Proposal: Activate LM Rewards for Compound (COMP) with a Six Week Duration + 2M Co-investment Limit

Read the original proposal on Discourse

Proposal to add mid cap LM rewards to the COMP-BNT pool with a six week duration and increase the co-investment limit to 2M BNT. Reward rates should be at similar levels to the current LM campaigns on the AAVE, SNX, BAT, WOO, etc... pools which is roughly 10K-20K BNT per week.

Vote For : Enable LM rewards for a six week duration on the COMP-BNT Pool Increase the co-investment limit to 2M BNT

Vote Against : Do not enable LM rewards for the COMP-BNT pool

TLDR

• Compound is a well established lending platform in the DeFi space.
• Compound kicked off DeFi summer last year and has a large community that we could target via this liquidity mining campaign.
• The Compound community is risk adverse and Bancor should be a good fit for their users.

Token contract address: 0xc00e94cb662c3520282e6f5717214004a7f26888

Project website: Compound Finance

Whitepaper: https://compound.finance/documents/Compound.Whitepaper.pdf

Discussion

Compound is a protocol on the Ethereum blockchain that establishes money markets, which are pools of assets with algorithmically derived interest rates, based on the supply and demand for the asset. Suppliers (and borrowers) of an asset interact directly with the protocol, earning (and paying) a floating interest rate, without having to negotiate terms such as maturity, interest rate, or collateral with a peer or counterparty. Each money market is unique to an Ethereum asset (such as Ether, an ERC-20 stablecoin such as Dai, or an ERC-20 utility token such as ChainLink), and contains a transparent and publicly-inspectable ledger, with a record of all transactions and historical interest rates.

Staking Currently, Compound Finance does not support staking for the COMP token. One of the few ways to utilize the token is by supplying COMP to protocols such as Compound (roughly .90% APY the last 60 days) or CREAM (2.09% APY as of time of writing).

If we incentivize the COMP-BNT pool on Bancor protocol then this should be the most attractive option for COMP holders.

Tokenomics & Token Metrics

In addition to being a standard ERC-20 asset, COMP allows the owner to delegate voting rights to the address of their choice; the owner’s wallet, another user, an application, or a DeFi expert. Anybody can participate in Compound governance by receiving delegation, without needing to own COMP. The token also includes code to query an address’ historical voting weight , which is useful for building complex voting systems.

Addresses delegated at least 100,000 COMP can create governance proposals; any address can lock 100 COMP to create an Autonomous Proposal, which becomes a governance proposal after being delegated 100,000 COMP.

A total of 10 million COMP tokens were created and distributed as follows:

• 4,229,949 Users of the protocol (over 4-year period)
• 2,396,307 Shareholders of Compound Labs, Inc.
• 2,226,037 Founders & team(4-year vesting)
• 372,707 Future team members
• 775,000 Allocated for the community to advance governance through other means

Community and Communication

Twitter 158.4K Followers https://twitter.com/compoundfinance Discord 19.9K Members https://compound.finance/discord Newsletter https://compound.substack.com/

The Compound community has a large user following that has shown significant growth these past few months. Bringing these users over and making them aware of the Bancor Platform should boost our usage base.

Available Audits

• OpenZeppelin Security: Compound Alpha Governance System Audit (February 2020)

• Trail of Bits: Compound Governance Security Assessment (February 2020)

• Trail of Bits: Compound Protocol Security Assessment (August 2019)

Market Data

The market cap for COMP is roughly $2.2B with a $313M trading volume the past 24 hours.

Since the beginning of the year it has done roughly $197.9M daily volume on average (see: historical stats) on Exchanges. The majority of COMP currently resides on CEXes (Huobi, OKex, FTX, Binance) followed by DEXes with Sushiswap and Uniswap leading the pack.

On DEXes the largest trading pairs are COMP-ETH with Sushiswap and Uniswap having the deepest pools:

There is an COMP-ETH pool on Uniswap V3 as well:

With LM incentives from our end, I think that we could easily become the second deepest pool for the COMP token and surpass Uniswap V2/V3. Note that Sushiswap rewards the COMP-ETH pool with sushi and has a yearly ROI of 7.58% at the moment.

Volume wise, the daily average for the last 30 days that the top two pools have done is roughly ~3.76M combined:

In the DeFi space the Compound protocol is consistently ranked in the top 10 by TVL in its platform:

Compound finance is a well established protocol in the DeFi space and has been around since 2019. Since the launch of the COMP token last year, they kicked off DeFi summer and multiple projects followed suit by launching their own governance tokens. Compound has segmented themselves as one of the leading protocols in the lending space and has a large user base.

Introducing this community to Bancor should be beneficial to us and we have a chance to capture new users that will be introduced to single sided staking with impermanent loss protection. There is a potential for some of these folks to become long term LPs and even BNT token holders in the future. Future synergies between both communities can be built as BNT could be considered a collateral type that might be onboard to the Compound Protocol.