Read the original proposal on Discourse

TL;DR

• Re-enable LM rewards on the YFI pool for 12 weeks.
• YFI has attracted a liquidity pool of $36M at the time of writing.

Voting Instructions

• Vote FOR to re-enable LM rewards on YFI for 12 weeks
• Vote AGAINST to keep things as they are now.
• Stake BNT in a protected pool on http://bancor.network
• Stake vBNT in the governance contract on Ethereum
• Use vBNT to vote

Discussion

Yearn currently has a $36 million Liquidity Pool $18M of which is YFI tokens according to Dune analytics. Yearn LM rewards expired about 2-3 weeks ago and since then, the pool still retained 75% of its TVL while increasing the fees generated for the protocol.

Exhibit A:

YFI provides as much revenue and up to 2x revenue for the protocol compared to recently extended LM Rewards tokens (AAVE & SNX)

Exhibit B:

YFI provides as much volume and up to 2x volume for the protocol compared to recently extended LM Rewards tokens (AAVE & SNX)

Exhibit C:

Since the end of LM Rewards for YFI, the pool retained ~75% of its TVL (24M down to 18M)

Additional data:

Since late march, Yearn increased its Total Value Locked from ~1B to ~3B currently.

The fundamentals behind the governance token has been increasing in a fast phase, providing YFI with more volatility and more volume within the same time period.

I propose to re-enable the LM rewards for 12 weeks to keep liquidity on Bancor and attempt to encourage even more deposits & for current deposits to remain longer within the protocol.

Competing with others AMMs is harsh, we have the advantage of offering single sided IL protected liquidity provision, enabling similar LM Rewards as on the previous period would return an 8-12% on the deposited YFI which will prevent deposits from leaving Bancor and going into other AMMs such as Sushi that provides ~40% APY on it’s YFI/WETH pool with no IL protection.

Sources:

• Dune Charts: https://duneanalytics.com/Bancor/bancor_1
• Yearn’s TVL: https://yearn.science/
• Yearn’s Price: https://www.coingecko.com/en/coins/yearn-finance
• Sushi Incentives: https://app.sushi.com/yield