Hi all, understood that Bancor has a lot happening right now but wanted to propose an idea and generate some discussion about it.
TLDR - Adopt a time locked staking model similar to CRV. This will further align incentives between BNT holders and the protocol by rewarding more voting rights / protocol fees to people who lock their BNT for longer. The increased stickiness in staked BNT should reduce overall volatility and reduce IL across the platform
Understood that this will require some changes to the way the protocol is currently structured. I will try to explain how this will work below:
BNT holders choose which pool to stake in / provide liquidity for.
- All staked BNT goes into a single ‘master’ pool. (i.e. BNT holders no longer choose what pool to stake their BNT in).
When TKN holders provide single sided liquidity, BNT is first taken from the master staked pool to act as a pair for that TKN deposit. If the master staked BNT pool is empty, the protocol will mint new BNT to match the TKN deposit the same way that it does today.
IL experienced by the master pool will be protected via minting of new BNT. In this way the protocol is very similar to how it works today, in that staked BNT essentially receives IL protection from non-staked BNT.
Staking in the master pool requires a time lock. Users can choose to stake their BNT for 1 week, 1 month, 1 year, 4 years… etc.
Similar to CRV, staking 1 BNT for 4 years will give the staker 1 vBNT. The amount of vBNT the user receives for staking will be proportional to the amount of time that the user has their BNT locked up. e.g. if someone locks 1 BNT for 2 years, they receive .5 vBNT, if 1 BNT is locked for 1 year, they receive .25 vBNT, etc.
- All trading fees generated from the BNT side of pools will be distributed proportionally to vBNT holders.
For TKN/BNT pools where the BNT is provided by the master pool, this is very similar to what happens today (stakers receive their proportion of fees) the only difference is that all BNT holders will share fees across the entire platform as opposed to having exposure to a single TKN/BNT pool. Stakers will also be rewarded more based on how long they’ve committed to staking their BNT (since they will have more vBNT). Under this model, fees generated by newly minted protocol BNT will be split amongst vBNT holders as well, instead of being burned as they are today. This further incentivizes
and rewards vBNT holders.
The Vortex can stay the same, in fact the vBNT buyback may provide an even more powerful effect on the overall protocol under this BNT staking model
Would leave to hear feedback and thoughts from the community thank you for reading!