Decentralized exchange service Bancor has announced that “stable liquidity pools” backed by a number of stablecoins including its own USDB token can now be deployed on its network.
As well as USDB, other stablecoins including Tether (USDT) and the ethereum-backed DAI token can also be used on the service, enabled through the project’s Cotrader dapp.
The move allows Bancor users to “store their idle assets in decentralized liquidity pools”. Doing so will generate fees (payable to the user) from autonomous token conversions performed by other customers on the network. According to Bancor’s own statistics, the 24-hour volume for the network’s decentralized exchange was around $500,000, with an estimated $7 million worth of token liquidity on its order books.
“Liquidity pools have emerged as a fundamental building block in the DeFi ecosystem,'' said the firm in its latest blog post. “As liquidity pools and protocols have grown in popularity, one finding has remained consistent: Liquidity pools with the highest ROI and the largest number of liquidity providers often involve a stable asset in their reserves.”
As an example, Bancor said that a liquidity pool with two stable assets in its reserves “minimizes impermanent loss to near zero”, thereby maximizing the profitability of fees collected from token conversations on the network. The firm said that this will “help drive decentralized liquidity” by automating order matching and market-making activities on the network.
Just last month, Bancor, which raised $153 million in its June 2017 ICO, revealed that it would be airdropping $2.3 million worth of ether to its users in December—a move it hopes will help create over 60,000 new liquidity providers.