Bancor Weekly Update Report

Bancor Weekly Update Report developing recovery plans: Fee allocation, Expand fees, Fee burning, Protocol analytics.

The Bancor DAO continued developing recovery plans aimed at restoring token reserves on the protocol. Bancor Weekly Update Report, Current plans focus on:

1. Fee allocation — divert fees to deficit reduction and affected LPs.
2. Expand fees — grow fees from trading and build new fee-earning strategies involving arbitrage, liquidations and native lending.
3. Fee burning — optimize fee burning aimed at replenishing pools.
4. Protocol analytics — better data to drive DAO decisions on protocol health and proposed new features.

1. Fee Allocation

Governance discussions are underway to determine the best allocation of protocol fees to help restore token deficits on the protocol. Three models are up for discussion: the DAI model, Protection model, and the Yield Throttling model. Initial details on each model are published in governance: “Feedback Request: Potential Direction for Recovery”.

2. Expanding fees

While AMM trading revenue is expected to continue serving as an important source of protocol income, Bancor V3 is designed to be a multi-faceted yield generating protocol that supports fee-earning strategies outside of just trading.

To accelerate restoration of network health and chart a path towards sustainable protocol revenue, new features and optimizations are being discussed within the Bancor community, including:

• Dynamic fees
• Protocol arbitrage
• Native lending/borrowing with protocol-level liquidations & margin trading
• Integration with off-chain market makers to support any token
• Token launchpad (IDOs)

Proposals will soon be presented with additional details including estimated development time, industry potential and proposed technical designs.

3. Fee burning

The DAO has voted to increase vBNT burn rates to:

• 100% on V2.1 —fees buy BNT and burn for vBNT.
• 30% on V3 —fees buy BNT; burning of vBNT on V3 not yet implemented (read more: Bancor V3 Vortex — Burn Collected BNT or Wait)

Further data regarding fee burning will be sharing in the next update. Other proposals related fee burning are under discussion:

• Direct BNT burning
• Proposal: Set the Bancor V3 Vortex to 90%

vBNT burning on Bancor V3:

With the ongoing trading activities on Bancor V3, a portion of trading fees are being using for buying BNT, to later swap for vBNT and burn via the Bancor V3 Vortex.

4. Protocol analytics

Recent events were a wake-up call that protocol analytics must be improving and more easily available for the community to monitor protocol health and make data-driven DAO decisions.

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