Bancor hosts weekly community calls with core contributors, every Sunday 1pm UTC in Bancor’s Telegram voice chat. A big thanks to Bias and Milo for writing the summary notes for today’s call.
Dev Update (12:25)
- Last week V3 was announced, which will be by far the largest and most significant upgrade for Bancor.
- V3 incorporates community feedback and a core discovery (details TBA), a killer feature that will not be easy to replicate because it relies on Bancor’s unique protocol design.
- Capital efficiency is an important topic in the AMM space (Uniswap V3, etc) but this efficiency also leads to high risk of impermanent loss.
- Concentrating liquidity hurts passive LPs and helps those with the best algorithms such as trading firms.
- Bancor V3 will allow for higher capital efficiencies without requiring active management or 3rd party automatic LP tools.
- We think that fees under V3 will be a lot higher while LPs will stay fully protected from IL.
- The features and design of V3 are set, coding is happening now!
- In terms of L2, we are designing V3 on Ethereum L1 and once it is complete, we can rapidly deploy it to L2.
- Our three core principles driving V3:
- Get as many assets on Bancor as possible, including streamlining whitelisting
2. Deliver the best APYs and tools for passive LPs. Low costs and low friction.
3. Drive more trade volume through a world-class trading UI and advanced trading functionality.
- We want to put professional financial tools in the hands of everyday users.
DAO Update (19:00)
- ETH/LINK/WBTC/stablecoins were up for an extension on Thursday and the extensions (aside from ETH) were voted down by large vBNT holders.
- Many potential voters did not have their vBNT staked in governance at that time. Since then, BNT holders have added around 10m vBNT to the governance contract, with a total of around 24m vBNT staked.
- New proposals to extend these rewards LINK, WBTC, and stablecoins are going live tomorrow
- These proposals are expected to appear on Snapshot for voting on Monday 31st, May 2021 at 4:00 pm UTC. Make sure to stake your vBNT for voting BEFORE this date and time in order to participate in the DAO decision.
- We understand the sentiment behind wanting to slow down LM rewards since it is purely inflationary (though ~70% of rewards are getting re-staked to the protocol) and LPs on Bancor are getting some of the best rates in DeFi already.
- We also know that the design for LM rewards need to be improved and that they haven’t been updated in the 8 months since v2.1 launched.
- The overall goal is to make fee revenue sustainably high so we can wean off of LM rewards.
- A brand new LM rewards model has been created to roll out with V3.
- Nate: a major change like dropping LM rewards from the biggest pools is not advisable before another big change like V3.
- Mark: while the anti-LM reward whales have good reasons to oppose LM due to inflation, the benefits of LM have been worth the inflation. Our volume and TVL are heading in the right direction. V3 should boost swap fee APYs further.
- This sudden DAO shakeup is good for participation. If you want the DAO to act towards your interests, get your vBNT staked and vote!
DAO Discussion points:
- Are governance quorum and majority requirements too onerous? Have we compared ourselves to other DAOs?
Mark: We should not lower our requirements. We are now a DAO super heavyweight. We can be the DAO for others to follow. We also have more risk due to IL insurance for example and high participation is important for us. The recent interest in governance may solve our governance issues.
- Have we thought about voter incentives?
Mark: Yes, and we may look at NFT rewards for voters, a sort of badge of honor for repeat voters. For now, we are focusing on Bancor V3.
Mark: One thing that may increase our participation is to move our Community Calls to Twitter Spaces rather than Telegram. We would like to find the ‘right’ way to communicate, not simply spread everywhere. Twitter Spaces for example is more likely to get gatecrashed.
- Are we doing anything to prevent whales from taking over voting?
We have looked at quadratic voting, which makes voting power proportional to the square root of vBNT you have staked. In short, this makes larger vBNT stakes gradually less powerful.
Also looking at voter decay, where voting power is multiplied by your voting activity. If you vote for only 50% of proposals, you only have 50% voting power. This removes power from inactive voters.
Vote delegation should help which is now live on Snapshot.
Opium (53:00) — Ali from the Opium team
- OPIUM is a protocol to create, settle, and trade decentralized derivatives.
