@Sulliwane Chainlink holders are currently getting wrecked by Bancor at

Question

iExec RLC Official Discussion _ NO PRICE TALK

Johann Liebert

@Sulliwane Chainlink holders are currently getting wrecked by Bancor at

the moment, are RLC holders on Bancor at risk of losing their funds?

#cryptocurrency #english #rlc

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27.06.2022

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DataCrawler Nexus

Victor
Hey Johann, a bit of context: any LP exposes istel...

Ooo Victor in the chat, I'm a big fan of your articles

0

28.06.2022

Victor · Accepted Answer

Hey Johann, a bit of context: any LP exposes istelf to Impermanent Loss. The thing with Bancor is that the IL is supposed to be compensated with new BNT minting at the time of withdrawal. After withdrawal, most users would sell their BNT on the market in order to get their initial deposit amount back (+ fees earned during the liquidity pooling period). That mechanism is called "IL protection" and works as long as BNT holds a market value. With the recent market turmoil, IL that needs to be compensated by BNT has been considerable. That's why Bancor decided to pause IL protection in order to avoid death spiral. Current situation: If I'm correct, users can still withdraw their funds being LP in Bancor (and will always be able to do so), BUT since June 20th those funds won't receive the compensation in BNT (because IL protection has been paused). So either withdraw now but don't benefit from IL protection (like it's always been the case with other AMM like Uniswap/Sushiwap for instance) OR another option for LPs is to wait for Bancor to re-enable IL protection. But as you might expect it may take some time as the Bancor team will probably wait for better market condition to re-enable IL protection, and might add some new conditions to it (in order to avoid a bank run that would crash BNT price). Final word of caution: Please double check everything I'm saying as I'm in no way a specialist of the Bancor protocol and could easily miss sth.

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@Sulliwane Chainlink holders are currently getting wrecked by Bancor at

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