No result
Show results
DigitalTrend.cz
en_US English
en_US English cs_CZ Čeština sk_SK Slovenčina de_DE Deutsch es_ES Español it_IT Italiano nl_NL Nederlands ru_RU Русский vi Tiếng Việt ko_KR 한국어 ja 日本語 zh_CN 简体中文
  • Introduction
  • Cryptocurrencies
    • Cryptocurrency prices
    • Where to buy bitcoin and cryptocurrencies
  • Internet
  • Online shopping
  • Introduction
  • Cryptocurrencies
    • Cryptocurrency prices
    • Where to buy bitcoin and cryptocurrencies
  • Internet
  • Online shopping
No result
Show results
DigitalTrend.cz
No result
Show results

Another DeFi protocol took action due to poor market conditions

RB from RB
June 22, 2022
in News
Time: 2 min
AND AND
0
Register on the largest exchange Binance and get a bonus up to $600 including automatic cashback up to 40%!

Bancor, one of the first DeFi protocols, has terminated its Impermanent Loss Protection (ILP) function. According to the protocol, "hostile market conditions" are to blame.

Also, according to Bancor, the suspension of ILP is a temporary measure to protect the protocol and users. Bancor he promised reactivation of protection as soon as market losses stabilize.

"The temporary measure to suspend IL protection should give the protocol some room to catch up. We are waiting for the markets to stabilize in order to reactivate protection as soon as possible. "

However, an explanation in the community, the shaken cases of Celsius and Three Arrows Capital, is not enough.

Do not miss: THE BEST STOCK EXCHANGE BROKERS IN EUROPE AND THE BEST BROKER IN THE CZECH REPUBLIC IN 2022

What is Impermanent Loss

Impermanent loss can be defined as the potential loss of a liquidity provider, equal to the difference between the price of injected cryptocurrencies in liquidity and the price that cryptocurrencies would have if the user only held them. Earnings values are calculated at the time of the liquidity insertion into the liquidity pool.

If the investor does not suspend liquidity or sell tokens, it is an Impermanent Loss. This means that the value of the tokens is lower, but because there was no sale, there was no loss. Impermanent loss increases in proportion to the price difference

In this sense, ILP acts as a way to protect liquidity providers from this loss. The protocol keeps its native token (BNT) in the pools and collects fees in the form of income. Bancor will then use the fees to cover any temporary loss to users.

Bancor's DeFi protocol in a possible death spiral 

While Bancor hopes that a break in the IRL will help the protocol breathe, many in the cryptocurrency community have been dissatisfied with the decision. Cobie, host of the cryptocurrency podcast UpOnly Tv, has criticized Bancor for suspending ILP when liquidity providers need it most.

Hasu, a Web3 analyst at Paradigm, warned that the suspension could send Bancor into a "death spiral."

"From Bancor, it sounds like they are doing it as a precaution, but I'm starting to think they're in serious trouble. Their contribution reminds me of the situation of Celsius and their problems are probably similar. "

Bancor may have had too many protections against losses as the market began to suffer from volatility. Bancor would therefore have difficulty continuing to meet its liquidation obligations.

The analyst also cited an excerpt from the Bancor communiqué, in which they pointed to the "insolvency of two large centralized entities" as part of the reasons for the abolition of the ILP.

"It took a long time, but recent events have really shown me how much we need to rethink protocol design, management and token economy if we are to truly demonstrate the benefits of cryptocurrencies," he concluded.

You might be interested in: WHERE TO BUY BITCOIN AND CRYPTOMEN

Interesting events for our readers

Binance

Trade with up to 60% off fees and a $600 bonus

Open an account Review

Phemex

Free bonus up to $ 2,500 upon registration and deposit

Open an account Review

Bybit

Free bonus up to 3650 USD after registration and deposit

Open an account Review
All content in this article is for informational purposes only and does not in any way serve as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.
Tags: DeFiImpermanent Lossprotocol

Similarly articles

Fortune 500 Taps into Crypto: Coinbase CEO Teases $10T Stablecoin Revolution
News

Fortune 500 se zaměřuje na kryptoměny: generální ředitel Coinbase naznačuje revoluci stabilních mincí v hodnotě 10 bilionů dolarů

