Episode 9: Bancor V3 ($BNT)
Single Sided Staking, 0 Impermanent Loss, 22 June 2022
What Is Bancor (BNT)?
Bancor is the only decentralized staking protocol that allows you to earn money with single-token exposure and full protection from impermanent loss. Launched in 2017, Bancor was the first DeFi protocol.
Today, it generates millions in fees per month for depositors, offering up to 60% APR on tokens like ETH, WBTC, LINK, MATIC, AAVE & more. Bancor is owned by its community as a decentralized autonomous organization (Bancor DAO).
The protocol token used on the network is the “Bancor Network Token,” BNT. The protocol’s token allows traders to provide liquidity for the pools available on the network. Anyone can contribute liquidity to the pools. When liquidity providers contribute liquidity to a pool, they are eligible to receive fees for trades that pass through the pool. Liquidity providers will receive pool tokens that represent their share of liquidity, fees, and Liquidity Mining rewards in the pool.
How Many Bancor (BNT) Coins Are In Circulation?
The Bancor Network Token (BNT) has an elastic supply, afforded by the protocol's minting and burning of tokens to maintain trading liquidity levels in Bancor pools. Protocol-owned trading liquidity earns swap fees from trading volume, such that the protocol comes to hold more BNT over time. The protocol's new balance of BNT is then burned in exchange for pool tokens when LPs stake the equivalent amount of their own BNT. Due to swap fees earned, more BNT is ultimately burned than was initially supplied by the protocol. This excess of BNT is then burned to offset the cost of impermanent loss, deflating the overall supply of BNT in the long term.
How Is The Bancor Network Secured?
Bancor is one of the longest-running and most heavily audited projects in crypto, receiving stellar ratings from leading auditors including Certik, PeckShield, and Halborn. In addition, Bancor received one of the highest safety scores to date by DeFiSafety (96%) in 2021.
Introducing Bancor 3
Bancor 3 proposes a new protocol version that reduces costs for trading and makes it refreshingly easy for users to earn on their favorite tokens
An Omnipool allows for all trades on the network to occur in a single transaction
Infinity Pools enable unlimited deposits while introducing Superfluid Liquidity that can be simultaneously utilized for market-making and other fee-earning strategies
Instant Impermanent Loss Protection is offered by the protocol; users no longer need to wait 100 days for 100% IL protection
Auto-compounding rewards are introduced; re-staking rewards no longer requires gas-intensive manual transactions
Dual-sided rewards allow third-party token projects to offer IL-free incentives on their pools
Revised tokenomics create a more cost-efficient system for offering IL protection and more deflationary pressure on BNT
Multi-chain and L2 support, & more!
Personal Take:
Impermanent loss is complex and difficult for new DeFi users to understand the whole mechanism. Most uniswap LP’ers couldn’t have a net positive earning by LP-ing in Uniswap and I think there is a need to have an alternative way for the LP’ers to be at least profitable since they are helping the DEX to lessen the spread. Hence, single sided staking by Bancor Network will solve the IL and making sure traders and LP’ers both are comfortable with their positions.
Your yield are based on liquidity mining incentives and trading fees. More volume, more fees, more yield. More deposit, the cake has be to sliced more to be divided, hence lesser yield.
Check out What is impermanent loss?
Visit app.bancor.network to try out the application now!
Feel free to drop a like if you enjoy the newsletter. Would appreciate if you share the newsletter with your friends! 💖
✓
Don't be shy to leave a comment below if you have any questions!