As one of the earliest proposers of automated market makers (AMMs), Bancor has been committed to optimizing its model design. The launch of Bancor V3 version brings a series of eye-catching new features, including instant completely impermanent loss protection, independent BNT aggregation pool (Omnipool), unilateral staking, automatic compounding, double rewards, etc. These new features not only increase the profits of liquidity providers, but also solve the problem of impermanent losses to a certain extent.
Key features of Bancor V3
Immediate impermanent loss protection: In Bancor V2.1, liquidity providers (LPs) need to stake in the whitelisted token-related fund pool for 100 days to obtain 100% impermanent loss protection. In Bancor V3, this process has been greatly simplified. Users can obtain 100% impermanent loss protection on the day of staking, which greatly reduces the risk of liquidity providers.
In addition, Bancor V3 also introduces a third-party impermanent loss protection mechanism. Third-party projects can provide impermanent loss protection for their token liquidity providers, allowing the project party and Bancor to share the risk of impermanent loss, further expanding the coverage of impermanent loss protection.
Independent BNT pool
In Bancor V2.1, one side of each pool is BNT. In Bancor V3, a separate BNT summary pool "BNT Omnipool" was introduced. This means that BNT holders can stake directly into this pool and earn revenue from the entire network without having to decide which pool to stake in.
This improvement also allows inter-token transactions to skip BNT and conduct token transactions directly, especially when ETH is converted to other ERC-20 standard tokens. This optimization effect is particularly obvious.
One-sided staking and unlimited liquidity: Bancor V3 allows users to provide one-sided liquidity and earn income on a single token. This means users no longer need to provide BNT to expand the pool, thus removing deposit restrictions. Specifically, Bancor V3 introduces the concepts of trading liquidity and superfluid liquidity. The former is used for market making, and the latter can be used for other charging strategies.
Automatic compounding and double rewards
The automatic compound interest function is another highlight of Bancor V3. In previous versions, liquidity providers needed to manually add rewards to the pool. In Bancor V3, transaction fees and liquidity mining rewards can be compounded automatically, which greatly reduces the complexity of user operations.
Additionally, Bancor V3 allows third-party projects to offer rewards in relevant pools, meaning liquidity providers can earn transaction fees and dual token rewards, further boosting returns.
LP token composability: Bancor V3 allows users to use LP tokens to earn additional income in other DeFi protocols, or automatically earn income in other DeFi protocols on behalf of users. This feature not only increases users’ income avenues, but also improves the flexibility of LP tokens.
Summarize
The launch of Bancor V3 is undoubtedly a major innovation in the AMM field. New features such as instant impermanent loss protection, independent BNT aggregation pool, unilateral pledge, automatic compound interest and double rewards not only increase the income of liquidity providers, but also solve the problem of impermanent losses to a certain extent. These improvements will attract more liquidity into the Bancor platform and further enhance its market competitiveness.
In the future, as more third-party projects join Bancor V3’s ecosystem, these new features will play a greater role. For investors, understanding and participating in the new features of Bancor V3 will help to gain more benefits in the DeFi market.