A quick look at the new features of Bancor V3: instant total impermanence loss protection, independent BNT pooling pool, etc.

Original author: Karen

Last week, a report on Uniswap V3 impermanent loss showed that 80% of the capital pool in Uniswap V3 had more impermanent loss In terms of transaction fee income, as many as half of LP users' net income is not as good as HODLer. Obviously, effectively alleviating impermanence loss in AMM has become a major problem to be solved urgently.

As the earliest proposer of AMM, Bancor is constantly optimizing its model design. The V1 version launched in 2017 requires all capital pools to be BNT For trading assets, after considering factors such as impermanent loss (IL), the V2.1 version launched in the second half of last year allows users to mortgage unilateral assets and obtain 100% impermanent loss protection under certain conditions.

The upcoming V3 version of Bancor will bring more new features, such as 100% impermanent loss protection on the day of mortgage, and a separate BNT pool (BNT Omnipool), automatic compound rewards, double rewards, third-party impermanent loss protection, etc., LP tokens can be combined, and at the same time, contracts are simplified to reduce Gas costs, and protocols can be deployed on Layer2.

Specifically, Bancor will launch the V3 version in three stages: Dawn (dawn), Sunrise (sunrise) and Daylight (daylight). The first phase will be launched in January 2022, and the second and third phases will be launched in February and March next year.

Impermanence Loss Protection: Protocol Instant IL Protection + Third Party Support

Instant 100% protection against impermanent loss is the most critical feature introduced by Bancor V3. In Bancor V2.1, users can enjoy impermanent loss protection in the fund pool related to whitelisted tokens. However, the protection ratio within 30 days of pledge is 0%, and 30% on the 30th day. The staking time increases by 1% per day, and you can enjoy 100% impermanent loss protection after 100 days of staking.

That is to say, in V2.1, users need to mortgage for 100 days to get all impermanent loss protection, and only whitelist tokens are supported. However, Bancor V3 allows users to obtain 100% impermanent loss protection on the day of mortgage, avoiding impermanent losses to the greatest extent.

In addition, Bancor's current impermanence loss protection will first use the fee obtained from the liquidity owned by the agreement as the first line of defense. If the impermanence loss exceeds the fee, then It will be overwritten with newly minted BNT, and therefore, a whitelist fund pool for impermanent loss protection is set. In the V3 class, third-party projects can also provide impermanence loss protection for their token liquidity providers, so that the project party and Bancor can share the impermanence loss burden and support more impermanence loss protection fund pools.

Independent BNT summary pool: transactions skip BNT

In Bancor V2.1, each pool’s Both sides are BNT, and in V3, there will be a separate BNT pool "BNT Omnipool" for users to pledge BNT and earn rewards. BNT holders no longer need to decide which pool to pledge, but can directly pledge In a separate pool, to earn revenue from the entire network, and because of this, this feature will allow the protocol to bypass BNT when processing inter-token transactions and directly trade tokens. This optimization will be highlighted when converting ETH to other ERC-20 standard tokens.

On the other hand, in the current version, although users can provide unilateral liquidity, when the BNT provided by the agreement on the other side reaches a set When the upper limit is reached, the user must provide BNT to expand the fund pool, and in the V3 version, there is no deposit limit. Specifically, the concepts of trading liquidity and superfluid liquidity will be introduced. Trading liquidity is used for market making. Superfluidity can be used for such as native and other charging strategies. The scale of trading liquidity It is still the DAO's decision that tokens that exceed transaction liquidity can be used in hyper-liquidity strategies, accumulating additional value for stakers.

Reward upgrade: automatic compound interest + double reward

Automatic compound interest transaction fees and liquidity mining rewards are another major feature of Bancor V3, and In previous versions, users could only manually add rewards to the pool.

In addition, in addition to BNT, Bancor V3’s liquidity mining rewards also allow Three-party projects provide rewards in relevant pools, so liquidity providers can get transaction fees and double token rewards, and these rewards can be automatically compounded.

Other

LP tokens can Combination is also a feature that cannot be ignored in the V3 version. It will allow users to earn extra income with LP tokens in other DeFi agreements, or Bancor will automatically earn income in other DeFi agreements on behalf of users. In addition, Bancor has also greatly simplified V3 contract, so the gas cost of transaction, storage and reconciliation will be reduced, and the protocol can be deployed directly on Layer2.

Summary

On the whole, in terms of impermanence loss protection, Bancor V3 provides instant and complete protection for the whitelist pool on the day of user pledge through the protocol itself, and allows third-party projects to share the impermanence loss, which can eliminate this impermanence Loss protection mechanisms are covered to maximize and more pools. On the other hand, the newly added independent BNT summary pool, automatic compound interest and double rewards may attract more liquidity, and at the same time help liquidity providers earn more rewards.

This article is from a contribution and does not represent the opinion of Rhythm BlockBests .

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