The Algofi Core Developer team will launch an ALGO-BANK Lending Pool and staking contract to the Dex protocol.
To learn about lending pools, see a write up here.
To learn about staking contracts, see a write up here.
Launch ALGO-BANK Lending Pool and staking contract.
This proposal is to be executed at the same time as the next emissions distribution proposal regarding allocations for the period of Nov 30-Dec 31.
The motivation is to drive ALGO and BANK liquidity on the Dex protocol. Additionally, the ALGO-BANK LP would be eligible for BANK emissions (% TBD).
In the future, the ALGO-BANK Lending Pool would be a capital efficient mechanism for users of the lending protocol and Algofi DEX to earn yield from lending interest and trading fees in the pool, but because of recent precautions explained here, you are not able to use the LP tokens as collateral at this time. Only ALGO will earn lending interest since BANK is not on the lending market yet. To be clear, this staking contract would be on the Farm page with the rest of the new staking contracts, not on the Lend page.
Liquidity for BANK paired with ALGO, from an investor’s perspective, is seen as a more attractive pool to earn trading fees because the tokens are more correlated and therefore impermanent loss is less of a risk vs. stablecoin-ASA pairs. The STBL2-BANK and ALGO-BANK staking contracts can co-exist. There has also been previous discussion of whether BANK emissions should go to STBL2-BANK or ALGO-BANK here. STBL2 should be a center for liquidity on Algofi but we should also let the market decide which pool wins the battle for emissions. This will be possible once the rewards manager and gauges are live.
That’s not part of the proposal on purpose. That will be in a proposal for emissions for next period. Don’t want to complicate things with this. This is just a proposal to add it as an option. If I also said it gets x% people might disagree and put the proposal in jeopardy. One step at a time. Drag-on
Not sure this can be done as Bank is not an asset that can be lent. Correct me if I’m wrong but a lending pool is an AMM pool that pairs bAssets which represents assets that have been lent in an Algofi lending market.
I voted against, because adding a BANK/ALGO lending pool seems contrary to the actions taken and proposed in the lending pool update. As I understand it, capping collateral and adjusting collateral factors can help reduce this risk but it looks like the plan is to decommission all but the dollar collateral pools. Seems too that BANK in particular, given it’s low liquidity, could be more easily manipulated and could suffer a similar Mango-like fiasco.
Saucey, maybe I can do a better job of making this clear: my proposal is not for a lending pool that can be supplied as collateral on the lending market. This proposal will add ALGO-BANK LP staking to the farm tab just like ALGO-STBL2, STBL2-BANK, ALGO-USDC. Hope that changes your mind.
Liquidity pairs with a collateral factor, yes. This would not apply in this circumstance as this proposal wouldn’t allow BANK or BANK-ALGO to be added as collateral with a factor, though the ALGO from the pair would participate in the lending pool and earn associated yield whilst not having a collateral factor. It shouldn’t impose any additional risk to the protocol and BANK-STBL2 amongst others already participates in this same manner.
This would increase supply of ALGO available for lending/borrowing, increase yield for those who provide liquidity and/or increase liquidity for BANK which is sorely needed for expansion of the ecosystem.
should we be concerned only a small portion of the circulating supply for BANK have been released and there could be a lot of volatility for ALGO-BANK pair that may have longer term effect on the development of BANK? imho BANK token emission should stabilize before we put this topic into discussion.
Oh yes, I am in favor of an ALGO/BANK LP Farm (staking) contract, so I would support that. I am still learning the language of DeFi, but in AlgoFi docs a Lending Pool seems different than a Liquidity Pool Farm Contract… where a Lending Pool LP is used specifically for collateral in lending and a Farm Contract LP is for staking liquidity pool tokens. I’m not sure if they can be both, or if it’s appropriate to call this a Lending Pool without lending. I don’t think so but I could be wrong. We are on the same page, just wanted to explain my confusion so we go to formalize with a tight proposal. Thank you!
deeper liquidity is great but the inflation rate on BANK is on par with early ALGO rewards which saw the price of ALGO tanking substantially. if the same thing happened with BANK it may cause a lot of sell pressure on the ALGO/BANK pricing. yes it may have deeper liquidity in the short term but it will also create selling pressure and significant price fluctuation that may have an effect on the long term sustainability of BANK. all for this proposal but i just think the timing is a bit early.
Having more liquidity also increases the chances for big buy ins from serious players. Big buy ins will never happen with tinny liquidity. Sells will happen regardless of liquidity if those parties are just farming and dumping.
“Allow people and projects to buy 1000A of BANK without a 2%+ price impact!” this is a good point but also when people dump they must take a 2% price impact. you think there is more demand then supply when emission is at 12.5% for the next 350 days?
fully diluted market cap of $BANK right now is a whopping $68M whereas something like Defly is only $6M, current TVL of AlgoFi is around only around $100M and $BANK has been available for 14 days only. just putting things into perspective here.
i m all for liquidity and listing BANK with more pairs etc. but moving too quickly too fast can be a double edge sword. taking Defly as an example where they now have 67% supply in circulation, its price tanked and took months to consolidate whilst only commanding around 10% of the current $BANK market value. how long do you think $BANK will tank if we have a prolong bear market with already minimal newcomers in the Algorand ecosystem? look at Algorand as a prime example if the price rallied after launch would the active user base be at 50k right now?
btw, i have right now 7 figure holding in BANK and the last thing i want is to have too much liquidity too fast where everyone might dump to make a quick buck.
And what if with our combined veBANK voting power we vote for a massive % of emissions to go to ALGO-BANK? What do you think would happen to the liquidity and price of BANK? Come join our discord in DragonFi and let’s talk BANK Wars. You’ll be a welcomed member of the Realm.