Golden Observation | Bancor 3 will be launched on May 11, a quick look at the new features of Bancor 3

According to Bancor official news, Bancor 3 will go live on May 11, 2022 at 8:00 pm Eastern Standard Time.

As the pioneer of AMM, Bancor's upgrade has attracted the attention of the community. Jinse Finance takes you through the new features of Bancor 3.

background

Launched in June 2017, Bancor is the first-ever DeFi protocol and the pioneer of automated market makers (AMMs).

After the launch of Bancor, AMM has developed into a core component of DeFi, but AMM is facing the key problem of "impermanent loss", that is, users may suffer losses when they provide liquidity to the fund pool.

In October 2020, Bancor V2.1 created the first "impermanent loss protection" mode. To date, Bancor is the only AMM where users can "stake and forget" tokens, allowing users to fully expose a single asset with zero risk of impermanent loss.

In 2021, Bancor proposed to develop Bancor 3. After a year of development, review and testing, Bancor 3 is expected to go live on May 11, 2022.

Bancor 3 Key Features

The new features of Bancor 3 can be summarized with the following key words:

Omnipool

In Bancor v2.1, each fund pair has a separate BNT pool ( ETH /BNT, DAI /BNT, W BTC /BNT, etc.). In Bancor 3, there is a single pool to stake your BNT and earn from the entire network. Omnipool simplifies the process of earning on BNT - no more moving BNT between different pools to maximize rewards and fees.

Importantly, Omnipool also reduces the cost of transactions and staking on the network. Now all transactions can be made in one transaction. In previous versions, transactions on Bancor required transfers via BNT, which created additional transactions and increased gas costs compared to other DEXs. By trading single-hop, Bancor can attract more transaction fees for the same level of liquidity, making the protocol more capital efficient. Staking costs will also be cheaper, as the protocol can calculate a user's return on withdrawals with far less computation.

Infinity Pools

Bancor liquidity pools no longer have deposit limits. Previously, users had to wait for pools to open in order to add liquidity, limiting protocol growth. With an infinite pool, anyone can contribute as much as they want without worrying about free space.

The infinite fund pool also introduces the concept of "Superfluid Liquidity". Hyper-liquidity can be used for both market-making and other protocol-native and external fee strategies.

Instant Impermanent Loss Protection

Bancor 3 will offer full impermanent loss protection from day one. In Bancor v2.1, 100% protection against impermanence is obtained by depositing tokens in the pool for 100 days or more; in Bancor 3, it is instant.

Impermanent Loss Protection has been redesigned to compensate users in a more cost-effective and user-friendly manner. Liquidity owned by a protocol associated with one pool can be used to compensate users whose staked tokens are associated with another pool. There are two advantages to this: 1. The protocol does not need to mint new BNT to compensate users for their impermanent losses; 2. Users are more likely to receive compensation for their free losses entirely with the tokens they mortgaged, rather than partially Obtained in BNT form.

Auto-Compounding Rewards

In Bancor v2.1, users had to manually add their rewards back to the pool, which cost them gas each time, while Bancor V3 adds it automatically.

Fees and liquidity mining rewards are now automatically compounded. This means that earnings are instantly added back to the pool, increasing the liquidity of the network and increasing the potential for users to earn more fees and rewards without any action required from users.

Dual-Sided Rewards

In Bancor v2.1, only Bancor can incentivize its liquidity pool with BNT rewards.

In Bancor 3, third-party protocols can now also offer rewards in their pools, so depositors can benefit from bilateral rewards, earning more BNT and more tokens they stake. Neither BNT nor non-BNT rewards are at risk of impermanent loss, reducing the cost of running rewards programs for third-party protocols.

Liquidity Direction

In Bancor 3, BancorDAO now not only has the power to provide protocol-owned BNT to its pool and generate fees for the protocol. If any pool is underperforming, the DAO can now vote to scale down the BNT owned by the protocol and direct BNT liquidity to more profitable pools.

By channeling BNT from underperforming pools to the best performing pools in the network, DAOs can more effectively manage risk and optimize fees earned by the protocol, BNT holders, and LPs.

Other features include

• Multi-chain and L2 support

• Third-party impermanent loss protection

• Integrate Chainlink Keepers to facilitate more efficient token burning

• Improved front-end and one-click migration from Bancor V2.1 and other DeFi protocols

All of these features will be live in the Dawn release of Bancor 3.

Additionally, Bancor 3 will be launched in three phases: 1) Dawn, 2) Sunrise and 3) Daylight.