Bancor, the very first decentralized finance protocol introducing liquidity pools, has come forth with a brand new liquidity solution using the launch of their v3, known as Bancor 3.
Bancor 3 went accept a promise to provide protection against impermanent loss to liquidity providers. The brand new architectural changes promise to create sustainable on-chain liquidity making decentralized finance (DeFi) staking simpler for decentralized autonomous organizations (DAOs).
The v3 project has attracted greater than 30 projects and tokens — including Polygon’s MATIC, Synthetix Network Token (SNX), Yearn.finance’s YFI, Brave’s Fundamental Attention Token (BAT), Flexa’s AMP and Enjin Gold coin (ENJ) — and many DAOs because of its new protocol launch.
The only-sided staking was initially introduced with Bancor v2 to safeguard traders against impermanent losses however, the final version endured from the high barrier of entry and gas charges. With v3, Bancor promises full impermanent loss protection and minimal gas charges.
Liquidity may be the backbone from the DeFi ecosystem, however, many leading protocols have faced a serious crisis to maintain a lengthy-term liquidity mining strategy. Speaking concerning the key architecture changes and also the new liquidity solution, Mark Richardson, product architect at Bancor, told Cointelegraph:
“In Bancor 3, the protocol utilizes a better group of operations that enables the network to higher manage its liabilities, producing a more cost-efficient approach to supplying impermanent loss compensation.”
Bancor 3 introduces several new architectural changes featuring, including Omnipool, instant impermanent loss protection, auto-compounding rewards, dual rewards and superfluid liquidity. Omnipool is really a single virtual vault for token liquidity. Richardson described that Omnipool may use protocol-earned charges in one pool to pay a user’s impermanent reduction in another pool. This should cut lower the transaction fee slippage and be sure efficiency.
The car-compound earning mechanism helps to ensure that buying and selling charges and rewards are auto-compounded with zero transaction charges concurrently utilized as liquidity within the pool from the first day. This mechanism ensures dual-earning for third-party projects.