- This is a good opportunity to get Opium on Bancor because our users want single-sided and IL protection.
- From our perspective, we can bring a lot of volume and liquidity to Bancor. Our launches on other DEXs have shown this.
- Q: “High level, how long have you been around?”
We started building in 2018, in 2019 the protocol existed as it does now. The public beta launched at the end of 2019. Since the end of 2020 we are live and running. We closed our fundraising and launched our governance token this January.
- We also liked the idea of 88MPH to incentivize voters. We are proposing to our DAO to send voters an NFT as well.
Open Q & A (60:48)
- A 6m vBNT stake was added to Bancor governance. Is this stake from the team?
Nate: The Bancor Foundation has staked some of its vBNT in governance. They intend to vote on the LM extension proposals. They want to leave governance up to the DAO in general but they believe in these proposals, having stability before V3, and have the ability to voice their opinion when needed.
- For the wBTC/LINK/stablecoin LM rewards what should the extension length be?
Mark: 8 weeks extension is the same as 12 weeks in my opinion.
- Aren’t we just trying to bridge the current LM rewards until V3 because V3 will completely change the rewards scheme?
Mark: Yes, but we want to be sure not to give timelines for V3. We are in early contract creation stages. It’s not that V3 will or won’t be finished in 3 months, but we can communicate much more about what V3 is by that time.
Yudi: I agree with the 12 weeks.
- Is there a plan for vote delegation? We saw that it went live.
Mark: Snapshot added the vote delegation button, not us. We saw it the same time that you did. There may be a delegation procedure that requires no dev time but we are discussing how to implement it.
- Will there be more functions for vBNT?
Mark: We are collaborating with UMA to create vBNT call options. More details will come later but you can create options to protect yourself against volatility if you sold your vBNT for another opportunity. You can also earn yield by creating options.
- When is Arbitrum coming?
Mark: We are going to finalize V3 and then rapidly deploy it to L2 solutions. DeFi thought leaders on Twitter, including from Aave & Uniswap, are urging caution for L2 solutions. Since it is still unproven technology, it may be best to wait to see which L2 solution is the ‘correct’ one before deploying. We are excited by Polygon and it isn’t having the security issues that were predicted. We are observing the L2 space diligently and waiting to see what the right decision is.
Yudi: The requirements for us to deploy on L2 solutions are 1) the L2 must be mature enough. We don’t want to be the first and then suffer from some exploit. 2) We need enough users and not just short-term hype. We don’t want to maintain a platform that was hyped only to see users leave. 3) The best time to deploy to L2 is once V3 is out. We are not going to pick a single L2 solution. We intend to deploy on any solution that meets these requirements.
- Do you have any thoughts about Starkware and zkrollup?
Yudi: We have worked with the team in the past and know they are a very strong team. Starkware seems very advanced but it’s further out compared to other solutions. We have no idea about the timeline but it may be the best solution once it’s out.
- Will moving from v2.1 to v3 be automatic or require LPs to unstake/stake?
Nate: We can’t comment on that yet but it’s important that this process is as smooth as possible for LPs with little friction. If it was expensive and frustrating for LPs, that would be a failure for us.
- Are shadow pools part of V3?
- Can you explain what shadow pools are again?
Sort of. Shadow pools are a design to alleviate the IL insurance for stablecoins. This idea snow-balled into a much larger idea that is at the core of V3. More details will come with further V3 announcements.
We have content grants active at all times. Any users that want to create videos or guides, please reach out to @natehindman on on Telegram or Twitter.
We also have analytics grants live. If you want to work on Bancor data projects and you are good with working on blockchain data and APIs we can use your help.
- A new trading incentive program is launching soon, stay tuned.
- The monthly protocol update is being posted on Medium soon. There may be some V3 alpha leaks in there.
- As always, token projects that are interested in whitelisting on Bancor, or any other integration, can email [email protected] or on Telegram at @FoxSteven.
Join Bancor’s public community calls every Sunday at 1pm UTC on Telegram voice chat to speak directly with core contributors.