Bancor AMA with Crypto Society
Bilo 2000,
Hi Nate. It’s our pleasure to have you with us today. I would like to welcome you here on behalf of our entire community.
Nate Hindman | Bancor,
~Heyooo
Good to be here
Bilo 2000,
Could we begin with a brief history of yourself and your team, and your roles at BANCOR and what you were doing before BANCOR ?
Nate Hindman | Bancor,
Yup I’ll start with Bancor. The core Bancor team is about 10–15 and we work with tons of contractors (reach out if you’ve got a skill to offer) and have a core group of like 40–50 community members we work on a lot of stuff and are basically the leaders of the DAO
Nate Hindman | Bancor,
Core community is the main source of product feedback, strategy help, and come up with new ideas to implement in the protocol.
Bilo 2000,
That’s nice to hear. Community involvement in the project reinforces its strength!
Nate Hindman | Bancor,
I am the head of growth at Bancor, where I work on strategy, marketing & BD
I have been with the project since early 2018. Before that I had been involved with a bunch of mobile Internet start-ups in NYC and Silicon valley. Actually started my career as a financial journalist
Yea we’ve built up a pretty crazy brain trust
Bilo 2000,
Tell us a little more about yourself please
How did you start in crypto?
Nate Hindman | Bancor,
I first learned about Ethereum in 2016 and at the time saw it at as this super interesting way to effectively do crowdfunding for new new projects
Pretty early on I started buying the tokens of new projects and researching DEXs — since they were among the few places where you could easily trade for newer tokens
Bancor was one of the first DEXs I traded on and while poking around the exchange and code, I noticed a peculiar feature: there were no order books. Instead of order books, a set of smart contract-based automated market-makers (AMMs) were used to perform the exchange’s core operations, like listing, order-matching and paying trading fees to liquidity providers.
From then on I became pretty hooked on AMMs and their potential to disrupt exchanges
Bilo 2000,
I have to ask. Did you buy ETH as soon as you heard about it?🙈
Nate Hindman | Bancor,
Yeah some
Not a crazy amount
Bilo 2000,
hahaha — good for you!
Nate Hindman | Bancor,
Was more focused on stock market at the time
Saw ETH as an interesting investment but I was more interested on using to build a wave of start-ups
Bilo 2000,
Can you tell us about why you thought BANCOR needed to be built and what problem it solves?
Nate Hindman | Bancor,
Bancor launched the first AMMs on Ethereum in 2016/2017 at the time as a sort of mechanism to provide liquidity of first resort for new tokens.
I think what we quickly found is it was a really efficient way of generating liquidity for not just the long-tail but mid-size and big tokens too
AMMs are now competing with CEXs in daily trading volume and have proved to be compelling vehicle for token holders to generate yield on their favourite tokens
Bilo 2000,
Yes — it is quite revolutionary as Cex’s where in themselves quite revolutionary themselves
Nate Hindman | Bancor,
The main problem with AMMs is there is still a lot of friction for liquidity providers.
There are risks — like impermanent loss and there is the fact that they can’t stay long on their tokens while providing liquidity, they have to be exposed to the paired asset in the pool — like on Uniswap — you must provide your tokens + ETH or another ERC20)
Bancor v2.1 solves both of those problems for LPs, who can provide liquidity with single-token exposure and impermanent loss protection — and generate swap fees and BNT liquidity mining rewards
Bilo 2000,
That’s great, Thanks for the explanation; How would you describe BANCOR if you were talking to someone completely unfamiliar with digital assets?
Nate Hindman | Bancor,
It’s a user-owned exchange where anyone can provide liquidity — you don’t have to be a professional market maker, just an ordinary person with assets.
You can effectively lend your assets to the exchange and have them be used to perform trades and you generate interest from each trade
https://blog.bancor.network/user-owned-exchanges-1a212f20ea12
I wrote about the concept of user-owned exchanges here
Bilo 2000,
Ok so the big difference between Bancor and a decentralized exchange when it comes to adding liquidity for rewards is that one would only need to stake the token and not the liquidity pair hence freeing up the other part of the LP to buy or sell as needed. is this correct?
Nate Hindman | Bancor
yes correct
You only to provide a single asset to the pool and you are only exposed to that asset
Bilo 2000,
Very big advantage for sure. I have some questions for you on the different coins that are supported on Bancor down the line but will move on to another topic for now.
