A New “Dawn” Coming for DeFi as Bancor 3 Features Is Unveiled

Everyday ushers in a new day for DeFi with more innovations and use cases springing up daily. Visionary inventors are not only utilizing the opportunities that technology has to offer, but they are also proffering solutions that will further push cryptocurrency into a global phenomenon. One of which is staking.

Staking as we all know is a new gem that many investors and crypto enthusiasts alike are diving into. Bancor, the only decentralized staking product that allows its users to earn money with single-token exposure and full protection from impermanent loss, discloses the first details of its long-awaited third version, called “Bancor 3.”

As a platform that aims to ensure its users are given the best experience, the team behind Bancor designed an updated version of Bancor 2. The Bancor V3 will help increase trading volume as well as make it easier and cheaper for everyday users to earn on their favorite tokens. The protocol has already famed itself in the market as a true “set and forget” staking product for token holders seeking safe and reliable yields by removing impermanent loss risk for depositors in Bancor V2.1.

Bancor contributors say that sustaining level playing fields for everyday users is important to preserving decentralized liquidity markets. On that note, the Bancor 3 comes with the following features:

• Omnipool: Compared to the previous version that required trades to be processed via BNT, creating an extra transaction and added gas costs, Bancor 3 comes with an “Omnipool” that allows for all trades on the network to happen in a single transaction. Invariably, Omnipool will lower gas costs and enable Bancor to draw more trading fees with the same level of liquidity, thereby, making the protocol more capital efficient.
• Infinity Pools: With Bancor 3, there will be no more deposit limits on Bancor liquidity pools. Unlike the V2.1 where users had to wait for space to open up in a pool before they were allowed to deposit their tokens, thus restricting the protocol’s growth. Similarly, Infinity pools present the concept of “trading liquidity” and “superfluid liquidity”. In detail, the trading liquidity is used for market-making, whilst superfluid liquidity is utilized in fee-earning strategies that are both native and external to the protocol.
• Instant Impermanent Loss Protection: Bancor 3 will offer full Impermanent Loss Protection from the onset. Contrary to Bancor v2.1 where full Impermanent Loss Protection was accumulated by staking your tokens in a pool for 100 days or more.
• Liquidity Direction: BancorDAO now can invest protocol-owned BNT in its pools and also generates fees for the protocol. The DAO can also now vote to shrink the protocol-owned BNT in any pool and direct the BNT liquidity to more profitable pools if the pool is inefficient. The DAO can more effectively optimize protocol fees earned by Bancor, BNT holders, and LPs by directing BNT away from under-performing pools and towards the most profitable pools in the network.
• Auto-Compounding Rewards: In Bancor 3, both the trading fees and rewards are automatically re-added to the pool, allowing users to earn even more while doing less. Meanwhile, in Bancor v2.1, a user had to manually re-add their rewards to the pool which cost them gas each time, and only trading fees were automatically re-added by the protocol.
• Dual-Sided Rewards: In Bancor v2.1, only Bancor could stimulate its liquidity pools with BNT rewards. While in Bancor 3, token projects can now offer rewards on their pools, so that depositors can profit from dual-sided rewards, earning more BNT. Moreover, most of the tokens they’re staking will be free from the risk of impermanent loss.

Additionally, Bancor 3 will integrate a number of other cutting-edge features including multichain and L2 support. Plus, the integration of Chainlink Keepers to facilitate more efficient token burning, a revamped front-end, single-click migration from Bancor V2.1, and other DeFi protocols and third-party impermanent loss protection.

The above-mentioned features will all go live with the deployment of Bancor 3’s first phase, code-named “Dawn”. Bancor 3 will be rolled out in three distinct phases and these include: 1) Dawn, 2) Sunrise, and 3) Daylight.

The code for Bancor 3’s Dawn phase will be open-sourced in the coming weeks with a public bug bounty and eventually activated pending a vote by the BancorDAO. A target release is planned for early 2022. Of note, Bancor contributors will unveil Bancor 3 on Tuesday, November 30 at the upcoming Dcentralcon Conference in Miami. Interestingly, community members will hand out custom “Safe DEX” Bancor condoms as a reminder to always use impermanent loss protection at the event. Bancor’s Head of Growth, Nate Hindman, states,

Across the industry, the issue of impermanent loss threatens to undermine the core tenets of DeFi by making liquidity pools unusable by ordinary users, and accessible to only the most sophisticated and wealthy users. We must prevent DeFi from becoming a playground for the rich and connected to extract value from protocols and dump on everyone else — and this starts with fixing liquidity pools.

Hindman adds on, “Bancor 3 marks a new day for DeFi — one in which people and projects retake DeFi’s core building block to bring community-sourced liquidity to masses.”