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DeFi Protocol Bancor Value Surges to $275 million

Posted by
Ian Kane

84% of redeemed BNT rewards re-staked to Bancor pools within 24hrs

Bancor, a blockchain wallet, and protocol that allows users to convert various cryptocurrency tokens directly and instantly hit an all-time high total value locked (TVL) this week amidst the launch of their BNT rewards. 

BNT liquidity mining rewards went live on the 27th of January and within just 24hrs 84% of the redeemed rewards were re-staked to Bancor pools. From the day staking rewards were launched an increase in Bancor’s TVL can be seen. On the 27th January 2021, TVL was just over $237 million, rising to over $275 million at the time of writing. An increase of $38 million in 24hrs.

Source: DappRadar

The beginnings of the spike are rooted back to the 21st of October 2020 when Bancor released the first-ever single-sided AMM pools. The purpose of the single-sided liquidity mining program was to bring new liquidity into its pool and create a stable platform from which to stimulate long-term liquidity. These types of pools allow people to supply tokens for just one side of a liquidity trading pool.

Source: DeFi Pulse

The main benefit to users being they are not required to supply additional tokens to stake BNT rewards and compound their yield. Looking at the increase in TVL from that date to the time of writing it would appear to have worked perfectly for Bancor. 

Source: Bancor

Competitive advantage 

Bancor states on its website that Uniswap is its main competitor. Both applications run on Ethereum and as such are tracked by DappRadar. Looking at TVL data for both protocols reveals that whilst Bancor has made impressive gains in regards to users and TVL it is still some way behind Uniswap. 

Source: DappRadar

Bancor’s $275 million TVL appears insignificant compared to Uniswap’s current TVL of over $3.4 billion. Some in the community suggest that users have just not woken up yet to Bancor’s offer and impermanent loss protection mechanism.

BNT Liquidity Rewards 

As of the 28th January 2021, BNT liquidity returns were made available on the Bancor.network interface. Users are now able to view, withdraw and stake BNT to increase profitability. The unilateral liquidity pool means users can easily stake BNT rewards without having to put tokens on the other side of the pool. 

Bancor believes this creates positive feedback, prompting the user to convert the prize into productive capital while enhancing the pool’s liquidity depth. Moreover, staking BNT rewards allows users to win swap fees and additional BNT rewards.

Source: Bancor

Staking BNT Rewards

If you stake the BNT rewards, you will deposit them in the same pool or in a different one by opening a new position in that pool. Your staked BNT rewards win swap fees and additional dig rewards that you can also stake to win more fees and gratuities.

Thanks to Bancor’s one-way liquidity pool, users do not need to provide additional tokens to bet on BNT prizes – only the awards themselves.

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