Topaze Blue discuss the Uniswap V3 IL Study
The study covered the pools comprising 80% of the TVL on Uniswap V3, and the results were unsurprising. Impermanent loss is significant, and in around 50% of cases, outweighs fees earned by LPs on Uniswap V3. Concentrated, leveraged liquidity actually increases your exposure to IL, rendering higher fees earned null in many cases.
In all but 2 pools studied, impermanent loss outweighed fees earned by LPs, with a handful of active, professional market makers being profitable against the trend.
This is the first time an empirical study has investigated the performance of active LPs with regards to impermanent loss, supporting Bancor’s long-standing warnings to LPs that they are making themselves worse off by not using protection while providing liquidity.
Sator.io discuss their whitelisting proposal
“The Sator platform aligns content ecosystem participants in an open economy that increases value creation and distribution. Socialize and compete in the content metaverse you design. Hop between realms, play head-to-head trivia, chat with fellow fans, earn SAO, and show off your NFTs. Beyond collecting, many NFTs on Sator are embedded with rights, aka “utility,” in the content being watched.”
The proposal requests a 100k BNT co-investment limit, and Sator are keen for volume and IL protection. Sator would like their Bancor pool to be the deepest pool, and will direct their community’s attention to it once whitelisted.
What helps a pool avoid impermanent loss?
Hoping that your pool doesn’t occur IL means hoping your token doesn’t perform ETH. Impermanent loss is a silly name, because it’s effectively permanent.
Where does the data on the IL study come from?
The data is from Dune Analytics and directly on-chain. There is an appendix in the paper referencing the source of each data set.
Are the IL data study and il.wtf related?
No, they’re separate projects. Il.wtf allows you to insert your wallet address to see how much impermanent loss you’ve ever incurred while LPing on Uniswap V2, Sushiswap, Balancer, 1inch and Kyber. We’re running a campaign called #BancorBailouts which will pay $1,000 to five randomly selected LPs per week for sharing their results on il.wtf.
To participate, visit il.wtf and enter your wallet address, then tweet your results using the Share button within the website, ensuring that the #BancorBailouts hashtag is showing.
Will V3 lower gas fees?
Yes, stay tuned for the discussion on 29th November. Staking your rewards will get easier and cheaper, ensuring that your profits are optimized without you having to take much action. We are aware of the gas fee issue on Ethereum L1 and we’re working on it.
What will Bancor do to promote awareness of Bancor as a trading platform as well as a liquidity protocol?
We have a new, full-time creative director, Sruly, who’s started doing great work on building our brand image. You’ll start to see more of this revamp in the coming weeks.
We are also working hard to optimize the user experience on Bancor, and on the trader side we are looking to remove barriers to whitelisting in V3. Currently, tokens typically list first on Uniswap, before their DAOs request a Bancor pool after they mature. In V3, we will be able to host newly launched tokens from the very beginning.
Thirdly, there are new features (TBC) in Phases 2 and 3 of Bancor V3 that will also boost trading volume on the platform.
Finally, our upcoming gas optimizations will drive more organic trading volume as well as aggregator-routed volume.
Why can’t Bancor whitelist pools automatically without a vote?
Automatically whitelisting tokens increases the risk of exploits and other vulnerabilities; our vetting process in governance serves to prevent this.
In V3, we’ll be able to whitelist tokens much earlier in their life cycle, so that if they moon, it wouldn’t be nearly as costly in terms of IL insurance, as it would be on V2.1.
Is there an upcoming fix for recent issues connecting hardware wallets to Bancor?
We’re aware of the issue and we’re fixing it.
🤝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.
- 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.