San Francisco-based DeFi investment firm ParaFi Capital has successfully started a partnership with Bancor, an on-chain liquidity protocol. Bancor shared the announcement on its medium blog on August 20.
Parafi plans to help the development of the platform’s native token, the Bancor Network Token (BNT). According to Bancor, the investment will help “further Bancor’s mission of enabling global permissionless on-chain liquidity.”
A partner at ParaFi, Santiago Roel Santos, believes that Bancor will massively improve the automatic market maker (AMM) ecosystem. “We believe Bancor v2 is a step function improvement in the AMM space,” commented Santos. His statement further reads:
“With trade volume and liquidity rapidly moving into AMM-based markets, we believe Bancor is uniquely positioned to benefit from this underlying market shift.”Santiago Roel Santos
The head of growth at Bancor, Nate Hindman, added to this by saying that ParaFi’s experience in the DeFi sector brings ‘substantial expertise’ to the project.’ Moreover, the investment firm will help the team scale Bancor v2 and release BNT liquidity mining and the BancorDAO.
New scaling opportunities for V2
Bancor V2 smart contracts were already launched on the Ethereum mainnet on July 31 this year. However, the platform still has to scale, as is the case with most DeFi platforms. Currently in beta, Bancor V2 hosts two live pools with cryptocurrencies REN and LINK. Both of them have a temporary liquidy cap worth $1 million.
According to the team, the V2 platform provides some of the most competitive prices and lowest slippage rates within the decentralized exchange market (DEX). Moreover, it only has a fraction of the liquidity that large DEX platforms have.
Now with ParaFi partnering with Bancor, the team will be able to scale V2 easier as the investment firm will provide feedback on their AMM. We note that ParaFi had experience with institutional players. Therefore, they will provide the DeFi project with feedback on both institutional and retail users.
Liquidity mining potential
Another upcoming feature to the Bancor Network Token is liquidity mining. The team stated that ParaFi is now involved in creating and voting on the design for BNT liquidity mining. As a reminder, liquidity mining is a feature where platforms motivate holders to provide liquidity to a token pool. In exchange, holders receive additional tokens.
Once the project launches its DAO, holders will have the chance to vote for liquidity mining as it will be within the first ‘Bancor Improvement Proposals.’
The story behind ParaFi Capital
ParaFi Capital is a leading investment firm in the decentralized finance space that partnered with many of today’s top projects. The team behind ParaFi has over 20 years of experience in institutional investment. Working with the best management firms such as JPMorgan, KKR, and TPG, the team gained powerful financial expertise that they now leverage when approaching DeFi.
Founded in 2018 and with headquarters in San Francisco, the investment firm participated in several crypto funding rounds. ParaFi invested in several DeFi projects this year, such as Aave, Teller Finance, DeversiFi, and Uniswap. Having in mind their previous smart choices and where the projects stand today, the investment firm may massively impact Bancor’s development.