When will IL Protection be turned back on

Community Chatroom (DISCUSSION)
1

I propose that IL be turned back on because seriously what is the point of the protocol otherwise?

1 Like
2

I also want IL to be turned back on.

However with the current conditions, turning it on unchanged would not be good for BNT holders (wh control the protocol).

So, some ideas to brainstorm.

  1. Turn on IL for smaller pools first.

Pros, helps smaller LPs and costs the protocols and lower cost for Bancor.

  1. limit withdraws with IL to x USD

Con, liable to sybl attack.

  1. allow x USD total withdraws with IL.

Con, would get hit by bots evertime it refreshed.

  1. increase withdraw time (possibly with a new withdraw queue contract)

Con, doesnt solve problem.

4a) reduced IL for shorter withdraw delay.

Pro Reduces overall IL protection costs in a hurry
Con, can still result in large withdraws and dumbinf, just slower.

  1. increase withdraw delay on BNT.

Pro Prevents BNT stakers from exitiing and selling when problems arose.

  1. stop minting for IL protection, divert part of “vortex” fee to IL pool (or mint x BNT per day to IL fund).

Then IL protection fund would grow over time.

Pro limits BNT given to IL ti a known amount.

Con, when IL protection occurs it could creat a rush to the exit.

Con, when IL pool is exhausted, each top up becomes an target for fastest bot. (Whale game).

  1. Increase LP fees

Pro, makes staying desposted more attractive. Builds Bancor revenue.

Con, may reduce volume. May not discourage exit.

  1. increase vortex fee.

Pro, Captures more income for bancor protocol and so BNTprice.

Con, doesnt help LPs generate income.

Also, i get the feeling the vortex burn of vBNT is a slow acting process. Are any BNT stakers buying buying BNT to buy vBNT to exit at this time?

  1. wait for distressed LP’s to exit while taking a loss?

Pro saves Bancor protocol IL costs.
Pro reduces future liabilities
Pro reduces sell pressure on BNT.

Con repultational damage to bancor

Note, we should discuss compensation for those LPs who exited B3 without IL active. Making them whole would help restore reputation, but would cost $$$ (something to consider once we have survived the current situation).

Any thoughts on the above?

Any additions we should discuss?

2 Likes
3

Obviously, more analytics on the IL deficit for each pool would be good (when entering and exiting).

4

Thank you for responding to my post. It seems well informed. I think I am not alone with other liquidity providers wondering whether it is worth trusting the Bancor admins (as this seems very similar to Celsius) that IL protection will eventually be turned on in a sustainable way, or taking a loss up front to reduce further potential IL if the protection is not reinstated in a timely manner. What are your thoughts?

5

Not sure if you are aware, but BIP21 was approved by the DAO a few months ago to allow Bancor to take emergency action in a situation just like this. So not similar to Celsius, since the community granted the authority to make this happen.

As well, it is within the DAOs authority to draft a proposal to have IL protection reinstated. However I would think it is within the best interests of all of us that if such a proposal is crafted, it is done in a thoughtful manner to not make the situation even worse. @OverAnalyser 's list above is a good start toward the right types of considerations.

2 Likes
6

Hi, I am moving this to the chatroom until it is ready to be proposed.