“Hostile Market Conditions” Force Bancor (BNT) To Suspend Impermanent Loss Protection

• Bancor has suspended impermanent loss protection, citing hostile market conditions.
• The feature will be reactivated when markets stabilize.
• Bancor is the latest entity to take action as the effects of the bear market grow.

The Bancor decentralized exchange is suspending its impermanent loss protection feature as it too begins to feel the effects of the bear market. Citing “hostile market conditions,” Bancor said that it would temporarily pause the feature and reactivate it as soon as the market returns to normalcy. It also hosted a community AMA to talk about the change.

Due to hostile market conditions, Bancor’s Impermanent Loss Protection is temporarily paused. IL protection will be reactivated on the protocol as the market stabilizes.

More info: https://t.co/pHrdO4sTFd

We’re hosting a community AMA in 15 minutes: https://t.co/xgh8UmfNoL

Users who make withdrawals during this time will not be eligible for impermanent loss protection. The decision to suspend impermanent loss protection will have to be approved by the Bancor DAO, which will conduct the vote on BIP 21. Bancor says that it will give the protocol some breathing room,

“The temporary measure to pause IL protection should give the protocol some room to breathe and recover. While we wait for markets to stabilize, we are working to get IL protection reactivated as soon as possible.”

Bancor notes that two entities who were beneficiaries of BNT liquidity mining rewards liquidated their BNT positions and withdrew large sums of liquidity, while another entity has opened a large short position. The decision to suspend impermanent loss protection is a bid to protect against such liabilities.

🚨 According to two sources, the “hostile market condition” is Celsius pulling their Bancor deposits, collecting $BNT imperm loss rewards, then dumping $BNT while simultaneously shorting on FTX. https://t.co/k1YoOmKqdO

The decision to suspend impermanent loss protection is yet another sign of projects feeling the strain of the bear market. Teams and investors can only hope that the bad times will pass and things will return to normal soon.

BNT Token Drops Sharply, Like Every Other Asset

The market crash has not been kind to the BNT token, which has fallen by over 50% over the past week. The token is valued at $0.52, which is still some ways off the all-time low that arrived during March 2020.

No asset has been safe during the recent bloodshed. Many stablecoins have also been depegging from their $1 mark, which is a cause for concern. Stablecoin providers have been scrambling to ensure that the peg remains intact.

The market crash has claimed many victims, including Celsius Network and Three Arrows Capital, the latter being rumored to be under a lot of financial stress. Celsius, of course, has been the talk of the town, but it is not the only one that might have a dark future.

Source: Read Full Article