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1/ @Bancor v2 is solving some of the most important problems facing AMMs today: impermanent loss, single-token exposure, and capital inefficiency. Impermanent loss results in a LP under-performing a simple buy-and-hold strategy.
2/ This is a huge issue as many people would rather not provide liquidity than underperform a simple buy-and-hold strategy. Less liquidity means higher slippage and is overall a net negative for the crypto space.
3/ Bancor has substantially mitigated IL by using @chainlink oracles to update the internal prices of tokens in their pools in response to external market price changes. These updates move prices along the bonding curve and incentivizes arbitragers to trade with the pools.
4/ As a result of these trades, token balances will be constantly trending towards staked balances (initial LP deposits), resulting in substantially mitigated IL. An ingenious design, which no other AMMs utilize currently as none use chainlink oracles in this manner.
5/ In other words, you will be able to deposit your preferred coin have no risk of IL and simultaneously earn trading fees. Why would LPs @ChainLinkGod provide liquidity on Uniswap and expose themselves to IL when they can do it on Bancor have no IL and earn trading fees?
6/ A massive positive feedback loop will occur: LPs move to Bancor, more liquidity and lower slippage, more trades routed from DEX aggregators, higher trading fees and ROI to LPs, more LPs join to get the high ROIs. This will absorb a substantial amount of liquidity.
7/ v2 pools will also enable single-token exposure which will remove one of the barriers to entry plaguing some AMMs. You will no longer need to own and buy both tokens in the pool, only one.
8/ There is a potential for slight IL for BNT LPs, but this will be mitigated by BNT rewards to providers in the pools. This is only an issue if the LP withdraws during a period of high volatility as over time the BNT staked balance will revert to the mean.
9/ However, to compensate for this the DAO will reward BNT LPs with additional BNT and this will overcome any IL. Ceteris parbius this will cause tremendous upside price pressure as 70-80% of BNT will be locked in pools, and people will buy BNT in order to get the BNT rewards.
10/ If that wasn't good enough v2 pools will also have 20x amplification. $100k pools will operate as if they were $2m pools and generate the same fees. This will result in substantially higher ROIs as the trading fees will be split among a much smaller participant pool.
