WBTC co-investment limits increase

DAO Archive (SUBMITTED)
1

TL;DR

  • Create extra space for WBTC deposits.
  • Enable a limit change from 30 million BNT, up to 50 million BNT minting limits on WBTCBNT pool
  • The limit can only be increased by 2M BNT, only if there is no space to stake WBTC
  • There has to be at least 5 days break between each limit increase

Vote “for” to enable this change, or vote “against” not to enable it.

Background

With the acceptance of BIP5 by Governance and the recent contract upgrade, the DAO can now set hard limits for BNT co-investments by the protocol on a per-pool basis.

This proposal seeks to exercise this new feature by significantly increasing the co-investment limits on WBTC from 30,000,000 BNT, to a maximum of 50,000,000 BNT.

The co-investment will be increased gradually with 2M BNT tranches. Effect on the network of the underlying limits increase will be tightly monitored.

The anticipated positive effects are:

  1. An immediate increase in TVL.

Increased co-investment limits allow for additional single-sided token staking by both WBTC holders. WBTC pool currently has a limited capacity to attract WBTC in big chunks. We witnessed a higher than usual demand and requested from big market players to stake WTBC with Bancor.

  1. An increase in the Bancor Vortex burn rate.

WBTC, similar to ETH pool has proved a minimal insurance liability during the initial phase of V2.1. Trade WBTC revenue is a relevant contributor to Bancor Vortex burning protocol. Increasing the co-investment limit will increase trading volume and Bancor Vortex burns activity.

  1. Passive staking of WBTC.

More and more institutional investors are looking for a safe place to stake their WBTC, Bancor, so far Bancor is one of the safest places with attractive WBTC denominated yield. There are no other places with risk-free decent yields on WBTC. Therefore we have seen increased demand for WBTC staking

Summary:

WBTC pool is one of the most important pools on BNT. It has been proven a low IL liability with a high upside for the network. WBTC pool not only aggregates a sufficient amount of Bancor liquidity but also collects a relevant amount of fees responsible for vBNT burnt in Vortex.
The careful limit increase will allow luring capital from big and long term players on the market that will not only support protocol TVL but also network fees increase the Vortex burn rate.

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