Proposal: Bancor 3 Liquidity Mining Rewards in the ETH Pool

To pass, this proposal needs 35% quorum and 80% supermajority.

TL;DR

• As stated in the previous ETH Liquidity Mining Extension proposal, the rewards in the ETH pool on Bancor v2.1 shall end with the full launch of Bancor 3.
• To bootstrap ETH liquidity and incentivise migration to Bancor 3, this proposal details a Liquidity Mining program with decaying emissions for the ETH pool which will last for 6 months.
• Bancor V3 has proposed a total budget of 10,000,000 BNT to be used to incentivize stakers on the token side.
• This total budget reflects the importance of transition away from large amounts of BNT emissions.
• This proposal seeks to use 360,000 of those to incentive ETH in the months following the launch.

Discussion

1. ETH is the 2nd deepest pool on Bancor with $232,003,201 in liquidity (25% of Bancor v2.1’s TVL).
2. Sustaining liquidity in the ETH pool is essential to maintain the position of the Bancor protocol on the market.
3. The ETH pool daily APR from fees (without BNT rewards) in the last month is shown in Figure 3.
4. The BancorDAO approved BIP18 which details the Bancor 3 Liquidity Mining Program with a budget of 10m BNT for Liquidity Mining Rewards on TKN pools for the lifetime of Bancor 3.
5. The Dual Liquidity Mining Program aims to incentivise migration and bootstrap liquidity on Bancor 3. Multiple projects have shown interest in the program, and several DAOs have passed and ongoing proposals to participate in the program by committing DAO TKN funds, such as the Wootrade, Paraswap, 88MPH, and APWine DAOs.
6. Given points 3 and 4 and with the sustainability of BNT emissions in mind, this proposal seeks to create a LM program with decaying BNT emissions in the ETH pool.
7. The proposed budget for the LM rewards on the ETH, wBTC, LINK, USDC, USDT and DAI pools for the first 6 months of Bancor 3 is 10% of the LM budget, 1m BNT.
8. The BNT rewards allocation schedule for the ETH pool is detailed in Table 1.
9. ETH pool’s weekly volume and fees are shown below in Figures 1 and 2.
10. Bancor 3 will introduce additional use cases for the liquidity in the pools, with flashloans being the first one, in order to generate additional yield for LPs. Other internal strategies to utilize the liquidity in the pools will be introduced in the next phases of Bancor 3. Table 1 - Proposed Liquidity Mining Rewards in the ETH pool (BNT)

Token	Month 1	Month 2	Month 3	Month 4	Month 5	Month 6	Total
ETH	100000	80000	60000	50000	40000	30000	360000

Figure 1 - Weekly ETH fees since the beginning of July.

Figure 2 - Weekly ETH volume since the beginning of July.

Figure 3 - Daily APR in the ETH pool since the beginning of April 2022.

Summary

1. The Liquidity Mining Rewards in the ETH, wBTC, LINK, USDT, USDC, and DAI pools will end with the full launch of Bancor 3.
2. With the sustainability of BNT rewards in mind and considering the approved LM budget within BIP18 as well as the Dual LM program’s potential expenditure, a BNT LM rewards emission of 1m BNT over 6 months for the 6 pools mentioned above is proposed, with decaying emissions each month.
3. New ETH LM programs, as well as modifications and extensions to the Liquidity Mining program described herein can be proposed to the DAO in the future.

Voting Instructions

FOR

Start LM rewards on the ETH pool, at the rate described in Table 1, after the full launch of Bancor 3.

AGAINST

Do not approve this LM program. The Bancor v2.1 LM program will end once Bancor 3 is fully launched.