DeFi investment fund DeFiance Capital has taken a position in the BNT token and will serve as strategic advisors to the Bancor protocol, advising on tokenomics, strategy and institutional liquidity […]
DeFi investment fund DeFiance Capital has taken a position in the BNT token and will serve as strategic advisors to the Bancor protocol, advising on tokenomics, strategy and institutional liquidity provision.DeFiance will use its BNT tokens to provide liquidity on the bancor.network and earn yield from swap fees and liquidity mining rewards, while enjoying impermanent loss protection.“Bancor was the pioneer of the Automated Market Maker (AMM) model on Ethereum,” wrote members of the DeFiance team in a recent article on Bancor in Deribit Insights.“Despite Uniswap’s runaway success and the rise of similar competitors such as SushiSwap, the Bancor team persisted in iterating on their original product. With the Bancor v2.1 release in Oct. 2020, the combination of single-sided liquidity provision and impermanent loss insurance seemed to be the unique selling position needed to make a breakthrough in the fiercely contested DEX arena. This is clearly reflected in parabolic growth metrics such as TVL and trade volumes since the protocol update.”Protocol Stats (as of March 18, 2021):TVL: $1.65B (#9 on Ethereum — DeFiPulse)Cumulative fees: $61M per month (#4 on Ethereum — Cryptofees)Bancor Dune AnalyticsDeFiance joins Bancor at a pivotal moment in the protocol’s development and the overall DEX ecosystem. Until the recent release of Bancor v2.1, AMM pools have required liquidity providers to forfeit their long position on volatile tokens and take on exposure to other assets in a pool. LPs have also run the risk of suffering impermanent loss, which can leave them holding less of their principal stakes, even after accounting for fees and rewards.Such risks have prevented many users from providing liquidity, since unlike most staking products, AMMs can under-perform a basic buy-and-hold strategy.By removing IL risk for LPs and offering single-asset exposure, Bancor v2.1 provides users with the ability to earn risk-minimized yield on their favorite tokens via swap fees and rewards. This brings AMMs in line with what users have come to expect from DeFi lending protocols and other staking products, and stands to attract a new wave of HODLers and institutional liquidity to Bancor.The bancor.network portfolio manager displays protected LP positions (Bancor v2.1 staking guide)“Institutional and retail users who previously avoided contributing capital to AMMs due to the risks involved are now taking another look,” said Nate Hindman, who works on growth at Bancor protocol. “We’re excited to work with the DeFiance team to educate the public on this new frontier in AMM technology, and to leverage the team’s DeFi expertise to advance the inner-workings of the Bancor protocol. DeFiance will work alongside Bancor’s team of leading crypto-economists and researchers to perform risk assessment and data analysis, and to inform optimizations on the protocol.”In a recent progress update, Bancor laid out an aggressive roadmap, including the upcoming release of Bancor Vortex (the protocol’s native lending engine), gasless governance, a new pool design for stablecoins, a token launch system offering IL-protection for low-cap tokens, new trader features & incentives, and Layer 2 scaling.Further ReadingTry the bancor.network appBancor v2.1 Staking GuideDeribit Market Research: “Bancor — The World Token”Bancor v2.1 Economic AnalysisMarch 2021 Progress UpdateBancor WikiDeFiance Capital Joins Bancor Protocol as Strategic Advisors was originally published in Bancor on Medium, where people are continuing the conversation by highlighting and responding to this story.
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