Bancor Update — July 16, 2022

This post was originally published here

The Bancor DAO continued developing recovery plans aimed at restoring token reserves on the protocol. Current plans focus on:

  1. fee allocation
  2. expanding fees
  3. fee burning
  4. protocol analytics

1. Fee Allocation

Governance discussions are underway to determine the best allocation of protocol fees to help restore TKN deficits on the protocol. Three models are up for discussion: the DAI model, Protection model, and Yield Throttling model. Initial details on each model are published in governance — “Feedback Request: Potential Direction for Recovery.

Below is a summary on how each of the models could work:

More details: Feedback Request: Potential Direction for Recovery

2. Expanding fees

While AMM trading revenue is expected to continued serving as an important source of income for the protocol, Bancor V3 was designed to be a multi-faceted yield generating protocol that supports fee-earning strategies beyond just trading.

Additional fee-earning features and optimizations being discussed include:

  • Dynamic fees
  • Protocol arbitrage
  • Native lending/borrowing with protocol-level liquidations & margin trading
  • Integration with off-chain market makers to support any token
  • Token launchpad (IDOs)

Proposals will be presented with additional details including estimated development time, proposed technical design and spec and industry potential.

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3. Fee burning

The DAO has voted to increase vBNT burn rates to:

Further data regarding fee burning will be shared in the next update. Other proposals related fee burning are under discussion:

vBNT burning on Bancor V3:

With the ongoing trading activities on Bancor V3, a portion of trading fees are being used for buying BNT, to later swap for vBNT and burn via the Bancor V3 Vortex. To date, there has been 183,000 BNT collected which can be queried via the pendingNetworkFeeAmount parameter. As Bancor V3’s Vortex is not yet implemented, the BNT amount will be swapped for vBNT and burned once the Bancor V3 Vortex is live.

4. Protocol analytics

The events that led up to BNT minting being disabled were a wake-up call that protocol analytics must be improved and more readily available by the community to monitor protocol health and make better-informed DAO decisions.

  • A new protocol analytics dashboard is in the final stages of development and will be released in the coming week.
  • Economic reports from V2.1 have been published in GitHub. Future reports will be published in this repository to enhance transparency into protocol health.

Proposals Passed:

Level 1 Proposals under review:

Discussion phase:

Conclusion

Since the discussion of the Recovery Plan has kicked off in the Bancor DAO, the amount of engagement has been tremendous, and the community is showing signs of strength. As the discussions proceed and evolve, the community and Bancor DAO are encouraged to continue participating in discussions and creating recovery solutions. Once ready, the DAO will help summarize the solutions and formulate a roadmap with estimates of the rollout.

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