Nate Hindman | Bancor,
You can either be 100% exposed to the ERC20 you contribute, or 100% to BNT, while earning swap fees and bnt liquidity mining rewards
Bilo 2000,
What is the BANCOR token used for? Can you describe the Tokenomics?
Nate Hindman | Bancor,
How the system works:
So unlike other AMM protocols, BNT is the paired asset in every pool
It is literally used to support liquidity on the network. The protocol can emit between into a pool or a user provide BNT to a pool.
Each swap in the network is processed through BNT (SNX<>BNT<>AAVE).
Swap fees earned by the protocol are burned for BNT so there is a direct cash flow that is collected by BNT holders
You can also use for a governance. If you stake BNT in a pool it mints vBNT — which is your receipt of deposit (like a pool token) and also something you can vote in Bancor governance with: http://gov.bancor.network/
by the way here is Bancor’s site as well, which realized I haven’t shared yet: bancor.network
Bilo 2000,
Ok thanks — Burning of tokens as the use case for the tokens occurs is always a positive strategy and is an important part of an investor’s evaluation of the tokenomics
That’s awesome — Will surely look into it. Thanks for sharing
Nate Hindman | Bancor,
Yes you can track Bancor cash flows pretty effectively with the tools out there
This is from a protocol health report we published earlier this month: https://blog.bancor.network/bancor-v2-1-protocol-health-report-january-2020-83338c904de0
Bilo 2000,
My next question was going to be “Is BANCOR disruptive and if so how so?” but it is clear that it is especially as more and more tokens are added onto the AMM
What are you currently working on and can you describe your future roadmap?
Nate Hindman | Bancor,
Where you can see cumulative revenue vs. costs, volume, liquidity numbers etc. can also be found here: https://explore.duneanalytics.com/dashboard/bancor-protected-v2-1-data
More tokens added to the AMMs, more liquidity, more fees, more burning of BNT more returns for liquidity providers
Nate Hindman | Bancor,
We have liquidity mining rewards being activated any day now
So that is most pressing at the moment. LPs will start receiving BNT rewards for providing liquidity to the system and the LPs who have been providing liquidity until now will receive BNT rewards retroactively.
So that is the biggest roadmap item to get done, then following that:
* There are several Bancor improvement proposals being considered that adjust the tokenomics:
https://gov.bancor.network/t/bip9-proposing-the-bancor-vortex/354
https://gov.bancor.network/t/liquidity-mining-rewards-extension/414
* Expand the reach and utility of the Bancor protocol via cross-chain and Layer 2 deployments
* Add functionality to the bancor.network front-end via new Bancor APIs, as well as new trader & LP features
* Implement a dynamic fee to Bancor pools which optimizes volume to the protocol and is adjustable via governance
* New liquidity solution specifically for stablecoins
Bilo 2000,
I have a cheeky question for you:
Why’s Tyler Winklevoss retweeting your tweets, and what does he know? Is there a partnership there?
😳
Nate Hindman | Bancor,
He has been a friend of the project for a while and looking at interesting ways to set up CeDefi integrations.
I think a lot of CEX world is really the power of DeFi and wanting to integrate DeFi protocols into Gemini would be awesome and also some cool stuff we can do with GUSD
I think that custody solutions want on DeFi big time because more institutions thinking about yield farming
Bilo 2000,
Ok I see — Will keep eyes on you and Tyler 👀
😂
Nate Hindman | Bancor,
I personally don’t know the guy
But I’m sure he’s a nice fella
Bilo 2000,
In your liquidity mining program, you so far mainly support large projects. Do you plan to add there also projects with smaller mcaps?
Nate Hindman | Bancor,
Yes definitely. We have a new design for onboarding new smaller cap tokens and having them achieve volume/revenue metrics which offers progressively more insurance and co-investment limits by the protocol
Bilo 2000,
Great especially that most seasoned crypto investors are always on the lookout for the smaller MC coins the offer lots of growth potential
Nate Hindman | Bancor,
For sure, we have this whitelisting going live asap and see the importance of catching the massive swells in volume in their early days
Bilo 2000,
I like your governance proposal platform — can you please give an overview on how this works and how anyone can participate in this.
