Bancor – a DeFi Automated Market-Maker (AMM) – showcased token-based governance as well as additional features for the AMM promising to eliminate impermanent loss in its v2.1 upgrade.
Announcing Bancor governance & the Bancor v2.1 upgrade!
?? v2.1 brings impermanent loss protection & single-sided exposure to AMMs
?? 60+ initial ERC20 pools are protected
?? Staking in protected pools generates $vBNT, Bancor's gov token
More: https://t.co/1DDNHKrDQ2 $BNT pic.twitter.com/g2RwpapaQP
— Bancor (@Bancor) October 12, 2020
The upgrade introduces a governance token wrapper – vBNT – generated by staking BNT in specific whitelisted Bancor liquidity pools. The v2.1 upgrade will change the tokenomics of the existing BNT token by introducing an elastic supply used to enable single-sided exposure & impermanent loss protection.
Existing AMM pools generally require users to take on exposure to assets outside of a user’s native holdings, inevitably incurring impermanent losses. While there have been many approaches to liquidity provider incentivization, it’s fair to say that no one has solved the puzzle of impermanent loss quite yet. Bancor’s new announcement looks promising and seems to be a fresh take compared to what is currently live on the market.
How Does It Work?
In Bancor’s new model, liquidity providers would accrue liquidity protection over time while collection fees from swaps, theoretically making the prospects of being a long term liquidity provider much more attractive.
Bancor will use its protocol token, BNT, as the counterpart asset in every pool, starting with 60 possible whitelisted pools, half of which have already been whitelisted today.
To learn more about the new governance token and upgrades made to the AMM check out Bancor’s blogpost here.
If you’re interested in staking BNT to receive vBNT and partaking in Bancor governance, check out their detailed staking guide here.
What’s Next
In order for any of the exciting changes covered above to occur, BNT holders must vote in favor of the Bancor v2.1 proposal. Voting on the proposal began today and last for 3 days. A quorum of 20% of staked vBNT will be required to approve the proposal.
You can join the discussion on Bancor v2.1 on their Discord governance channel or their Telegram Group.
To stay up with Bancor, follow them on Twitter.
Business Development and Operations at TrustToken – TUSD. Jack is a startup generalist and DeFi enthusiast. Stay connected with him by following @HHJackSun on Twitter.
