Decentralized automated market maker (AMM) Bancor will introduce new staking pools and an upgrade to its fickle loss protection mechanism as part of its long-awaited Bancor 3 update.
Founded in 2017, Bancor was the first DeFi protocol to introduce automated market makers (AMMs) to the blockchain. The Ethereum-based exchange and lending platform also allows users to earn staking rewards across different liquidity pools.
In a Tuesday blog post showcasing the upcoming Bancor 3 update, the platform announced several new features and upgrades, including the Omnipool, Infinity Pool, and “Instant Impermanent Loss Protection.”
Impermanent Loss (IL) occurs in AMMs like Bancor or Uniswap when the prices of two assets in a liquidity pool diverge significantly, with one side rising or falling sharply in value.
In October 2020, Bancor first introduced a mechanism to combat the problem by introducing (IL) insurance, which guarantees liquidity providers receive up to 100% of their initial capital plus fees accrued after a 100-day waiting period.
As part of the Instant Impermanent Loss Protection update, users no longer have to wait the first 100 days as they receive full protection from day one.
The new Omnipool feature envisions the creation of a single pool to stake BNT, offering returns from across the network, as opposed to the current method of offering returns from separate asset pair pools such as ETH/BNT.
“The omnipool allows all trades on the network to take place in a single transaction. In Bancor’s previous versions, transactions required transfers via BNT, resulting in an additional transaction and additional gas costs compared to competing DEXs.”
Infinity Pools will offer unlimited deposits on Bancor and users will no longer have to wait for “space to become available in a pool before they can deposit tokens”.
Other notable updates in Bancor 3 will include auto-compounding of liquidity mining rewards, two-way rewards to “allow third-party token projects to offer IL-free incentives to their pools,” and more multi-chain and layer-twos -Include support.
Related: How Liquid Staking Disrupts Parachain Auctions on Polkadot
Bancor is governed by a decentralized autonomous organization (DAO) and currently offers cross-chain support for the EOSIO blockchain. The platform said Bancor 3 will be launched in three phases called “Dawn, Sunrise and Daylight” and is targeting a release in Q1 2022 pending a vote by the BancorDAO.
According to data from DeFi Llama, Bancor is the thirty-second largest DeFi platform measured by a total value of $1.65 billion. At the time of writing, Bancor’s native token BNT is up 2.3% over the past 24 hours and is trading at $4.06 with a total market cap of $949.4 million.
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