Enthusiasm Grows For “suSHIBAncor”, A Proposed Merger Between Bancor & SushiSwap

Support is growing for a proposed merger between the Bancor Network and SushiSwap. The proposal calls for the two projects to be combined into a single entity - suSHIBAncor - that would benefit from more liquidity, better leadership and protection against the “impermanent loss” phenomenon that’s threatening the very foundation of decentralized finance. 

The proposal, posted to the SushiSwap forums by an anonymous user who also goes by the name suSHIBAncor, reckons SushiSwap is in real danger of going tits up due to a combination of its shambolic leadership and a lack of profitability for its liquidity providers. 

While the leadership issues and lack of direction is an issue that can perhaps be dealt with, the issues faced by liquidity providers are less easy to resolve. Like many automated market makers, SushiSwap suffers from the problem of impermanent loss, where users staking their tokens in a pool actually lose money versus simply holding their assets in a wallet. It’s believed impermanent loss accounts for billions of dollars in losses each year, yet due to the complexities of calculating it, plus the opaque analytics of many AMMs, most users aren’t even aware they’re losing money. 

suSHIBAncor reckons the only solution for SushiSwap to address this problem is to merge with Bancor, which recently came out with version 3 - a revolutionary redesign of the Bancor protocol that adds protection against impermanent loss. The changes make the act of depositing tokens in an AMM pool far safer, easier and more lucrative, enabling them to “stake and forget” their tokens with full exposure to a single asset and no risk of impermanent loss. 

Meanwhile, the Bancor Network will benefit from a massive injection of liquidity. SushiSwap currently has around $3 billion worth of liquidity in assets that can be easily transferred to Bancor because the upcoming V3 supports limitless pools.

“This means that not only can 3 billion dollars of assets be migrated over without issue, they would all be single-sided stakes,” the author explains. “I’ll spell it out. If a token is staked single-sided, and has full IL protection, the LP tokens can only rise when denominated in the staked token.” 

The idea of suSHIBAncor has attracted a surprising amount of support. A quick poll on the SushiSwap forums proposal page by commenters shows 59% are currently in favor. Moreover, a non-binding vote on the idea posted to Bancor’s snapshot shows a massive 86% support the idea, at least in theory. 

Realizing suSHIBAncor would take a lot of work, however. Bancor’s Head of Research and key contributor, Mark Richardson, said in the comments section that while projects are both community led and would therefore be a good cultural fit, the proposal lacks any clear details on what the merger would look like. There are multiple issues that would have to be ironed out, not least the fact that both projects have unique tokens and code bases. He added that until the proposer has something more substantive to say around those issues, there is very little to discuss. 

“I can see very clearly that such an event could have immense value for all involved. There seems to be a synergy of developer talent, community energy, and shared vision that would be very powerful,” Richardson said. “I don’t want my criticisms here to be misconstrued as an outwardly negative reaction. I wouldn’t bother showing up if I thought the idea was vacuous. But it is [very] incomplete.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.