Bancor 3 goes live with impermanent loss protection for liquidity providers
Bancor’s new liquidity mining strategy promises to bring organic on-chain liquidity and make DeFi staking easier for DAOs. Bancor, the first decentralized finance protocol to introduce liquidity pools, has come out with a new liquidity solution with the launch of its v3, called Bancor 3.Bancor 3 went live with a promise to offer protection against impermanent loss to liquidity providers. The new architectural changes promise to bring sustainable on-chain liquidity and make decentralized finance (DeFi) staking simpler for decentralized autonomous organizations (DAOs).The v3 project has....
Related News
Bancor 3 will feature instant impermanent loss (IL) protection, an unlimited deposit staking pool, and an Omnipool offering a share of fees generated from the entire platform. Decentralized automated market maker (AMM) Bancor is set to launch new staking pools and an upgrade to its impermanent loss protection mechanism as part of its long-awaited Bancor 3 update.Bancor was founded in 2017 and was the first DeFi protocol to introduce AMMs to the blockchain. The Ethereum-based exchange and lending platform also allows users to earn staking rewards via various liquidity pools. In a Nov. 30....
Bancor’s approach to dealing withimpermanent loss on decentralized exchanges might have significant implications for idle altcoin capital. Bancor has released a status report for its v2.1 decentralized exchange upgrade covering the performance of its decentralized exchange over the last three months.According to the document, the total liquidity increased by almost 100% resulting in the platform earning about $1.12 million in cumulative swap fees.Bancor’s report noted that the fee earnings were more than five times the cost required for impermanent loss compensation for liquidity....
Veteran DeFi protocol Bancor came under heavy scrutiny for pausing the impairment loss protection program at a time when liquidity providers need it the most. Bancor, a decentralized finance (DeFi) protocol often credited as the pioneer of the DeFi space, paused its impairment loss protection (ILP) function on Sunday, citing “hostile” market conditions.In a blog post on Monday, the DeFi protocol noted that the ILP pause is a temporary measure to protect the protocol and the users. The blog post read:“The temporary measure to pause IL protection should give the protocol some room to breathe....
There ain't no such thing as a free lunch, however. Bancor is updating its protocol once more to defeat the insidious issue of impermanent loss, which it earlier called “DeFi’s dirty little secret.”Impermanent loss, also called divergence loss, affects exchanges based on automated market makers like Bancor or Uniswap. It happens when the prices of two assets in a liquidity pool diverge significantly, with one side going strongly up or down in value.The effect translates to a loss of value compared to a benchmark “buy and hold” portfolio. Liquidity providers (LP) may take out less money....
A recent study of Uniswap v3 pools revealed that on average, almost half of the liquidity providers are losing money due to impermanent losses. Recent research shows that impermanent losses have become an increasing issue for liquidity providers on Uniswap v3. A Nov. 17 report by Topaz Blue and the Bancor Protocol found that 49.5% of liquidity providers on Uniswap v3 have incurred negative returns from impermanent loss (IL). The report highlighted that Uniswap v3 generates the highest fees of any automated market maker (AMM) today, but IL surpasses those earned fees. The research surmised....