- The LM rewards on stablepools are extended from 9th of March for another 4 weeks.
- The LM rewards structure on the stablecoin pools is changed. The rewards emissions are halved, from 100k to 50k BNT per week, and the distribution of the rewards is proposed to be split evenly between either side of the pool (50% stablecoin, 50% BNT).
Due to Bancor V2.1 single asset exposure and IL protection, and because the stablepools do not appreciate with the rest of the market, the current APY on the TKN side is stablepools are massive.
- All 3 pools currently have around 15M stable assets each locked on the TKN side, which is entitled to 60,000 BNTs a month each (if 2x multiplier applied) providing around 100% APY on TKN and BNT side.
- The rewards halving and rewards distribution to 50/50 will change APY to around 80% on TKN and around 70% on BNT side (ceteris paribus).
- The above APY is still among the most profitable, risk free staking opportunities for stable assets in DeFi.
- We anticipate that halving the rewards would not cause significant outflow of capital but would decrease the emission of tokens by 1,200,000 BNT, monthly.
- Those tokens can be relocated to other parts of the ecosystem that currently requires incentives (e.g. ROOK, GRT, etc.)
Liquidity mining halving and rewards redistribution
- Proposing halving LM rewards on stablepools.
- Instead of 100,000 BNTs per week, 50,000 BNTs per week will be distributed to the tokens (2x more if considering multiplier logic)
- The rewards distribution will be changed from 30% to TKN 70% to BNT, to an even split (50/50) distribution of LM rewards to each side.
- The new rewards structure will commence from 9th of March, at the conclusion of the current program and will last for 4 weeks.
Pools considered in 30 days extension and rewards halving:
- DAI (50% BNT, 50% DAI)
- USDC (50% BNT, 50% USDC)
- USDT (50% BNT, 50% USDT)
The Alternative is Not Economically Feasible
The alternative approach would be to increase the investment caps on stable tokens however:
- Stablecoin pools are, at present, the single greatest cost to the protocol in terms of IL expenses. Increasing the caps would only exacerbate the problem.
- Bancor is currently working on a Stabletokens dedicated solution that will significantly decrease the IL, and allow limitless single-assets deposits on stabletokens, therefore increasing the caps makes no sense.
- Bancor should not lose the momentum and cut out the LM rewards on stabletokens.
- Considering the change in the rewards redistribution, the APY should still be maintained on a highly competitive level.
- The new solution for stable tokens is behind the corner, therefore, the pools should be maintained until it is ready but in a different structure.