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.<\/p>\n
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. <\/p>\n
In a Nov. 30 blog post introducing the upcoming Bancor 3 update, the platform announced several new features and upgrades including the Omnipool, Infinity pools, and \u201cInstant Impermanent Loss Protection.\u201d<\/p>\n
Impermanent loss (IL) occurs on AMMs like Bancor or Uniswap when the prices of two assets in a liquidity pool diverge significantly, with one side going strongly up or down in value.<\/p>\n
In October 2020, Bancor first introduced a mechanism to combat the issue by rolling out (IL) insurance, which guarantees that liquidity providers will receive up to 100% of their initial capital, plus fees accrued after a 100 day wait period. <\/p>\n
As part of the Instant Impermanent Loss Protection update, users will no longer need to wait the initial 100 days as they will receive full protection from day one. <\/p>\n
The new Omnipool feature will see the creation of a single pool to stake BNT that offers yield from the entire network, as opposed to the current method of offering yield from separate asset pair pools such as ETH\/BNT. <\/p>\n
\u201cThe Omnipool <\/strong>allows for all trades on the network to occur in a single transaction. In Bancor\u2019s previous versions, trades required transfers via BNT, creating an extra transaction and added gas costs compared with competing DEXs.\u201d<\/p><\/blockquote>\n
Infinity Pools will offer unlimited deposits on Bancor, and no longer require users to wait for \u201cspace to open up in a pool before being able to deposit tokens.\u201d<\/p>\n
Other notable updates in Bancor 3 will include auto-compounding liquidity mining rewards, dual-sided rewards to \u201callow third-party token projects to offer IL-free incentives on their pools\u201d and further multi-chain and layer two support.<\/p>\n