LSDFi and the Growth of Bunni: A Twitter Space with Timeless Finance
To mark the launch of our swETH-ETH pool on Bunni, we were joined by Dakotah from Timeless Finance to discuss LSDFi.
May 18, 2023
To mark the launch of our swETH-ETH pool on Bunni, we were joined by Dakotah from Timeless Finance for a discussion about LSDFi.
In case you missed it, here are the top questions from the event:
1. What is Bunni?
Bunni is a project built by Timeless Finance that aims to tackle liquidity incentives in DeFi.
Bunni enables projects that are still relying on Uniswap v2 or SushiSwap liquidity to easily migrate to UniSwap v3. This allows protocols to keep their existing incentive structure, while helping traders experience less price impact and giving liquidity providers higher capital efficiency.
2. How do you see the LST and AMM market growing in the future?
Firstly, liquid staking tokens (LSTs) are currently growing at a steady rate and we believe that they will be the next big narrative within the Ethereum space. For AMMs, Uniswap v3 is a part of the next wave of innovation that is currently being developed and will continue to push the space in the right direction.
Overall, LSTs are definitely here to stay and will become a mass adopted sector in the next few years. Having an asset that is liquid and provides passive income from the most blue chip yield source in crypto is a super powerful tool. It will be interesting to see these tokens in the hands of more traditional finance and retail players as we continue to build additional financial protocols on top of staked ETH.
3. What are the benefits of being a liquidity provider on Bunni?
One of the main utilities that Bunni is going to offer liquidity providers is taking the Uniswap LP NFT token and turning it into an ERC-20 token.
Minting an NFT through Uniswap is currently a technical process, so this is going to make the process cheaper and gas fees more efficient. The ERC-20 token is going to have more composability and in the future you may be able to take your LP token and use it as collateral on another platform. This process is much harder with an NFT versus an ERC-20 token.
Bunni will also be offering incentives on top of the swap fees that you get on UniSwap v3. You will have extra funds coming in that can help offset the risk of impermanent loss, and in the case of LSTs this will bolster how much you’re getting paid when you put your funds on the platform.
Bunni’s Liquidity Incentive Token (LIT) model allows liquidity providers to use the platform and get paid in our governance token: vote-escrow LIT (veLIT).
This also gives them the opportunity to buy oLIT at a 50% discount, which is something that the community can vote on and change over time. The other 50% needed to redeem will come from wrapped ETH which ensures that the protocol will always be collecting ETH for the treasury as new supply becomes available.
Once users hold LIT, they can lock it on Balancer and receive the Balancer Pool Token (BPT). This token is required to be locked inside the pool's UI to claim our governance token, veLIT.
As veLIT tokens are Balancer tokens, veLIT holders also have the opportunity to vote on how much emissions each liquidity provider receives, creating a sort of natural liquidity inside the ecosystem.
5. Why did Swell choose to collaborate with Bunni?
As Swell is still new to the LST space, we are in a position where we can bootstrap our liquidity without a governance token.
One of the key reasons that Swell chose to collaborate with Bunni is because it is a newer protocol that we can collaborate with while veLIT is still relatively undervalued. This allows us to control a larger position with emissions directing back to us, thus providing deeper liquidity.
Thanks to everyone for attending the Twitter Space!