This proposal aims to deploy 187k IDLE into the IDLE/BNT pool on Bancor, reaching $1m in pool liquidity and reducing current slippage by 50%.
In early January, Idle DAO approved a 187k IDLE liquidity deployment into Bancor.
That action resulted in 1.68% APR on the IDLE side while benefiting from impermanent loss protection and single side deployment.
At the time of writing, the IDLE/BNT pool has ~$500k total liquidity.
Currently, we are already able to increase IDLE/BNT pool liquidity on Bancor by another 257k IDLE, and no proposal needs to be voted on their side if Idle DAO plans to finalize this liquidity deployment.
With an additional 187k IDLE deposit, Idle DAO can achieve $1m liquidity, thanks to the BNT matching.
Here below an analysis about the current state of the markets
With 55% of the whole IDLE-related liquidity (source), Bancor is the most liquid pool today.
In terms of volumes, Bancor manages 26% of the weekly volumes, following SushiSwap (41%) and Uniswap (32%).
SushiSwap and Uniswap still represent the main markets, but they require to deposit both IDLE and ETH. The deployment of $250k IDLE into Bancor would be automatically translated into $500k liquidity.
Bancor is still the most straightforward way to reach that milestone without the need to match the ETH side and with the minimal capital deployment.
Furthermore, the aggregation of the liquidity in a single pair enables better market performances, generating benefits for community members that interact with DEX aggregators like Paraswap, 1Inch, Matcha.
With approximately $1m in Bancor liquidity, Idle DAO would be able to halve the slippage on that market, attaining ~15% price impact on a $100k swap. With that liquidity, DEX aggregators would drop the slippage on a $10k swap below 2%, and consequently the $100k one near the 10% range.
Table 1.1 - Current Slippage on DEXes
Table 1.2 - Hypothetical Slippage with $1m total liquidity on Bancor
We will update the above table with DEX aggregators figures after the liquidity deployment takes place. Idle DAO is also considering adjusting the current liquidity deployment in Uni v3 to further strengthen IDLE/ETH oracle resiliency. A new proposal, possibly involving Gelato G-UNI for active liquidity management, is currently being drafted.
- Route 187k IDLE from Ecosystem Fund to the Treasury League multisig. Treasury League will deploy funds into Bancor IDLE/BNT pool.
We are going to leave this thread open for discussions and, if there are no objections, in about 3 days we will proceed with the Temperature Check. In case of approval, an on-chain proposal will follow.