Executed November 30th, 2022
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 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.