The DeFi a movement encouraging alternatives to traditional, centralized forms of financial services. protocol paused its interim loss protection (ILP). Bancor cited the liquidation of many positions from its token a digital unit designed with utility in mind, providing access and use of a larger crypto economic system. native BNT and the situation ” hostil “of the market.
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- Bancor stopped its temporary loss protection (ILP).
- It cited the liquidation of its BNT token and the “hostile” market an area or arena, online or offline, in which commercial dealings are conducted. situation.
- Platforms take steps to cope with the fall.
Bancora decentralized decentralization refers to the property of a system in which nodes or actors work in concert in a distributed fashion to achieve a common goal. exchange (DEX) based on Ethereum a decentralized open-source blockchain with smart contracts functionality. The company, is halting one of its user protection mechanisms due to the turmoil in the cryptocurrency cryptocurrencies are digital currencies that use cryptographic technologies to secure their operation. market.
In a communiqué Sunday,Bancor announced to its customers that it has paused one of its core features called interim loss protection (ILP). The decentralized finance platform a place to buy, sell and store cryptocurrency (DeFi) said that this is a temporary measure to protect the protocol and its users, also citó the fall of his token native BNT and the situation “ hostil “of the market.
The temporary measure to pause IL protection should give the protocol the set of rules that define interactions on a network, usually involving consensus, transaction validation, and network participation on a blockchain. some breathing room to recover. While we wait for the markets to stabilize, we are working to reactivate IL protection as soon as possible.
Bancor pauses its ILP function
Launched in 2017,Bancor has been catalogued as a pioneer in DeFi, as stated byThe Block a file containing information on transactions completed during a given time period. Blocks are the constituent parts of a blockchain.. Its ILP feature provides protection for a type of loss incurred when someone provides two unrelated cryptoassets to a liquidity pool.
When a user provides liquidity to a liquidity pool, the proportion of its deposited assets changes at a later point in time, which can leave investors with more of the token of lesser value. This is known as a transient loss (TL), as explained by Cointelegraph .
Bancor subsidizes ILP through the rewards of its newly minted BNT token. Users then decide whether to hold or liquidate those tokens in the market. However, recent price volatility a statistical measure of dispersion of returns, measured by using the standard deviation or variance between returns from that same security or market index. in the broader digital digital technologies are these electronic tools that have the ability to generate, store or even process data. asset market appears to have put further selling pressure on BNT.
“ The need to pause IL protection is the result of the recent liquidation liquidation refers to the conversion of an asset or cryptocurrency for fiat or its equivalents. of bounty a cryptocurrency bounty is a reward users receive for performing tasks assigned by a given blockchain or project. issues that accumulated over the past 18 months. “, dijoBancor. According to the statement, several centralized a centralized organizational structure is one in which a single node or a small number of them are in control of an entire network. entities “ quickly liquidated their BNT positions and withdrew large sums of liquidity how easily a cryptocurrency can be bought and sold without impacting the overall market price. from the system “.
It was also reported that “ an unknown entity opened a large short a trading technique in which a trader borrows an asset in order to sell it, with the expectation that the price will continue to decline. In the event that the price does decline, the short seller will then buy the asset at this lower price in order to return it to the lender of the asset, making the difference in profit. position in the BNT token on an external exchange businesses that allow customers to trade cryptocurrencies for fiat money or other cryptocurrencies. “.
Bancor pointed out that the temporary measure to pause the ILP function should give the protocol some “ space to breathe and help BNT to recover “. The team also indicated that as the markets stabilize, they are working to reactivate the feature as soon as possible.
BNT was trading at USD $0.51 at the time of publishing, 40% lower than its price a week ago, according to data from Coinmarketcap .
Measures to cope with the fall
Bancor isn’t the only one taking steps to protect the platform and its users amid the recent steep drop in the cryptocurrency market. In the DeFi space, the MakerDAO (MKR), issuing the stable currency currency is a medium of exchange that defines value. DAI , announced that you have disabled your Direct Deposit Module (D3M) for Aave (AAVE ) as a ” preventive measure against potentially unacceptable risks to the protocol “.
Decentralized crypto-lending platforms, Celsius y Babel Finance announced last week that they were freezing their withdrawals due to the turbulence in the market. Reports suggest that Celsius is experiencing a liquidity crisis as it has been unable to meet customer withdrawals. Both firms have indicated that they are working to reinstate withdrawals.
Meanwhile, in the case ofBancorMany in the community expressed their displeasure with the move to pause the ILP. As reported by Cointelegraph Cobie, host of cryptocurrency podcastUponly TvcriticizedBancor for pausing the function when liquidity providers need it most. Research partner at the investment firm Paradigm Hasu, too approached this issue and talked about how the measure could lead to another “ spiral collapse “.
what is the point of impermanent loss protection if it just disappears when u most need it LOL pic.twitter.com/GAJyhr6Tib
– Cobie (@cobie) June 19, 2022
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Article by Hannah Estefania Perez / DiarioBitcoin
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