Nate Hindman | Bancor,
That said, listing is permissionless for smaller projects
Anyone can “list” by creating a pool for their token, and your token automatically shows up and is tradeable on the bancor.network front-end
You can create a pool here: https://app.bancor.network/eth/pool/create
Yea governance is basically where you can see the direction the DAO is heading in:
We have a ton of new ideas and proposals there by members in the community that dig into how our system works
Vortex: https://gov.bancor.network/t/bip9-proposing-the-bancor-vortex/354/2
People then vote with vBNT
You get vBNT by staking BNT in a pool, so all governance participants are also liquidity providers on the network
And token hodlers
Bilo 2000,
That is awesome
Nate Hindman | Bancor,
A lot of AMM protocol there is sort of this divide between LPs and token holders and on Bancor there is very high overlap, so the interests of both holders and LPs don’t diverge too much
Btw been meaning to share our FAQs: https://docs.bancor.network/faqs
Bilo 2000,
Sorry — I deleted the question as you already answered that anyone can add
Nate Hindman | Bancor,
A lot of the answers to questions and more info on single-sided AMMs and impermanent loss protection
Bilo 2000,
Bancor is capturing an increasing share of swap volume from other AMM protocols on key tokens like $LINK & $REN; how have you achieved this?
Nate Hindman | Bancor,
By offering better prices on LINK and REN trades through an increasing amount of liquidity in the LINK and REN pools:
bancor.network
You can see both the LINK and REN pools here are pretty deep
https://twitter.com/Bancor/status/1351185316770684928?s=20
Here are the charts
Bilo 2000,
Really interesting. Also, $BNT holders currently earn around 25% of swap fee revenue generated by the Bancor protocol. How do you manage to achieve this?
Nate Hindman | Bancor,
The reason more liquidity is coming to the LINK and REN pools and Bancor’s pool is capture more market share is because LPs are getting better more reliable returns — because they are able to maintain exposure to their LINK or REN and also are protected from any IL that can cut into gains
$BNT holders currently earn around 25% of swap fee revenue generated by the Bancor protocol.
How?
The protocol co-invests $BNT alongside LPs — e.g., a $100K deposit of $LINK triggers $100K of $BNT emissions into the $LINK pool.
These emissions earn swap fees burned for $BNT
In most pools the protocol is providing around 25% of the pool’s liquidity and thus earn 25% of the system’s revenue and burns it for BNT
Bilo 2000,
Cheeky question number 2: Is there any exclusive breaking news about Bancor that you could share with us here today?
Nate Hindman | Bancor,
Yes
Bilo 2000,
[ GIF: DRUMROLL PLEASE! ]
Nate Hindman | Bancor,
And yes that is very cheeky
We will announce the details of a cross-chain bridge we are building to Polkadot shortly
I will give you a taste
LB,
Bilo 2000,
no waayyyy!!! now you have to tell us more
Nate Hindman | Bancor,
But just a small one
Bridge operators will utilize lightweight nodes to listen to and interact with both chains. Unlike existing cross-chain bridges where nodes can cost hundreds of thousands of dollars or even millions to run, these lightweights nodes can run within a simple web browser.
This slashes the costs and setup time for new bridging agents and allows anyone to participate in setting up and maintaining the bridge.
The software underpinning the nodes is WASM-based, and could potentially be used to enable mesh networks across multiple ecosystems (e.g., a contract on Ethereum could be called to send tokens from a Solana account to a Polkadot account).
Bilo 2000,
Nate Hindman | Bancor,
That and BNT liquidity mining rewards is imminent
When activated, LPs will finally see how much BNT they’ve earned from LP’ng and will be able to re-stake BNT rewards onto the network to create more space in each pool
More BNT staked means more single-sided non BNT liquidity can flow in
Like single-sided LINK or REN
Protected from IL, so liquidity providers are chomping at the bit for it
Bilo 2000
We have a couple of ideas for some very interesting potential collaborations given this news. We will discuss this with you after the AMA
Nate Hindman | Bancor,
Once there is more staked BNT on the network our pools will be able to fill much faster and process volume, which in turn creates more fees that BNT holders collect
Bilo 2000,
Very exciting stuff Nate!
Gimme a few minutes — I’ll be back
LB,
continue the AMA Bilo, stop buying…
LB,
Nate Hindman | Bancor,
During this commercial break…
Bilo 2000,
😋
Nate Hindman | Bancor,
Check out our nifty portfolio manager:
When you provide liquidity it opens up a staked position and you can track returns there
bancor.network
Nate Hindman | Bancor,
Bilo 2000,
Do you wish to let us know anything else that was not covered in the questions above?
