As part of its long-awaited Bancor 3 release, decentralised automated market maker (AMM) Bancor will include additional staking pools and an enhancement to its temporary loss protection system.
Bancor was the first DeFi system to integrate AMMs into the blockchain, and it was launched in 2017. Users can earn staking rewards through several liquidity pools on the Ethereum-based exchange and lending platform.
Moreover, the platform highlighted many new features and updates in a blog post on Nov. 30 unveiling the next Bancor 3 version, including the Omnipool, Infinity pools, and “Instant Impermanent Loss Protection”.
When the values of two assets in a liquidity pool diverge dramatically, with one side going strongly up or down in value, impermanent loss (IL) happens on AMMs like Bancor or Uniswap.
Bancor first developed a solution to fight the problem in October 2020, when it launched (IL) insurance, which covers liquidity providers up to 100% of their starting capital, plus costs, following a 100-day wait period.
Omnipool functionality will allow users to create a single pool to stake BNT
Users will no longer need to wait the first 100 days after installing the Instant Impermanent Loss Protection upgrade. Since they will be under protection from the start.
In contrast to the existing way of delivering yield from individual asset pair pools such as ETH/BNT, the new Omnipool functionality will allow users to create a single pool to stake BNT that gives yield across the whole network.
“All deals on the network may be completed in a single transaction thanks to the Omnipool.” When compared to rival DEXs, trades in Bancor’s prior versions needed transfers via BNT, resulting in an additional transaction and higher gas costs.”
Auto-compounding liquidity mining prizes
Infinity Pools on Bancor will allow users to deposit an unlimited amount of money. Without having to wait for “space to open up in a pool before contributing tokens”.
Bancor 3 will contain auto-compounding liquidity mining prizes, dual-sided rewards. In order to “allow third-party token projects to offer IL-free incentives on their pools”. And increased multi-chain and layer two interoperability.
In fact, the platform, Bancor, is now cross-chain compatible with the EOSIO blockchain. And it is under the administration of a decentralised autonomous organisation (DAO). Bancor 3 will be available in three stages, named “Dawn, Sunrise, and Daylight”, according to the platform. With a projected release date of Q1 2022 assuming a BancorDAO vote.
Significantly, Bancor is the thirty-second largest DeFi platform, with a total value of $1.65 billion, according to statistics from DeFi Llama. Bancor’s native token, BNT, is now trading at $4.06, with a market capitalization of $949.4 million.