Proposal: Increase Co-investment Limit to 250K BNT on MLN (Enzyme Finance) Pool

Read the original proposal on Discourse

TLDR

• This proposal seeks to increase the Co-investment limit to 250K BNT in the MLN pool.
• It will open up space for LPs on the TKN side (MLN) and potentially lead to an increase in the depth of the pool as LPs add liquidity
• A larger MLN pool will attract more trades from aggregators and professional market makers to Bancor which ultimately leads to more fees for our platform.

Abstract
There is currently 24.6K BNT and 1616 MLN tokens in the BNT-MLN pool 1. This has resulted in a pool that has roughly 370K in liquidity. At the moment, LPs on the TKN side (MLN) can't provide single sided liquidity since there is no capacity. This proposal is seeking to increase single-sided capacity in the MLN pool by increasing the Co-investment limit to 250K BNT.

Motivation

If we want to attract more MLN LPs to Bancor, we need to open up space in the pool so that they can provide single sided liquidity. This would allow us to grow the liquidity in the pool and attract larger trades towards our platform which ultimately results in higher fees for Bancor.

The MLN-BNT pool data shows that it roughly filled up completely on the week of 3/15/2021:

and only recently saw a small bump in MLN liquidity after more space was opened. This suggest to me that there is demand from LPs on the MLN side to provide liquidity and we should open up space from our side.

The top pool for MLN is on Uniswap (not much on other DEXes) and it is paired with ETH. We should strive to make the Bancor pool deeper to support larger trades (equates to lower slippage).

Currently, this pool is filled completely on Bancor and LPs can't provide single sided liquidity on the TKN side (MLN). I am proposing a 250K Co-investment limit for the MLN pool which should open up roughly 1.7M in single sided liquidity (assuming BNT price at $7.00). If this pools fills up completely, we would have a pool that's roughly ~3.5M in depth.

For

1. A larger co-investment limit on the pool will let LPs provided single sided liquidity and will lead to an increase in pool depth
2. More liquidity in the MLN-BNT pool should lead to larger volume from DEX aggregators and professional market makers sent in our direction
3. More volume for Bancor leads to more fees for our platform and BNT holders

Against

1. We should not increase the limit on the pool
2. We do not need extra liquidity in our platform to support larger trades
3. We do not need to generate fees for our platform or BNT holders