The Bancorian | Jan 23 2022

9 min readJan 23, 2022

💻Development

Bancor 3 is coming along quite well and our target date is Q1 of 2022. A big part of Bancor 3 Phase I is instant IL protection. Instant IL protection allows LPs to be covered on day one so that they no longer have to wait 100 days to get 100% ILP (impermanent loss protection). Instead, there is a 7 day cool-down period at withdrawal.

We have launched a new UI for the Bancor web application which is powered by our new APIs. Expect the new UI to be modern, faster, and better than the previous version. The application will continue to evolve as Bancor 3 rolls out and new screens, as well as user flows, will be made available in the future. We welcome any feedback from the community as well as any bug reports.

New UI screens are now live on the redesigned interface. This includes:

A new pools page🥽
A new tokens page💰
A new portfolio page📒
A new voting interface🗳
A new safe staking landing page✅
A new impermanent loss landing page ✅
A new Bancor 3 landing page 3️⃣

🌐Ecosystem

🌀Bancor Vortex🔥

This week, we saw roughly ~53.7K in $vBNT that was burned by the vortex. At current $BNT prices (~$2.25) this equates to ~$120K worth of $BNT locked forever.🔒

+----------------+--------------+
|      time      | burnedamount |
+----------------+--------------+
| 1/10/2022 0:00 |  7834.885759 |
| 1/11/2022 0:00 |  9451.876618 |
| 1/12/2022 0:00 |    7516.3852 |
| 1/13/2022 0:00 |  9076.606936 |
| 1/14/2022 0:00 |  7048.946028 |
| 1/15/2022 0:00 |   8958.21937 |
| 1/16/2022 0:00 |  3902.298383 |
| Sum            |  53789.21829 |
+----------------+--------------+

The cumulative burned amount increased from ~2.13m on 1/9 to ~2.19m on 1/16.

📊Key Metrics

7-day total cumulative fee revenue: ~677.4K

30-day total cumulative fee revenue: ~$3.53m

Source: token terminal

📈 The average daily revenue for different time periods:

7 days ~$96.8K
30 days ~$117.6K

The 30-day annualized daily revenue equates to ~$42.9m in annual trading fees paid to LPs. For the past 30 days, trading fee revenue is down (~$1.3m) as compared to the previous 30 days.

💰 In terms of protocol revenue, Bancor earned around ~$1.76m in monthly revenue for $BNT holders.

🔌Integrations and Updates

Saffron Finance are proposing to activate liquidity mining on their pool in return for routing their buybacks through Bancor. This is a way in which Bancor can secure liquidity in a token as projects will tend to deepen the depth of their pools to have a lower price impact. This usually involves depositing a portion of their treasuries on Bancor so that they can earn passive yields from fees as part of being the recipients of their own buyback program.
We have updated our Dune analytics dashboard and we now show our liquidity share for some of our deepest pools. We think that some of these pools are prime candidates for having their fees adjusted since we control a large market share. You can expect future experimentations proposals for fees on these pools in the future.

💪Social Channels

Protocol owned liquidity is not all roses 💸

There has been a lot of discussion about tackling the problem of mercenary capital that will farm new projects for their tokens as they are bootstrapping via liquidity mining incentives. This creates persistent sell pressure for these communities and at the same time, liquidity will tend to dry up as the program expires or when yields decrease. We previously discussed the misaligned incentives that exist between loyal long-term holders who take on the risk to provide liquidity for tokens and also get the short end of the stick when said token moons. This is because impermanent loss will negate any gains that they made and they would have been better off holding these assets without providing liquidity.

Enter some of the so-called “DeFi 2.0” protocols which aim to solve this problem by letting protocols own their liquidity. Accomplished via a process called bonding where a user can acquire his favorite tokens by depositing LP tokens (e.g. ETH-TKN) in return for TKN at a discount after the bond matures (usually after some number of days). A lot of the time the expectation is that community members will participate in these programs to remain long-term aligned holders but reality tells us otherwise as bots are the ones that profit the most and there is greater sell pressure via these programs than normal liquidity mining. We wouldn’t be discussing this topic unless this was the reality that is faced by communities that have participated in bonding programs:

If the expectation was for community members to participate, bond ETH/POOL LP tokens for POOL, and remain long-term aligned holders, then the results do not reflect that outcome. The majority of the participants in the bond program appear to be bots.
The Olympus Pro bond sale was proposed and executed to minimize the sell pressure on POOL over time. While sell pressure from traditional liquidity mining has impacted POOL price, the bond sale resulted in greater sale pressure over the same timeframe. The distribution of POOL redeemed through bonding was highly concentrated and heavily sold.

