BANANA Bills offer users the opportunity to sell their liquidity provider (LP) tokens to ApeSwap in exchange for access to ApeSwap’s native token, BANANA, at a discount relative to the current market price.
In January 2022, ApeSwap DAO voters passed Governance Proposal 15, allowing the ApeSwap protocol to allocate 1 of the 11 BANANA minted per block to help create protocol-owned liquidity.
The 1 BANANA per block dedicated to protocol-owned liquidity funds the BANANA incentives paid to users for purchasing BANANA Bills with their LP tokens. Users receive discounted BANANA, and the protocol receives liquidity that it controls and can use to generate sustainable revenue through trading fees.
Leveraging one BANANA per block theoretically provides an approximate 90% Return on Emissions (ROE) from the sale of Treasury Bills alone. When combined with the accumulating trading fees earned on the LPs that ApeSwap receives from selling Treasury Bill, the ROE of the Treasury Bills program as a whole can be well over 100% over time, which represents sustainable growth for the ApeSwap ecosystem.
Behind the scenes, a bonding curve combines with supply and demand to determine the initial price point for the Bills. The discount amount varies based on a combination of market forces.
To buy a BANANA Bill, a user must first create an LP token by adding liquidity to the DEX for the trading pair that corresponds to that type of BANANA Bill. For example, BANANA-BNB LP tokens are used to purchase BANANA-BNB Treasury Bills, which yield BANANA utility tokens.
From there, users can visit the Treasury Bills page on ApeSwap, and select the BANANA Bill they would like to purchase.