We propose a BNT Liquidity Mining (LM) program aimed at achieving two primary goals:
- Attract new liquidity into Bancor pools
- Create stickiness to incentivize long-term liquidity provision
With more liquidity, Bancor stands to win more conversions in the market, which generates more fees for liquidity providers (LPs) and results in increasing APY and protocol revenue.
Users who are initially drawn to yields from BNT Liquidity Mining rewards will hopefully become acquainted with the unique benefits of Bancor v2.1, including impermanent loss protection and single-asset exposure.
The following structure is pending community approval via Bancor governance:
- BNT liquidity mining will start with 8 pools representing 6 Large-Cap and 2 Mid-Cap tokens. The first round of tokens proposed are the following:
Large-Caps: ETH, WBTC, USDT, USDC, DAI, LINK
Mid-Caps: OCEAN and renBTC
- The protocol will distribute an amount of BNTs to LPs in each qualifying pool on a weekly basis: Large-cap pools receive 100,000–200,000 BNT per week; mid-cap pools receive 10,000–20,000 BNT per week.
- Every two weeks, two new tokens can be added to the program. Once activated, a token’s pool will receive BNT rewards for 12 consecutive weeks.
- Pools will be selected for rewards via Bancor governance. If deemed by governance, a pool may be selected more than once to receive rewards for a 12-week cycle.
- We anticipate the entire program lasting a total of 72 weeks.
- BNT liquidity mining rewards will be distributed 70% to the BNT side of the liquidity pool and 30% to the base ERC20 token (or “TKN”) side of the pool.
- Liquidity providers who keep their rewards staked to the protocol receive a “Bonus Rewards Multiplier”, which increases their BNT rewards by up to x2 per week.
- Based on simulations, it is estimated that $50-60M USD could be locked in Large-Cap Pools and $5-6M USD in Mid-Cap pools, with estimated yields during the program exceeding 100% APY (see Estimated Performance in the proposal).
- Starting today, November 16, 2020, any user who is providing protected liquidity to a proposed rewards pool (ETH, WBTC, USDT, USDC, DAI, LINK, OCEAN or renBTC) will receive retroactive BNT rewards when the program eventually launches.
- For example, if a user is currently providing protected liquidity to an eligible pool and BNT liquidity mining goes live 3 weeks from now, the user will receive 3 weeks worth of BNT rewards when the program ultimately goes live, amplified by the Bonus Rewards Multiplier.