{"id":63175,"date":"2022-06-20T16:57:11","date_gmt":"2022-06-20T13:57:11","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=63175"},"modified":"2025-09-05T22:31:11","modified_gmt":"2025-09-05T19:31:11","slug":"bancor-protocol-suspends-impermanent-loss-protection","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/bancor-protocol-suspends-impermanent-loss-protection\/","title":{"rendered":"Bancor Protocol suspends Impermanent Loss Protection"},"content":{"rendered":"<p>The Bancor DeFi protocol team has paused its Impermanent Loss Protection (ILP) feature due to &#8216;hostile market conditions&#8217;.<\/p>\n<blockquote class=\"twitter-tweet\" data-lang=\"en\">\n<p lang=\"en\" dir=\"ltr\">Due to hostile market conditions, Bancor\u2019s Impermanent Loss Protection is temporarily paused. IL protection will be reactivated on the protocol as the market stabilizes.<\/p>\n<p>More info: <a href=\"https:\/\/t.co\/pHrdO4sTFd\">https:\/\/t.co\/pHrdO4sTFd<\/a><\/p>\n<p>We\u2019re hosting a community AMA in 15 minutes: <a href=\"https:\/\/t.co\/xgh8UmfNoL\">https:\/\/t.co\/xgh8UmfNoL<\/a><\/p>\n<p>\u2014 Bancor (@Bancor) <a href=\"https:\/\/twitter.com\/Bancor\/status\/1538662297635282949?ref_src=twsrc%5Etfw\">June 19, 2022<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;The measure to suspend IL protection should give the protocol a little time to breathe and recover. While we wait for market stabilization, we are working to reactivate the option as soon as possible,&#8221; the blog says.<\/p>\n<\/blockquote>\n<p>ILP compensates potential temporary losses for users when depositing assets into the protocol\u2019s liquidity pools using BNT tokens. The tokens come from rewards for providing liquidity in Bancor-owned pools or from an additional issuance.<\/p>\n<p>The protocol team noted that a recent sell-off by users of rewards accrued over the past 18 months necessitated issuing new BNT.<\/p>\n<p>The downward pressure on the token\u2019s price was attributed to the insolvency of two large centralized entities, which the developers did not name. These institutions were notable beneficiaries in liquidity-mining pools as long-time providers in Bancor V2.1.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;To cover their obligations, they quickly liquidated their BNT positions and pulled large sums out of the system, while an unknown party opened a large short position on the token on an external exchange,&#8221; the team explained.<\/p>\n<\/blockquote>\n<p>Bancor said there are no ongoing attacks at the moment; assets in the protocol are safe.<\/p>\n<p>Depositing is also temporarily paused. Withdrawals are possible only via Bancor V3 without loss compensation. Users who leave assets in the liquidity pools will be able to withdraw them later with ILP reactivated, the team said.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;What\u2019s the point of Bancor\u2019s ILP if it just disappears when you need it most,&#8221; commented influencer Cobie.<\/p>\n<\/blockquote>\n<p>He noted developers&#8217; remark that the suspension of the option is linked to how they &#8220;designed and built it.&#8221;<\/p>\n<blockquote><p>\n&#8220;What is the point of impermanent loss protection if it just disappears when u most need it LOL <a href=\\\"https:\/\/t.co\/GAJyhr6Tib\\\">picwitter.com\/GAJyhr6Tib<\/a>&#8221; \u2014 Cobie (@cobie) <a href=\"https:\/\/twitter.com\/cobie\/status\/1538666240696254471?ref_src=twsrc%5Etfw\">June 19, 2022<\/a>\n<\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote>\n<p>Hasu: &#8220;Bancor\u2019s shell game of IL hiding is collapsing. They print new BNT to compensate underwater LPs and call it \u201cIL protection\u201d. The cost is transferred to BNT holders via inflation, which causes further IL to all other BNT pairs, and leads to further inflation. A death spiral.&#8221;<\/p>\n<\/blockquote>\n<p>On June 13, amid the crypto market downturn, Celsius Network <a href=\"https:\/\/forklog.com\/en\/news\/celsius-token-plunges-50-amid-withdrawal-suspension\">paused withdrawals<\/a>, trading and transfers between accounts.<\/p>\n<p>Since then, BNT\u2019s price has fallen by nearly half\u2014from around $1 to around $0.52 (Bitfinex).<\/p>\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh6.googleusercontent.com\/iYkPBW2CW0DD2o7M8X-bF87dHAM5t5Sf7Kb0SldZXHLFAIme2rylVBke_7czw9h0OUr8d_UKcczzNaKpd_BNvsJGm_ikD-Qps9q_ZIJfUGB1DaeTz7IGVIfH1RrnFADloDfbyzFKPzDIYPQhvg\" alt=\"Bancor Protocol pauses Impermanent Loss Protection\"\/><figcaption>Hourly BNT\/USD chart on Bitfinex. Data: TradingView.<\/figcaption><\/figure>\n<p>Following the market crash, <a href=\"https:\/\/forklog.com\/en\/news\/three-arrows-capital-co-founder-breaks-silence-amid-insolvency-rumors\">reports of possible insolvency<\/a> of hedge fund Three Arrows Capital emerged. Co-founder Su Zhu did not directly confirm the rumors, but stated that they are committed to addressing the issue.<\/p>\n<p>As of June 18, the volume of assets in the DeFi ecosystem <a href=\"https:\/\/forklog.com\/en\/news\/defi-ecosystem-tvl-falls-to-70-72-billion\">fell to $70.72 billion<\/a> \u2014 down 71% from the December 2021 peak.<\/p>\n<p>Read ForkLog&#8217;s Bitcoin news in our <a href=\"https:\/\/telegram.me\/forklog\" target=\"_blank\" rel=\"nofollow noopener\">Telegram<\/a> \u2014 cryptocurrency news, prices and analysis.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Bancor DeFi protocol team paused its Impermanent Loss Protection (ILP) due to hostile market conditions.<\/p>\n","protected":false},"author":1,"featured_media":26216,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1809,1093],"class_list":["post-63175","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-bancor","tag-defi"],"aioseo_notices":[],"amp_enabled":true,"views":"34","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/63175","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=63175"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/63175\/revisions"}],"predecessor-version":[{"id":63176,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/63175\/revisions\/63176"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/26216"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=63175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=63175"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=63175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}