in. So please let those pools tag along in the LM rewards program.
Are there any efforts we can make to drive more volume towards these pools? There is a decent amount of uniswap volume we should be able to hijack. Like we’ve seen with the Link pool. How has the Link pool managed to steal all the volume it has? Can we do the same for renBTC and Ocean?
I do have multiple of Ocean and BNT in the OCEAN / BNT pools.
Withdrawing them will cost me more $ETH fees then OCEANS protected.
I would like te see them rewarded with small cap, so that i wont make a loss with withdrawing them.
Or L2 should be implemented hopefully soon, or multiple withdrawing.
We are working on a proposal with the OCEAN community now to re-instate liquidity mining rewards. I think everyone will be happy with it - it will be the first of its kind.
