BNT PROPOSAL PASSES
The Bancor proposal passed on July 28th. There was a 50% quorum.
6.65M dollars worth of vBNT tokens voted yes to whitelist the proposal on Bancor. The proposal agreed 500K BNT will be co-invested. That’s about 1.6M dollars as part of this new LP.
It’s important to note the single-sided LP has already filled up. You can only deposit DAPP into the pool while simultaneously adding BNT right now.
The community could request more BNT as co-investment. But DAPP Network needs all of the contracts to go live first. And DAPP token should generate fees / activity on Bancor before requesting more funds.
Those staking DAPP to the single-sided LP will start accumulating time for IL (impermanent loss) protection. But you won’t mine DAPP rewards until the audit is completed. These tokens, however, are not yet locked into long-term staking pools. This feature is also not available until the audit is complete.
Here’s a guide explaining how to transfer DAPP to ETH: Bridge User Guide
If you want to buy DAPP tokens, there’s higher liquidity and lower slippage on Bancor. But if you’re purchasing smaller amounts, Defibox is cheaper due to ETH gas fees.
There’s a lot of people in Ethereum’s ecosystem who are just learning about DAPP Network due to Bancor’s whitelisting. But they’re probably not going to use EOS to buy DAPP. New interest in DAPP means Bancor’s LP could potentially generate more than the 6-7% yield generated by most DSPs.
While the audit is being conducted over these first weeks, the fees could generate more return than DSP rewards. Those staked to the LP before rewards begin have claimed their position and will earn swap fees. IL should not occur until after the first 30 days.
Bancor will compensate IL through protocol fees. The contract first looks to DAPP tokens for compensation, but will mint BNT as a secondary option.
The IL mechanism isn’t going to pay out BNT unless you’re staked into the rewards program. You’re basically using the LP like a proxy. The stake is essentially owned by your ETH address. Bancor’s contract will calculate and transfer the withdrawing LP rewards. They’ll burn BNT and replace it with DAPP. You must proxy your stake with the rewards contract.
There’s two main benefits for those staked into this LP before the rewards go live:
(1) You won’t have to unstake, then restake and risk losing your LP position.
(2) You’ll earn swap fees right away.
GRANTS & BOUNTIES
DAPP Network inflation is 15%. That’s how the liquidity mining and the external IL is being funded. All the new inflation flows into governance to decide how it's spent.
These details set DAPP governance up to potentially act like a WPS (worker proposal system).
Once your DAPP tokens are staked to Bancor, you can’t use them to vote on proposals. It’s the same with any major staked token.
DAPP Governance voted to increase inflation for funding, not only the LP rewards needed to create liquidity, but also funding towards grants and bounties. These grants and bounties should accelerate ecosystem development.
Builders who desire growing the DAPP Network or might create something with additional value should seek-out grants. Developers should consider thinking about a business model for DSPs.
If you're a developer with a great idea to use DAPP Network, you're able to write your own worker proposals and milestones using DAPP governance. The DAPP Network community may decide to fund your innovation.
Bancor will boost market liquidity enough to use these bounties for paying devs or anyone adding value to the DAPP Network. The governance proposal system can be looked at as DAPP’s launchpad. The DAPP community is most likely to fund Ethereum EVM devs, EOSIO devs, and projects utilizing DAPP token for utility.
The code’s audit is being conducted by Peck Shield — a prominent ETH auditor. They started Monday, August 2nd. Once the audit is complete, LP staking rewards will begin. EOS and ETH code needs to be audited on the same timeframe. This process will take a maximum of 30 days.
There will be a thorough blog post explaining everything about DAPP’s staking system. This official blog is coming soon from LiquidApps.
There will be a future proposal deciding how DAPP inflation is portioned out. A portion will go into DAPP governance funds. The IL reserve account will also need a portion. And some inflation will flow into the BNT rewards pool on EOS.
These tokens will cross the bridge every 30 days using a single transaction for each account. This process is completed once per month to save transactions in gas.
There’s a proposal to fund IL on ETH with 20M DAPP right away. These tokens were minted through retroactive inflation. Moving forward, probably 6M to 7M DAPP will go to the IL account each month. If DAPP moves in price relative to BNT, DAPP gov fund will need to keep adding tokens to ETH’s IL reserve until the account reaches a heavy cushion — let’s say 50M DAPP.
50M DAPP in the ETH IL fund would create a back-stop to cover major price differences between DAPP and BNT. The more DAPP tokens in the LP, the more we need to cover for IL.
If the price of DAPP continues to go up against BNT to create IL, less DAPP is needed from the IL protection fund.
The rewards contract on ETH has a locking contract built into it to offer higher rewards for longer staking and lower rewards for smaller staking periods. Tokens minted and placed in IL Fund shouldn’t be considered circulating supply.
DAPP’s community will need to figure out how many rewards to distribute for the Bancor pool.
There will be six ways to stake DAPP:
The front-end will display different time staking options and their current yields. Once this interface goes live, there’s a chance you’ll earn higher yield for a shorter lock-up. But, over-time, it’s going to create a bond curve where longer time-frames will earn more yield. The longest term pools will receive more rewards than shorter ones.
LiquidApps @LiquidAppsIOA big thank you to the entire @Bancor community on behalf of the #DAPPNetwork community for approving its proposal for co-investment and whitelisting for single sided liquidity! It is an honor to make #Bancor the liquidity hub for DAPP on Ethereum.🙏 Onwards and upwards! 🚀 https://t.co/muoVVuVStY
Stakers could potentially turn their position into NFTs. Even if you’re locked for two years, you could basically mint an NFT that’s ownership of your staked position. You could sell that on a second hand market or peer-to-peer. This NFT would be considered a yield bearing asset.
NFT use-cases are not part of the initial rollout. But there’s many potential DeFi elements that will manifest in the future.
Check out my past articles to learn more about NFT multipliers:
If you stake using the Bancor interface, your account owns the stake. But the rewards contract manages your stake for you. So, once it’s deployed, you’ll need to transfer your stake to the rewards contract. You’ll still be able to control it with your keys, you’re just controlling it through the rewards contract. You’re basically granted the rewards contract permission to intercept BNT IL, burn it, and then send you DAPP instead.
The Bancor front-end isn’t built to do any of this stuff. They don’t have a claim function for third-party tokens. So we need to use our own front-end for all of the user controls. Claiming and staking will be on this interface. After you transfer you stake to the contract, you won’t see it on the Bancor front-end anymore. But you will see it on the DAPP Network front-end interface.
DeFights will be the first front-end for the DAPP liquidity mining smart contracts once they're deployed.
The trading fees accumulated from swap volume will be distributed pro-rata as normal. The staking pools don’t amplify your percentage of trading fees. Zero lock-up pool is for people who value access to liquidity. People in the zero lock-up pool would be able to accumulate their pro rata share of fees and utilize external IL. They’ll get their pro-rata swap fees regardless of the length of their stake. But the DAPP rewards are weighted towards long-term stakers.
Stay tuned for more DAPP Network updates!
This article was prepared and accomplished by Wes Carmichael in his personal capacity. The opinions expressed here are my own and do not reflect the views or opinions of LiquidApps.
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