LEAP-23: Add Lyra Liquidity on Bancor

Simple Summary

Fund Lyra pool on Bancor with DAO owned LYRA tokens.

Abstract

This LEAP proposes Lyra DAO funds liquidity in the LYRA pool on Bancor. The Lyra DAO will add LYRA tokens to the pool to seed its liquidity.

Motivation

This proposal aims to create sustainable, DAO owned liquidity on L1. Since token launch, Lyra has launched a number of programs to encourage liquidity in the LYRA token by using incentives. LEAP - 21, Bridging Emissions Until Avalon, greatly reduced emissions for liquidity and increased capital efficiency by moving all of the incentivised liquidity along with some DAO funds to a Uni V3 managed Gelato pool. While this has been very effective in providing liquidity for LYRA, it leaves very little liquidity on mainnet and therefore restricts access for some traders who may want to access LYRA without moving to L2. Two sided liquidity pools can also suffer from large amounts of impermanent loss which is not ideal.

Specification

Overview

Bancor provides an excellent solution for protocol owned, L1 liquidity with zero additional emissions or incentives required. Once the initial liquidity is bootstrapped, Lyra DAO can add liquidity in LYRA up to the approved trading limit. Bancor allows for single-sided liquidity with 100% protection from Impermanent Loss after 100 days of liquidity providing. This pool gives LYRA holders the confidence that they can always efficiently buy and sell their LYRA on Bancor at any time on Mainnet.

Rationale

By funding our own LYRA/BNT pool, we can offer consistent liquidity on L1 without paying emissions for the liquidity or using a bonding discount. We can avoid mercenary capital that will farm and dump our token and protect DAO funds from losses with Bancor’s IL protection. Bancor V3 will be available in approximately 6 weeks and will shorten the IL protection window to 7 days. Once V3 is available, the Lyra DAO will migrate the pool's liquidity over at the council's discretion while maintaining IL protection.

Technical Specification

Deposit Lyra Lyra's DAO will deposit LYRA into the pool up to the limit of 100,000 BNT ($224,000 in notional value currently)

Test Cases

Over 30 DAOs [https://blog.bancor.network/nexus-mutual-joins-30-daos-adopting-bancors-dao-treasury-management-solution-2eb60b762259] have adopted Bancor’s single sided staking for their treasury management.

Sample Bootstrapping Event: https://etherscan.io/tx/0xa6f0dd4bbd6c3c8fda0e20b3164294782b4fc36799f7785ccbd56edc0e623c2d

Sample Deposit: https://etherscan.io/tx/0xbf08ad49da92d4b509c0745a59eb780684e5f2c2c9b9eb68f4aa9cedcf8a24fb

Configurable Values

BNT/LYRA Pool Deposit Limit = 100,000 BNT
Days in Pool = >100 days or until IL protection is reached with Bancor V3

Copyright

Copyright and related rights waived via CC0.