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Bancor’s Solution for Impermanent Loss Brings Positive Results

On Jan. 12, the Bancor Network (BNT) team offered an update on how the v2.1 upgrade has impacted performance. In particular, its swap fees massively surpass impermanent loss compensation, bringing profits for the protocol, BNT holders and liquidity providers.

  • Bancor described the performance of the protocol since the v2.1 update in a “health report” for Jan. 2021
  • Released in Dec. 2020, the Bancor v2.1 update introduced protection against impermanent loss incurred on staked liquidity 
  • The solution has proven to be effective, with newly minted BNT offsetting the IL along with an additional 1000% increase in swap fees
  • Results are as of $4.48 million of annualized swap fees, 5x up on the impermanent loss protection margin
  • The 100% coverage of realized costs, as well as minimal impact of unrealized loss, have led to Bancor calling v2.1 a sustainable system that beats the problems of first-generation AMMs
  • The team also announced the imminent release of Bancor Vortex, a passive revenue stream, which is expected to increase BNT staking
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