The Tie Research
Bancor: The History of DeFi’s Founding Fathers
By Gustavo Lobo
April 18, 2023
- Liquidity- vBNT is liquid with BNT,which is liquid with every single token on Bancor. Stakers now have the option to leverage their vBNT by swapping it for any platform asset.
- Governance - vBNT is the token used to vote for protocol changes and whitelist proposals in the Bancor DAO. This allows staked users to vote.
- Yield - Stakers earn yield with vBNT by staking it in the vBNT/BNT pool, securing a share of the swap fees.
- Our friend Joe deposits 500 BNT in the LINK/BNT pool. The protocol mints 500 vBNT to represent pool share.
- Joe sees that $AAVE dropped to a key support level, and thinks it’s a good time to buy. So, heswaps his vBNT for $AAVE
- Joe then decides that he wants to hold onto his newly bought $AAVE for a while, and decides to use it to provide liquidity to the BNT/AAVE pool.
- Fast forward 12 months and now, due to all of the fees Joe has accumulated, his BNT stake has tripled and is now worth 1500 BNT. He decides it’s a good time to cash out and buy that house he’s been looking at.
- In order for Joe to withdraw his LP, he needs to have the same amount of vBNT in his wallet that was given to him when he first deposited -in this case, 500 vBNT.
- Joe uses some USDC in his wallet to buy 500 vBNT. Hecan now withdraw his staked BNT from the LINK/BNT pool. This burns the 500 vBNT, and returns 1500 BNT.
- Increased liquidity depth, by locking a portion of every swap into the protocol.
- Reduced borrow risk, by offsetting the continuous upside pressure of vBNT with consistent burns.
- Permanent reduction in the circulating supply of BNT, by continuously buying and locking up BNT for good.
- Increased the amount of protocol-owned liquidity throughthe treasury, giving them the ability to sponsor more room for a liquidity pool and pay for insurance.
- Instant impermanent loss protection
- A redesigned framework for Single Side Pool Tokens
- Unlimited cap for deposits with the introduction of “Superfluid Liquidity” and Infinity Pools
- Flash Loans
- Deeper liquidity & reduced transaction costs by using Bancor's new Omnipool
- Dual-sided reward issuance.
- Auto-compounding rewards on a contract level.
- External impermanent loss protection
- New integrations, Multichain & L2 Support, a revamped UI, and more.
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