July 19, 2025
Russia’s Sberbank Eyes Major Crypto Role with Surprise Custody Move Amid Sanctions Shift
News

Ruská Sberbank se zaměřuje na významnou roli v kryptoměnách s překvapivým krokem v oblasti úschovy uprostřed změny sankcí

July 18, 2025
Satoshi-Era Whale Awakens: $1B in Bitcoin Moved to Galaxy Digital After 14 Years
News

Satoshi-éra velryba se probouzí: 1 miliarda dolarů v Bitcoinech převedena na Galaxy Digital po 14 letech

July 17, 2025
$888M Crypto Pivot: Nasdaq Biotech Firm Goes All-In on HYPE Token with Bold Treasury Bet
News

$888M Krypto Pivot: Biotechnologická firma Nasdaq vsadila všechno na HYPE token s odvážnou sázkou na pokladnu

July 16, 2025
Bitcoin Hits $122K but CZ Warns: “In a Few Years, This Will Be Just a Fraction”
News

Bitcoin dosáhl 122 000 USD, ale CZ varuje: „Za pár let to bude jen zlomek“

July 15, 2025
Bhutan’s Bitcoin Myth Unveils: What’s Behind the Sudden Government Sell-Off?
News

Mýtus o bitcoinu v Bhútánu odhaluje: Co stojí za náhlým prodejem vlády?

July 14, 2025
Sign in and comment.
  • We recommend

    • Get 60% back and a $600 bonus through us!
    • Reliability
    • Wide selection of cryptocurrencies
    • CPC support
    Visit Review
    More info
    • Free bonus up to 3650 USD after registration and deposit
    • Reliability
    • Low fees
    Visit Review
    More info
    • Free bonus up to $ 2,500 upon registration and deposit
    • Reliability
    • Wide selection of cryptocurrencies
    Visit Review
    More info

Tags

stocks analysis bankruptcy binance bitcoin blockchain btc cryptocurrency exchange cardano coinbase cpi dogecoin to kwon do ecb elon musk eth etherium Ethereum The Merge European Union FED FTX inflation investment crypto exchange cryptocurrencies LTH bear market instructions on-chain data fees survey review recession regulation of cryptocurrencies Russia Sam Bankman-Fried Sec Solana stablecoiny Terraform Labs tether miners usa Vitalik Buterin gold

Recent Posts

  • Největší indická kryptoburza CoinDCX hacknuta, únik omezen na interní peněženku
  • ETH cílí na 3,5 tisíce dolarů, protože se zvyšuje momentum spotového ETF v USA—další ATH?
  • Fortune 500 se zaměřuje na kryptoměny: generální ředitel Coinbase naznačuje revoluci stabilních mincí v hodnotě 10 bilionů dolarů
  • Charles Schwab připraven přímo soutěžit s Coinbase v oblasti Bitcoinu a kryptoměn, říká generální ředitel
  • Pump.fun Předprodej Dump: Téměř 60 % kupujících PUMP již prodalo tokeny, zjistil BitMEX
  • Ruská Sberbank se zaměřuje na významnou roli v kryptoměnách s překvapivým krokem v oblasti úschovy uprostřed změny sankcí
  • Rep. Josh Gottheimer říká, že demokraté dávají pozitivní zpětnou vazbu na zákony GENIUS a Clarity

© 2022 DigitalTrend

No result
Show results
  • Introduction
  • Cryptocurrencies
    • Cryptocurrency prices
    • Where to buy bitcoin and cryptocurrencies
  • Internet
  • Online shopping

© 2022 DigitalTrend

Welcome back!

Log in to your account below

Don't have a password?

Get a password

Enter your login name or email.

Login
cs_CZ Čeština
cs_CZ Čeština
sk_SK Slovenčina
en_US English
de_DE Deutsch
es_ES Español
it_IT Italiano
nl_NL Nederlands
ru_RU Русский
vi Tiếng Việt
ko_KR 한국어
ja 日本語
zh_CN 简体中文
We use cookies to provide you with a better browsing experience, analyze web traffic, customize content, and display targeted ads. If you continue to use this website, you agree to the use of cookies by us.