We have recently published a proposal on the Bancor Governance Forum (https://gov.bancor.network/t/proposal-increase-temp-trading-liquidity-to-500k-bnt-from-100k-bnt/) to increase the BNT liquidity limit from 100,000 BNT to 500,000 BNT in the TEMP/BNT pool on Bancor.
At today’s rate (1 March 2022, BNT = $2.47) this opens up the pool for approximately $988,000 worth of TEMP tokens.
In summary, we have done so to make the Bancor pool more competitive in terms of slippage with our Uniswap and Balancer pools.
If and when the proposal passes, and the liquidity limit is increased, I suggest we use $750,000 worth of TEMP from the Tempus Treasury to provide liquidity to the TEMP/BNT pool. This leaves sufficient room for other TEMP holders to also deposit into the pool if they wish.
- It reduces slippage on Bancor, and makes TEMP more tradable due to lower slippage
- TEMP is sitting idle in the Treasury, and this is a great way to put idle TEMP to “work”
- Due to the core value proposition of Bancor, the deposited TEMP is protected from IL - the Treasury is guaranteed to make trading fees
- It does not increase circulating supply as TEMP will be held by the Treasury (Treasury held tokens are excluded from the circulating supply, regardless of whether they are staked or used to provide liquidity)
- It increases the long term cooperation between Bancor and Tempus
I suggest we debate this issue in the forum until Thursday 3 March 2022, and move it to a vote then.
Does this mean people like me who’ve deposited into pool get lower rewards?
Great question - in short, it doesn’t. Volumes in the pool will increase greatly as a result of deeper liquidity, so the APR should be the same for stakers regardless of this proposed increase.
Sounds like a win win. What’s the catch or tradeoff here? (or there is none the team can think of)
By pairing TEMP with any token other than stablecoins in any liquidity pool, we partially anchor the TEMP price to that other coin. Practically, this means that if BNT price pumps on a $ basis, TEMP pumps with it, and vice versa. This is due to how AMMs work.
Since Tempus has most of its liquidity in the TEMP/USDC pool on Uniswap and the TEMP/ETH pool on Balancer, this is not a huge risk. Of course, we would like to work with Bancor going forward so we don’t mind the slight AMM-induced correlation.
Overall, the benefits I laid out above clearly trump this small risk.
I’m in favour of this proposal. As you mention @garai, we currently have a lot of $TEMP sat doing nothing in the Tempus Treasury and it would be great if we could do something with this. Bancor’s impermanent loss protection is also a no brainer for me - it’s basically free money. Strengthening our relationship with our partners is also never a bad thing.
IMO, these benefits clearly outweigh the negligible risks. I will be voting in favour of this proposal if/when it moves to a Snapshot vote.
Agree with this proposal as it strengthens the DAO2DAO relationship with Bancor, deepens liquidity for the TEMP token without the impermanent loss risk, increases trading volume and enables Tempus to accrue more value in the Treasury.
This proposal makes sense to me. Adding more liquidity will reduce the slippage and the IL protection feature on Bancor will protect the treasury TEMP tokens from any losses. There is nothing to lose here.
Just wanted to add that I am also in favour of this proposal for all the reasons already stated above.
This proposal has been moved forward to a Snapshot vote: Snapshot
The Tempus community have spoken and have voted against this proposal. It will therefore proceed no further (though of course the Bancor community may still vote to increase the BNT liquidity limit from 100,000 BNT to 500,000 BNT in the TEMP/BNT pool on Bancor, which is a separate issue).