Nate Hindman | Bancor,
Guide on staking: https://blog.bancor.network/how-to-stake-earn-snx-on-bancor-v2-1-e2311bcaa235
Um, just mainly to check out Bancor and try out staking / swapping on the network:
bancor.network
https://docs.bancor.network/faqs
Also we post updates here: http://blog.bancor.network/
Bilo 2000,
Thank you Nate, for your time in answering our questions here today. We are all very appreciative of your time and of the answers you have provided
With this, we will open up the chat for those who wish to personally thank you for your time with us here today.
chat is now open
Acer,
Hi Nate, great AMA. any details on L2?
Balduin,
Thanks a lot for the AMA, Nate.
Was super interesting👍🏼
Alexander Vogels — ExxiBox,
Hey Nate, thank you for taking the time for this AMA
LB,
Great news, thanks so much for the interesting AMA, really proud having such a huge project in here 🙏❤️
Ryan D
Great AMA Nate 👏
Alexander Vogels — ExxiBox,
much appreciated 🥰
Bilo 2000,
Alex and @natehindman you two should talk
Nate Hindman | Bancor,
[In reply to Acer]
We are pretty close on an arbitrum demo / front-end
PumpeyeTheSailorMan,
I didn’t know anything about Bancor until today and it has opened up my eyes to what a great project/platform this is!
Nate Hindman | Bancor,
[In reply to PumpeyeTheSailorMan]
Yea it’s tough to get the word out, so much going on in crypto, but when people learn more they tend to fall in love
PumpeyeTheSailorMan,
I do have a couple of questions actually @natehindman:
If you are going to be interoperating with Polkadot, how does that fare with fees on Ethereum/Polkadot being different?
Also, with the token listings being permissionless, how will this negate the Uniswap like rugpull situations occurring that plague the industry and the impact that this might have on the reputation of Bancor?
DR,
Hey @natehindman I have a question:
- Could you explain why Bancor decided to partner with Arbitrum as opposed to Optimism? I personally prefer Arbitrum but am curious what the team felt were the pros of their roll-ups vs. Optimism. Some other teams e.g. Synthetix have gone with Optimism
Nate Hindman | Bancor,
[In reply to PumpeyeTheSailorMan]
Polkadot design details we’ll share in the coming days
Token listings have always been permission-less on Bancor. It is the job of interfaces and community-run lists to display tokens deemed to be legit. And then it is up to the user to decide which community list they trust.
What is not likely not be fully automated in the near future is whitelisting of tokens for single-sided exposure and IL insurance
The reason the whitelisting of tokens for single-sided exposure / IL protection is unlikely to be fully automated in the short term is by offering these features to a token, BNT holders are effectively underwriting the token’s risk of impermanent loss
Nate Hindman | Bancor,
[In reply to DR]
We’ve heavily researched both platforms and see the pros and tradeoffs in both. Arbitrum was the first L2 to get our contracts deployed on. I’m sure there will be an Optimism deployment too.
DR,
What are considered the cons of Arbitrum?
Nate Hindman | Bancor,
[In reply to DR]
Our engineers are closer to prioritization of L2s and I can’t speak too knowledgeably about specific decision making on Aribtrum v Optimism.
What do you think?
DR,
Well Optimism as I understand it can’t work on smart contract computation of the same complexity cause of the technical difficulty with ZK roll-ups
Alexander Vogels — ExxiBox,
[In reply to Nate Hindman | Bancor]
Being part of a Polkadot project with liquidity issues, I am VERY interested to hear any and all news. Do keep us posted 😊
Nate Hindman | Bancor,
[In reply to Alexander Vogels — ExxiBox]
Sure thing. What are you building on Polkadot?
Alexander Vogels — ExxiBox,
[In reply to Nate Hindman | Bancor]
I’m part of ChainX’s Council and X-Association. That’s fancy speech for I run some day to day’s and hold hands with the devs
Nate Hindman | Bancor,
[In reply to Alexander Vogels — ExxiBox]
Where is the token is traded? I’m just getting an understanding of the liquidity landscape and solutions available on Polkadot
Alexander Vogels — ExxiBox,
[In reply to Nate Hindman | Bancor]
MXC mostly, Hotbit being a close second
(Let’s keep an eye on this… you know how Crypto Society loves creating strategic partnerships!!! Especially amongst great projects ;-) )
