This guide shows you how to stake and earn SNX in the single-sided SNX liquidity pool on Bancor v2.1.
Bancor v2.1 is a dramatic improvement over the existing AMM model, as LPs can now stay long on their tokens and earn swap fees & rewards without having to worry about price movements reducing the value of their stake.
Bancor v2.1 allows liquidity providers to stake in the SNX liquidity pool on bancor.network and maintain 100% exposure to SNX, instead of taking on exposure to a separate paired asset like ETH.
This allows LPs to stay long on their tokens while earning:
- SNX swap fees
- liquidity mining rewards*
- impermanent loss insurance
*The SNX pool was recently selected for BNT liquidity mining. Once the pool receives $400K USD in liquidity, it starts receiving 10K–20K BNT per week for 12+ weeks. In addition, the protocol will offer up to 1M+ BNT for impermanent loss insurance. If the pool’s insurance limits are reached, adding single-sided SNX requires more BNT being provided by users, or the insurance limits to be increased by governance.
Impermanent loss insurance accrues for LPs over time, increasing 1% per day until 100% insurance (full protection against IL) is achieved after 100 days in the pool.
Meaning, if you stake 100 SNX in the pool for 100 days, even if SNX moons, you’ll still get the equivalent value of 100 SNX back — plus swap fees & rewards. (Learn more about impermanent loss insurance.)
The chart below shows the impact of impermanent loss on LP returns in the SNX/ETH pool on Uniswap, May 20-December 23, 2020. All else held equal in the SNX/ETH pool, Bancor’s IL insurance would have protected LPs against periods of negative returns and improved profits for LPs more than 2X.