Thread by @korpi87

1) I've been trying to raise awareness of superior @Bancor dex for some time but my reach on Twitter is so low that I literally twitted for myself with the aim to quote it when market realises I was right. I think this time has come.

https://twitter.com/korpi87/status/1338263894360469513

2) In my opinion @Bancor is the most innovative AMM on the market and $BNT is substantially undervalued. The core features include:
- Single-sided liquidity (you can add liquidity for your token only)
- Impermanent loss protection
- Low trading fees (0.2% vs 0.6% on Uni or Sushi)

3) More features are coming:
- Leveraged liquidity on staked $BNT (borrow against staked $BNT for better capital efficiency)
- Layer 2 on Arbitrum for faster and cheaper transactions
- Cross-chain bridge to Polkadot & other chains

4) Let me start with explaining why I think that @Bancor may become a black hole for many assets and as a result win a substantial share of the AMM market share. It's because of its powerful trifecta features: single-sided liquidity, IL protection and low trading fees.

5) AMMs face chicken and egg problem. They need liquidity to bring trading volume. Otherwise, slippage is too high and trading is not profitable. But they also need trading volume to attract liquidity. Otherwise, LPs don't earn enough to deposit their funds on AMM. How to fix it?

6) You can bribe LPs by giving them rewards for liquidity. This is how $SUSHI started. But rewards alone don't constitute a sustainable model. When APY drops LPs move out. To make them stay, you need to convince them your AMM offers good long-term perspectives, create a brand.

7) $SUSHI changed its image from a degen Uniswap fork to an innovative AMM. They managed this by collaboration with $YFI, openness to community and actual innovation. Many other AMMs which appeared in DeFi summer didn't succeed. But @Bancor is not a clone, it is a unique AMM.

8) Other AMMs like $UNI or $SUSHI force LPs to deposit equal value of both assets, mostly $ETH and other token XYZ. If both prices move relatively the same, impermanent loss is low and offset by trading fees. Net ROI is positive. But it's often not the case, see USDT/ETH returns:

9) IL is often greater than LP fees. If your favorite token XYZ doubles but $ETH stays the same, your position in LP pool is worth 6% less than it would be if you hadn't provided liquidity. That's the punishing power of underrated IL. What if you could get rid of it?

10) Actually, you can, thanks to @Bancor unique IL protection. It works by bundling an array of pools into one bucket. Some pools have high IL, others don't and fees they generate are used for IL compensation. It shifts IL from single-pool risk to a risk spread across many pools.

11) Does it work? In Jan @Bancor published a report summarising the health of IL protection feature. It says: "The value of swap fees earned by the protocol exceeded the total cost of impermanent loss compensation paid to liquidity providers by a margin of more than 5X."

12) "This indicates protocol revenue is covering the cost of impermanent loss protection, and generating a profit for the protocol and its owners (BNT holders)." blog.bancor.network/bancor-v2-1-pr…

13) So you can deposit your favorite token to @Bancor without the need to deposit $BNT (single-sided liquidity) and have it protected against IL. Why would you want to deposit it into any other AMM and take a risk of IL? You don't know? Not only you - TVL chart proves that.

14) Since IL protection was introduced in Oct, TVL in @Bancor increased 65x and reached $1B on 21.02. That's an exponential growth showing that market has finally discovered the superior power of Bancor AMM. But it's actually just the beginning... Now let's talk about the fees.

15) If you want to swap $LINK to $YFI on Uniswap or Sushiswap, you make two swaps in the background: $LINK to $ETH and $ETH to $YFI. Each swap has 0.3% fee for LPs so in total you pay 0.6%. In Bancor you pay 0.1% for each swap, so in total you pay 0.2%.

16) Good liquidity means that large trades can be executed with low slippage. That combined with low trading fees makes Bancor a first choice AMM for aggregators like $1INCH. More volume => more fees for LPs => higher TVL => lower slippage => more volume...

17) This is not the end of innovation @Bancor offers. Bancor Vortex is a new feature which will allow $BNT LPs to borrow against their staked $BNT. This creates a black hole environment for all the $BNT on the market and may lead to a supply crisis like it worked for $SNX.

18) If you long $BNT, it makes sense to add it to @Bancor. This way you earn trading fees and $BNT rewards but also increase protocol capacity for single-sided liquidity and contribute to higher TVL. Moreover, you can leverage your staked $BNT and buy any other token.

19) There is no liquidation risk because you technically don't take a loan. You just swap your $vBNT, which you get for staked $BNT (similar to LP token in other AMMs), for any other token. More about Vortex: blog.bancor.network/using-bancor-v…

20) So it doesn't make sense to long $BNT and not stake it. When the majority of supply gets locked, circ. supply is low and buying pressure moves it consistently up. This is $SNX case study where a lot of supply is staked on Synthetix platfrom. You know what happened with $SNX.

21) There are more plans in the roadmap:
- Joint liquidity mining: allow other projects to deploy non-BNT rewards
- Limit orders and 1-click migration from other AMMs
- Layer 2 on Arbitrum
- Cross-chain bridge to Polkadot & other chains
- Nexus Mutual "shield" mining

22) More details on planned develoments can be found here: blog.bancor.network/bancor-monthly… These are not words. @Bancor has already proven that they are able to innovate and deliver on their promises.

23) At the end a bit about $BNT price. At 5.2$ it's $582M MC. Uniswap: $7.3B MC, Sushiswap: $2.1B. There is definitely a potential for increase. Can it flip $UNI in MC? Ambitious target but I believe it can. It has superior AMM design with better incentives for LPs so why not?

24) $BNT is also on major exchanges including Coinbase and Binance. For some it may mean limited upside potential. For me it's a great exposure on buyers who are priced out on dexes. As soon as they realise that Bancor is superior AMM, they will quickly press green buy button.

25) And they will know soon enough. @CryptoMessiah is big $BNT holder and will use his influencer skills to spread $BNT awareness. Which makes me think that my $BNT bag is still not big enough. If you read it now, it means I've managed to accumulate more. Maybe you should too?