Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Bancor Suspends 'Impermanent Loss Protection', Citing Market Strain

Published 06/20/2022, 05:16 AM
Updated 06/20/2022, 05:55 AM

By Geoffrey Smith 

Investing.com -- Decentralized finance network Bancor said Monday it is suspending its so-called Impermanent Loss Protection barely a month after its launch, citing "hostile market conditions".

Bancor is the latest in a series of platforms offering high token-based rewards to crypto speculators - frequently through the use of derivatives - to face liquidity strains as the price of many cryptocurrencies slump under pressure from a cycle of higher global interest rates. Various lending platforms including Celsius Network, Finblox, and Babel Finance have all announced similar measures over the last eight days.

Celsius said on Monday it will need more time than first thought in order to restart operations.

Bancor, whose marketing slogan is "Earn safe DeFi yields on your favorite tokens", said the move was a temporary one "to protect the protocol and its users". 

The Impermanent Loss Protection mechanism was designed to protect depositors in liquidity pools consisting of multiple tokens against big swings in the value of the individual tokens in the pool, something that is usually correlated to overall liquidity in that specific token. But the trick has proved harder to guarantee than the designers imagined in the context of the biggest crypto sell-off in four years. Bitcoin fell below $20,000 over the weekend taking its losses for the year to over 55%, while Bancor's own token, BNT, has lost nearly 95% of its value from its 2021 peak. It had slumped to less than 52 cents as of Monday from $3.34 at the start of the year.

Bancor said it had identified "anomalies, if not manipulative behavior," on its blockchain, implying that one or more participants have been shorting the token.

Latest comments

aaand, its gone!
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.