Bancor Follow-up Liquidity Deployment (187k IDLE)


Treasury League: @Davide @raghav1997, reviewed by @Teo


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 :point_down:
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

SIZE Bancor SushiSwap Uniswap Paraswap 1Inch
$ 10k 4.1% 10.6% 10.5% 2.7% 4.3%
$ 50k 17.7% 36.6% 36.9% 12.0% 12.3%
$ 100k 30.2% 53.5% 53.8% 19.5% 21.2%

Table 1.2 - Hypothetical Slippage with $1m total liquidity on Bancor

$ 10k 1.8%
$ 50k 8.4%
$ 100k 15.5%

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.

This proposal is connected with " Treasury Management M1-2022" post, released by @biaf, which analyzed the past liquidity deployments and their outcomes.



Next Steps

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.


Let’s move the proposal to the Temperature Check phase!

:arrow_right: Poll for $IDLE holders: HERE
:arrow_right: Poll for $IDLE Stakers (stkIDLE holders): HERE

:alarm_clock: Polls will close on 2022-03-07T18:00:00Z .

The final $IDLE voting weights will be calculated using the approved calculator.

Cast your vote :writing_hand:


Snapshot approved! :white_check_mark:

With more than 300k IDLE votes, the proposal will be included in the next IIP :tada:


This proposal has been executed on-chain, and Leagues deployed 187k IDLE into Bancor.

Here below you can find the overview of the current slippages on DEXes, in comparison with the previous scenario.

SIZE Bancor Slip. reduction Paraswap Slip. reduction 1Inch Slip. reduction
$ 10k 2.0% -51% 2.7% 0% 3.3% -23%
$ 50k 9.2% -48% 7.8% -35% 8.4% -31%
$ 100k 16.9% -44% 13.7% -30% 14.3% -32%

As a result, the main benefits come with Bancor, the direct receiver of the DAO’s liquidity. The slippage reduction is about 50% for any swap size.
Consequently, DEX aggregators like Paraswap and 1Inch reduced the slippage by 30% for swaps above $50k.