Bancor suspends the protection service against losses
Another DeFi protocol referred to “adverse market conditions.”
This time it’s a staking platform Bancor, which has announced on Medium that it is temporarily suspending its Impermanent Loss Protection mechanism.
With this type of insurance, the protocol stimulated liquidity providers to place assets on Bancor, ensuring that their funds would not be affected by periodic balancing of the pool.
The service was carried out based on the savings fund, with 30- and 100-days thresholds, during which levels of minimum and complete protection were formed. Withdrawing from the platform earlier than 30 days prevented the liquidity provider from the possibility of protection. For the 100-day period, Bancor fully provided the compensation deposit on the “1% per day” formula.
The suspension of the service with such an “expressive name” is consistent with the general state of frustration and fear that reigned in the sector over the past few weeks. At the same time, the team emphasizes that the measure is temporary, and the ILP will be restored when the market stabilizes.
It is claimed that no attacks on the protocol are made, and all users’ assets are safe. Trade, exchange, and withdrawal of funds are available. The restrictions apply solely to the insurance of possible “impermanent losses” for investors with the right to the IPL.
Bancor’s concerns are related to the possible depreciation of its native BNT token due to cascading liquidations of the positions of two bankrupt DAOs, which were the primary beneficiaries of rewards from Bancor’s pools, as well as the risks of an organized BNT dump, which an unknown organization produces.
The temporary suspension of accepting new deposits, which indicates no liquidity shortage at Bancor (as it can be understood from the headline), may be classified as a positive signal. The company also promptly held a massive 2.5-hour AMA session on the current situation. You may find answers to your possible questions at the link.