It’s also worth reading the following Twitter thread that highlights some of these realities.

🎲Random Musings

We are starting to see an interest in projects that are looking to launch their liquidity mining programs on Bancor. Available to them is the option to set aside a portion of their tokens to cover any IL that is experienced by LPs (external IL protection). Additionally, they also have the ability to drop rewards on their pools that emit in a linear fashion with a predetermined end date based on the reward rate:

or that decay exponentially via a predetermined decay rate:

Either option gives projects the flexibility to decide on how they will emit their rewards. With external IL, the Bancor DAO can onboard riskier tokens that would otherwise not be up for consideration due to the potential IL that the protocol might have to cover. Projects can get trading liquidity from the Bancor protocol so that their holders can stake single-sided with IL protection. Going forward, I expect the Bancor DAO to start onboarding newer projects that are still in their early stages.

Some tweets from the official Bancor account in case you missed them

🎩Bancorians in the Wild

☑Governance

👈Previous Proposals

This past week (1/9/22), we had five proposals on Snapshot that were able to meet quorum and supermajority requirements:

The following proposal failed to meet quorum and supermajority requirements:

Proposal: Increase trading liquidity on CEL-BNT pool to 1M BNT

👉Current Proposals

For this week (1/16/21), we have seven proposals on Snapshot for voting:

Head over to Snapshot to cast your votes on current proposals.

❗If you aren’t voting regularly make sure you unstake your vBNT from governance and delegate instead. Self-nominated delegates maintain a page on Discourse to inform other community members of their intended voting behavior. If you disagree with the way your delegate votes, you can always vote manually to override their decision on your behalf.❗

☎Bancor Weekly Call

In this week’s Community Call recording, Bancor shared the development updates above and answered questions from the community. Additionally, the call featured DerivaDEX whose Token $DDX was recently onboarded on Bancor.

Fee change experiments

We have been raising trading fees in pools recently and monitoring the impact this has on both trading volume and fees earned. The TRAC pool has seen incremental increases and decreases in trading fees, and the three stablecoin pools have each had different trading fees. In both cases, we have seen increases in fees earned in spite of falls in volume, strengthening our hypothesis that higher trading fees are conducive to more profits for LPs.

It is also worth noting that with infinity pools allowing for deeper liquidity in Bancor 3, higher fees will be nullified on the trader’s part by much lower slippage.

The charts below show the TRAC pool fee change experiment. This includes the average daily volume, market share (on Ethereum) and the fees accrued. The maximum time frame (with an equal duration on either side) was used for calculations.

A message from Rick, our new Events Manager

As part of efforts to get the message out regarding Bancor 3’s upcoming launch, we will have a strong presence at upcoming events that make sense for us strategically, including ETHDenver in February. We are also working on a community engagement strategy to allow the community to help with disseminating information on Bancor 3.

Ainsley from DerivaDEX

“Until now, traders have had to choose between performance and security. Centralized exchanges offer strong liquidity and products, but at the expense of user control. Decentralized exchanges give control to users, but compromise on usability.

DerivaDEX is a new kind of exchange with key performance advantages, including a real-time price feed, fast trade resolution, and a competitive fee structure.”

🤝Connect Projects with Steven, Bancor Business Development Lead:

Are there tokens you’re holding that we should whitelist on Bancor? DM @FoxSteven about it or connect us with any community leaders/core contributors on the project. Steven leads all our BD efforts and will connect with the team and work with them to get whitelisted or build a deeper pool.

📔Bancor Grants:

We have content grants active at all times. Any users that want to create videos or guides, please reach out to Nate Hindman (@NateHindman on Twitter or telegram).
We have analytics grants. If you want to work on Bancor data projects or if you are good with working on blockchain data and APIs, we can always use your help!
As always, we have rolling developer grants for those who want to build and innovate on Bancor’s infrastructure.