This article was first published on Bancor - Medium
- The Bancor Vortex Burner has been deployed to the Ethereum mainnet
- The Vortex Burner collects 5% of swap fee revenue and uses it to buy and burn vBNT
- vBNT will now be burned with every swap — locking BNT in the protocol forever, and putting deflationary pressure on the circulating supply of BNT
- vBNT burning also lowers borrowing risk for users who wish to take leverage on their staked BNT
- The vBNT burn rate will become a critical part of the BancorDAO’s flexible monetary policy, and may be adjusted to collect up to 15% of swap fee revenue
What is the Vortex Burner?
The Vortex Burner introduces an adjustable fee taken from swap revenue generated by liquidity providers (BIP9 and addendum). For example, if a $100,000 trade is executed on a pool with a 0.2% pool fee, $200 is collected by the liquidity providers as commission. The vBNT burner takes a 5% portion ($10) and uses it to buy vBNT and burn it.
vBNT burning is designed to:
- Increase locked liquidity: a portion of every swap is permanently locked into the protocol
- Reduce the circulating supply of BNT: BNT is continuously bought and removed from circulation forever
- Increase lending capacity: By putting continuous upward pressure on the vBNT price, the burning of vBNT lowers borrowing risk for users who wish to take leverage on their staked BNT
The full powers of the Bancor Vortex can now be accessed to perform key actions on the network that drive increased value to traders, LPs and the protocol’s owners, BNT holders. These actions, including swapping, staking and borrowing against staked BNT, are discussed in more detail below.
1. Swap tokens on the network
Traders and aggregators can use Bancor’s deep liquidity pools to swap tokens at the best rates, generating fees that increase the ...
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